China - Hrm Issues

Issues affecting International

Human Resource Management

in China

The significance of culture in international HRM

Managing Diversity

Organisational structures in the context of globalisation

HR 364 Management of international Human Resources

2004/05

Florian Kress

Registration no: 04914686

Table of contents

Introduction 2

The significance of culture in international Human Resource Management 2

Hofstede's five Dimensions 3

Power Distance Index (PDI) 3

Individualism (IDV) 3

Masculinity (MAS) 3

Uncertainty Avoidance Index (UAI) 4

Long-Term Orientation (LTO) 4

Important Terms 4

Gunaxi 4

Lien and Mianzi 5

Guo qing 5

Influences on HRM processes 5

Managing Diversity 6

Negotiating 7

Organisational structures in the context of globalisation 8

Political factors 10

Economic factors 10

Conclusion 12

References: 13

"Napoleon called China a sleeping dragon and said

there would be woe to the world when the dragon awakes.

As the world knows, the dragon is more than stirring."

Introduction

The Chinese believe that the Great Dragon ruled the Middle Kingdom of the world for nearly four thousand years. For most of this period China was a great trading nation. Then the dragon fell asleep for two centuries, while China collapsed under the effects of colonialism, until in 1978 Deng Xiao Ping woke the dragon up. And now the Chinese dragon is back, hungry to take its place as the economic and cultural superpower of the 21st century.

Nowadays China is often called the world's largest market. Many people might think that it is very easy to start business in China and that success is guaranteed because of the huge potential of the market. But that isn't true. Making successful business in China is not that easy as it might seem. There are many potential problems which can arise.

For instance the Chinese civilisation is five thousand years old and because of that the Chinese culture, tradition and value system have a significant impact on the different business processes. As the largest country in population, China has 50 plus different minority groups of people each have its own culture, custom, norm, tradition, even unique holidays and languages. Also, as one of the top three nations in land size, China is geographically divided into many regional centres across the nation each has unique cultural aspects in terms of tradition, value, social norm, belief, and organisational features. Those unique cultural factors will present numerous challenges to foreign investors and international joint venture managers.

In this essay I want to discuss issues effecting human resource management which is, according to many foreign executives, the greatest challenge for Western companies in China today.

The significance of culture in international Human Resource Management

According to Hofstede the influence of national culture is important to management for three reasons. The first is political and institutional. There are differences between the countries in formal institutions such as government, legal systems, educational systems, labour and employer's association, and the way they are used. The second is sociological. It concerns the identity of people and part of the 'who am I' in contrast to those with different identities. The third is psychological. People's thinking differs because of their different life experiences. Activities like management and organisation are therefore culturally dependent.

Hofstede's five Dimensions

Hofstede proposes five dimensions in the study of national culture.

Power Distance Index (PDI)

The PDI focuses on the degree of equality in the country's society. China has a significantly high PDI which indicates a high level of inequality of power and wealth within the society. This condition is rather accepted by the society as their cultural heritage, than forced upon the population.

Individualism (IDV)

The IDV focuses on the degree the society supports individual or collective achievement and interpersonal relationships. The low IDV typifies the Chinese society as one with a more collectivistic nature with close ties between individuals. The society encourages strong relationships were everyone takes responsibility for the other members of their group, e.g. family. The low IDV is probably caused by the Communism.

Masculinity (MAS)

The MAS focuses on the degree the society support the traditional work role model of male achievement, control and power. The MAS of China is just a little bit higher than the world average, which means that there is still differentiation and discrimination between male and female.

Uncertainty Avoidance Index (UAI)

The UAI focuses on the level of tolerance for uncertainty and ambiguity within the society. The Chinese UAI is below the world average, which means that the Chinese society is less rule-oriented, more readily accepts change and tales more and greater risks