Business in China has been performing positively. Additionally, China has been opening new doors for foreign investors. As an illustration, empirical evidence show that China is allowing foreigners to invest in trust companies, financial leasing and other avenues of investment. The increase investments have led to increase employment of people (Briscoe, Tarique & Schuler, 2012). The key pillars in driving Chinese foreign trade is the support from the government and low interests’ rates which have made borrowing easier. At this rate organizations have been able to buy raw materials and also be in a position to invest in other markets.
The government policies on trade have been favorable. With these, many foreigners have been in a position to invest without external interferences from government in regards to government regulations. China has also been able to operate in different countries. With this, there has been a collection of different cultures of different ethnic background and tradition. The existence of diversity in China is a source of traction. The culture of the country being able to embrace different people has opened doors for different investors to inject capital and resources into the country (Child & Lu, 2018).
With increased business activities in china, there are major challenges that are being faced by human resource management practitioners employed by foreign enterprise which operate in China. These challenges can be classified based on the following perspectives: Economic, political and legal, social and cultural perspective and technological perspective. When it comes to the economic perspective, there has been an increased shortage of labor hence increasing the amount being paid on wages and salaries. Empirical evidence shows that it has come to the level in which people are swapping folks and increasing the amount of salaries (Moore & Jennings, 2017). According to the report that was released by BCG, it was discovered that the average wage rate in China is valued at 36%. By the end of 2010 it was discovered that the wage gap had reduced to 48%. With increased labor costs, human resource management practitioners will spending more when it comes to cost of production.
Increased labor cost will affect the overall cost of production. This may also affect the final product that are to be produced by these firms. In a foreign environment, there will be an opportunity to hire experts with an objective of managing operations or legally represent their business in China. HRM practitioners will be required to spend large sums of money when hiring an expert to represent their business. This may reduce the amount of money being made by these foreign organizations in a host country.
These foreign companies also have challenges dealing with management and developing Chinese employees. This is an initiative which will involve collective use of financial resources predominantly. First, HRM, practitioners will have to work on boarding and training which will involve provision of adequate on boarding and continuous training to their employees. In Chinese, knowledge and education are highly valued (Gutierrez-Gutierrez, Barrales-Molina, & Kaynak, 2018). There is also the issue of employee motivation and offering incentives. Employees having low morale will affect the work performance of employees.
Therefore, HRM practitioners should be in a position to have adequate resources which will cater for all the needs of the employees. As a result, there should be a scenario in which employees are financially taken care of in terms of salaries and compensation packages. Without a clearly defined protocol of compensating the employees, the foreign firms will have a difficult moment training these employees. This, means that, without adequate human capital to support the organizational activities, there will be complete collapse of the organization.
When it comes to the legal and political environmental perspective, foreigned own companies have been struggling with the ever changing regulations (Frey & Osborne, 2017). As an illustration, the presence of foreign representative’s offices, financial institutions and other economic organizations have been denied the opportunity of directly hiring employees. With this, HRM practitioners are required to go through a specifically designed procedures being dictated by HR management agencies. A major challenge regarding these procedures is that, the version of the labor contract should be in Chinese language.
When it comes to the industrial relations, the Chinese government has allowed Chinese laborers to join labor unions being that these unions protect the needs of the employees. It is significant to note that, according to the latest government statistics, 80% of all the foreign firms located in China had been unionized by the end of 2008. When employees are unionized, they will be protected from the harsh treatment from employers. This is an opportunity for the laborers to have say for fair treatment.
The Chinese culture is complex and it is different from other cultures across the globe. Foreign organizations have been having challenges understanding the Chinese culture which involves their business etiquette. Foreign firms have to deal with employees who have a preinformed perspective of the practices that should be done in China (Zhu & Warner, 2017). When organizations fail to implement strategies that uphold Chinese culture, it will be difficult to handle them and also motivate their work performance. In china, culture is widely recognized and never ignored being that it is a sensitive area that will require all foreign firms understanding the culture before investing in the human capital. Lastly, there is the issue of technology. As an illustration, China is an emerging marketing with evolving technological needs and development. With technology, there is increased generation of ideas and innovation. Foreign firms should be in a position to adopt technological development that will be able to match with the needs of the consumers (Teagarden, Von Glinow & Mellahi, 2018).
It is significant to note that, international businesses should be in a position to have an international function. While having a global function, competing favorably within in a diverse market will require recruiting, training and managing people locally with an objective of reflecting the local culture, local markets and understanding the needs of the diverse local organizational units. With localizing the HR function, the following are the benefits:
The major arguments against hiring local staff in China include: first, hiring the local staffs will involve understanding their culture and languages. With this, in China there are local agencies which require the foreign firms to go through a detailed procedure when it comes to hiring the local staffs. This procedure will be time consuming and also involve use of increased resources (Stephen & Walsh, 2014). When it comes to retaining of these employees, it will be difficult to come up with a detailed process of employee retention. In most cases, retaining of employees will involve training the locals on the perspective that is required for the success of the organization (Reiche, Harzing & Pudelko, 2017). This may be a difficult process being that there are resources that are needed to run the entire program. Foreign firms should have to discover different ways in which they have to find reasons why the local employees are interested towards joining the company. Hiring local employees will require the foreign firms to understand the different needs and preferences of the employees. This will be a whole new process that will require a complete understanding of the culture of the local residents.
In conclusion, increased foreign investment in China has created a platform in which there are increased economic growth and people are getting employment. However, there are challenges when it comes to human resource management. In this scenario, foreign firms have to hire local residents through localizing their HR functions. This will open a new channel in which the foreign firms can adapt to the cultures of the country and enhance a positive working culture.
References
Briscoe, D., Tarique, I., & Schuler, R. (2012). International human resource management: Policies and practices for multinational enterprises. Routledge.
Child, J., & Lu, Y. (2018). Management Issues in China: Volume 2: International enterprises. Routledge.
Frey, C. B., & Osborne, M. A. (2017). The future of employment: how susceptible are jobs to computerization? Technological forecasting and social change, 114, 254-280.
Gutierrez-Gutierrez, L. J., Barrales-Molina, V., & Kaynak, H. (2018). The role of human resource-related quality management practices in new product development: A dynamic capability perspective. International Journal of Operations & Production Management, 38(1), 43-66.
Kennedy S. N. (2012). The Challenges and opportunities of hiring locals. Retrieved from: https://www.devex.com/news/the-challenges-and-opportunities-of-hiring-locals-78472
Moore, L. F., & Jennings, P. D. (Eds.). (2017). Human resource management on the Pacific Rim: Institutions, practices, and attitudes (Vol. 60). Walter de Gruyter GmbH & Co KG.
Reiche, B. S., Harzing, A. W., & Pudelko, M. (2017). Why and how does shared language affect subsidiary knowledge inflows? A social identity perspective. In Language in International Business (pp. 209-253). Palgrave Macmillan, Cham.
Stephen M., & Walsh B. (2014). The global and local HR function. Retrieved from: https://www2.deloitte.com/insights/us/en/fous/human-capital trends/2014/hc-trends-and-local-hr.html
Teagarden, M. B., Von Glinow, M. A., & Mellahi, K. (2018). Contextualizing international business research: Enhancing rigor and relevance. Journal of World Business, 53(3), 303-306.
Zhu, C. J., & Warner, M. (2017). The emergence of Human Resource Management in China: Convergence, divergence and contextualization. Human Resource Management Review.
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