Question:
Analyze the Difference between China and Europe.
Gamescorp plc is a computer software store based in the United Kingdom with a high growth rate. The organization sells discounted computer games and similar products. Physical shops of Gamescorp are running successfully in Paris, Milan and Berlin since three years and after gaining momentum in business Gamescorp plans to adopt an expansion strategy in other parts of the world. Gamescorp plans to open retail outlets in China. However, the organization has decided that in China the physical stores will have a lot of similarity with the stores already established in the United Kingdom.
In Europe communication is explicit or direct. The Europeans speak their mind and adopt a verbal communication style with less non-verbal cues .The Chinese rarely speak directly. They do not get straight to the point. In business meetings, Chinese use formal and indirect language. Communication style in China is inferred or implied and subtle. More non-verbal cues are used in communication style. They focus on gaining trust; they reveal their intentions only after strong business relationships are developed. People holding senior positions in organizations generally speak during business meeting in China and all questions should be directed to the seniors. The Europeans value freedom and follow independent decision making approaches, whereas in China harmony and stability are valued and decision making process is group-oriented. In business relationships, the Europeans are quite superficial. They give priority to profitability and business relationships are contractual in Europe, whereas in China business relationships are built on trust. The Chinese believe in building long -term business relationships and develop relationships at a personal level before conducting business. The Europeans focus on short-term goals, on the contrary, the Chinese focus on long-term results. The Europeans think per quarter whereas the Chinese think years ahead (Brewster, 2008).The Europeans are high risk-takers whereas the Chinese culture tries to avoid risks. The decision making process in Europe is fast, planned and proactive and distributed authority is used in decision making process. In China the decision making process is slow and impulsive; generally managers make the final decision. The Europeans generally respect wealth, achievement and success whereas the Chinese people have high respect for wisdom and seniority. The thought process or thinking style in Europe is guided by logic. Europeans are generally analytical whereas the thought process of Chinese people is holistic and intuitive. People in China consider the big picture and their though process is specific to a particular situation. In European culture, punctuality is of paramount importance whereas in Chinese culture times for appointment are flexible. The Europeans are generally argumentative and verbal while handling conflicts but people of China find it difficult to say no and they use non-verbal cues (Chan, 2012).
The culture of a country determines the values that are practiced in workplace. Professor Geert Hofstede studied 5 dimensions of culture that can influence the workplace values of different countries. These five dimensions are power distance, Individualism Versus Collectivism, Masculinity Versus Felinity, Uncertainty Avoidance and Long-Term Versus Short- Term Orientation.
Power Distance – China scores 80 on Power Distance Index (PDI). This means that in China there is substantial power distance between in between subordinates and superiors in China. The European countries demonstrate variation in this score. Countries like Ireland, Denmark, Austria, and the United Kingdom have a low power distance score and countries whereas countries like France and Romania score 68 and 90 on power distance (PDI).
Individualism/ Collectivism (IDV)- China scores 91 on IDV , the Chinese culture is much more collectivistic. Group thinking is encouraged in China and decision is made with a consensus of group members rather than individual decision making. Majority of countries follow an individualistic culture in Europe but there is variation in this cultural dimension, for instance, the United Kingdom scores 89 on IDV dimension whereas Spain scores 51.
Masculinity/ Femininity (MAS) -China ranks 66 on MAS dimension. The Chinese culture and people are highly driven by achievements, competition and success. People in China prefer to work and give importance to priorities related to work than spending time with families.
Uncertainty Avoidance (UAI) – China scores 40 in Uncertainty Avoidance (UAI) dimension. This means that Chinese follow a structured procedure and framework, rules and regulation to avoid uncertainty. However, the Chinese are not intimidated by uncertain situations and are willing to embrace changes according to the ambiguous situation (Shen Y. D., 2015).
Long- term / Short-Term Orientation (LTO) – China scores high on long term orientation (LTO).The 118 LTO score of China clearly reflects that the Chinese people practice perseverance and persistence to accomplish goals. The Chinese focus on results of long-term rather than focusing on short-term goals. The negotiation process in China is time-consuming. The Chinese people believe to gain trust and build relationships before engaging into a business deal (Hofstede, 1983).
From the analysis of the Hofstede’s Cultural Dimension, it can be clearly understood that there is significant cultural difference between China and Europe. This cultural difference will cause difference in core values, attitudes and lifestyle of people of China and Europeans (Taylor, 2007). Thus, the style of doing business in China will be completely different from that of Europe. Thus Gamescorp Plc. needs to consider the cultural difference between China and Europe while setting the Human Resource Management Practices for its software store in China. The recruitment policies and practices for recruiting local staffs of China in the software store of Gamescorp Plc. will be substantially governed by the cultural values of China which is different from that of Europe (Chan, 2012).
In ethnocentric staffing, people who belong to the same nationality as the parent Company are chosen as a part of the parent Company. In polycentric organizations, the workforce is hired from the host country. In geocentric organizations, global objectives as well as local objectives are met.
Gamescorp plc wants the corporate culture of its software store in China to have resemblance with the software stores of the home country United Kingdom. The physical evidence of the stores are expected to be laid out and decorated in accordance to the already established corporate style. The stocks of the stores will have similar kind of stocks as the stores present in the United Kingdom. The strong corporate identity which is already established will be maintained wherever a store of Gamescorp Plc is opened (Hofstede, 1983).
Since, the stocks of the store in China and the physical evidence of the store is planned to have resemblance with that of the store of the home country of Gamescorp plc., the organization is keen on adopting ethnocentric approach. Organizations adopt ethnocentric approach to implement a tighter control for its subsidiaries and to have a unified corporate culture. In ethnocentric approaches, the core competencies of Gamescorp plc will be transferred to its home country China and since the Chinese subsidiary will have to comply to the objectives and strategies of the home country, a good implementation of quality factors are expected in ethnocentric approach. However, if Gamescorp plc adopts the ethnocentric approach in China without considering the cultural values of the Chinese population, it might lead to lower productivity, higher dissatisfaction and turnover in the software store in China. (Schneider, 1988)
If Gamescorp plc adopts a polycentric orientation for its software store in China, then there will be a wide cultural gap between its store of the United Kingdom and the store of China. Thus a polycentric approach will lead to mismanagement, lower point of control and supervision and there might be a drop in quality of stocks delivered to customers. Thus, the brand value of Gamescorp plc will be at risk if polycentric approach is adopted.
Geocentric orientation will best suit the objectives of Gamescorp plc. The organization wants its strong corporate identity which is already established in the home country to be adopted in China. The physical resemblance and the stocks of the store of China will also have resemblance with that of the home country. But for hiring policies Gamescorp plc should hire managers and local staffs both from home country as well as host country. The skills, knowledge and abilities required for a particular job position should be filled by competent managers and staffs irrespective of the nationality. (Shen J. , 2004).Gamescorp plc should adopt a geocentric orientation because the organization needs to hire local Chinese managers who will be able to suggest the management of the organization about the cultural policies of China which will determine the human resource policies of that Gamescorp plc will adopt in China. Also, language is a great barrier among Chinese and Europe. The recruitment and selection panel of Gamescorp plc in China should have sufficient Chinese managers who will be able to communicate with local Chinese staffs in their mother tongue and will understand their psychology better than a European manager. The presence of Chinese managers will help to a great extent in face-to-face interviews of the local Chinese staffs. This is possible in a geocentric approach.
The Chinese customers will have different needs, wants and demands. The preference of the Chinese customers will be guided by their core values, beliefs, attitudes and lifestyle. (Tang, 2015). . Gamescorp Plc should first understand the cultural values, core beliefs, attitudes and lifestyle of the Chinese population before setting up a framework for human resource practices in geocentric approach for its store in China. Thus, the human resource practices which Gamescorp plc has adopted for its store in the United Kingdom, Paris, Milan and Berlin might have to be modified. The organization can’t adopt the same human resource practices which are applicable for its home country, the United Kingdom for its software store of the host country China (Shen Y. D., 2015) In the entire process of recruitment and selection for local staffs in China where a geocentric orientation should be adopted, Gamescorp plc must be sensitive towards the cultural needs and core values of the Chinese population. There are substantial cultural differences between China and Europe as it is already pointed by the analysis of Hofstede’s cultural dimension factors. The geocentric orientation of Gamescorp plc should consider the difference in cultural values between Europe and China while selecting local Chinese staffs for its software store in China (Si, 2012).
A European manager will be completely clueless about the cultural values of China. Thus Gamescorp plc should hire Chinese managers and local staffs who will be able to guide the higher management about the behavior of Chinese customers. If Gamescorp plc hires local managers and staffs who will be able to communicate in the local language with the Chinese customers, it will be an added advantage for the organization. Thus if Geocentric approach is adopted by Gamescorp plc, the organization will be more productive and will have a diverse competent workforce without losing control and quality (Díaz de Basurto Isaba, 2014).Geocentric orientation will enable Gamescorp plc to utilize the best practices of ethnocentric and polycentric orientation.
Policies and Practices to be adopted for selection of local staffs in China
The registered capital of the Company Gamescorp plc will determine its power to hire expatriates. The higher the register capital of the company, higher will be its power to recruit expatriates. A work permit or work visa for the expat must be obtain by the employer. Gamescorp plc. Internship visa, Priority Talent Visa and Work Visa are different types of visas that will be available for the expats. The visa type will depend on the job role. In China, Discrimination in recruitment and selection process is considered unlawful on various grounds. If recruitment is made by an employer through a job fair or private employment agency then appropriate documents should be provided to the agency. A foreign national can only be recruited by an employer only if the position requires specific knowledge, skills, abilities and experience which can’t be filled by a suitable Chinese candidate.
Email circulations, employment websites, Consulate General Website can be used to advertise about the vacant position by Gamescorp plc in China (Huang & Hao, 2014).
The criteria for selection and job description are mentioned by the employer in the advertisement. The job advertisement can include the details of the person to be contacted, salary offered
The application of candidates should be assessed against the criteria for selection; applications from candidates which will not match the selection criteria can be rejected.
Applications can be ranked to select candidates for further interviews with the Company. The initial order of merit can be used to identify how the applicants match the criteria for selection with the organization. If the application of the candidate does not address each one of the criteria for selection, then the candidate should not be shortlisted for interview
The best candidates can be shortlisted for an interview. The questions in the interview should be in alliance with the selection criteria. The interview panel can pose some scenarios in front of the candidate and he should provide information on what he should do to handle the scenario. Ability or aptitude testing can be essential for some positions, the technical skills of applicants, the language skill, the ability to handle basic computer related activities like working on word processors, power point or spreadsheet can be tested (Cadin, 2006).
The candidates who will secure highest rank in the interview will be subjected to background verification. Each candidate must mention about two referees which Gamescorp plc can contact to obtain information about the reliability of the candidate and his ability to work under critical circumstances.
The successful candidate can then be offered the position by the organization. Under the People’s Republic of China’s Labor Law, the companies need to get a contract of employment signed by the employees, Date of Signing; Term of Contract and probation period should be included in the employment contract.
Employees can be both a permanent employee and a temporary employee. Task-based term and fixed term are the different terms for a temporary employee in China. Permanent employees are not recruited based on a specific term in China. The probation period can extend to maximum time period of one month if the term of contract for employment is three months. The period of probation for contractual employees in China can extend to a maximum time period of two months if the term of contract for employment is in between one to three years. An employee does not need to serve a period of probation in China if his employment contract is of less than three months or if the contract is of a fixed term (Paillé, 2014).
Mandatory Benefits should be contributed by both employer and employee and this should be applied for the employment of local staffs of China by Gamescorp plc. There are five mandatory insurance schemes like pension funds, medical insurance, industrial injury insurance, unemployment insurance and maternity insurance. A housing fund should be provided by Gamescorp plc which should be applicable to Chinese employees
The Individual Income Tax payment needs to be done by each individual depending on his salary. This tax should be deducted by Gamescorp plc every month from the salaries of the employees. The employer should then submit this tax to the Tax Authority. This tax is contributed only by an employee. This individual income tax policy is applicable by both Chinese employees and expatriates.
The process of internal recruitment can be followed by Gamescorp plc. If there is a vacant position in Gamescorp plc, the organization should try to fill the gap internally to leverage its existing talented pool of managers and staffs and to save cost and money of external recruitment process. The internal recruitment process will be beneficial for Gamescorp plc because the organization will be able to provide a career development plan and process for its employees by the internal recruitment process (Holland, 2006).Recruitment in the China store cam be done through job portals online (Galanaki, 2002).
Cultural diversity, cultural tolerance and cultural sensitivity should be encouraged by the recruitment and selection panel of Gamescorp plc .Stereotypes and biases based on sex, age, gender, language, minority, ethnicity and sexual orientation should be strictly avoided in the entire process of recruitment and selection (Thite, 2014).
Conclusion
It can be concluded that China and Europe are substantially different in terms of culture and sub-culture. The Europeans focus more on profitability and short term goals, whereas the Chinese prefer to gain trust and build long term relationship before signing a business deal. The Europeans are direct in their communication style whereas the Chinese communicate subtly and indirectly. Due to the cultural difference that is present in China and Europe, the human resource practices of China adopted by Gamescorp plc can’t be the same as it is in its home country. The human resource policies adopted by Gamescorp plc for its store in China must consider the core values, attitudes and cultural beliefs of the Chinese population.
The cultural difference between Europe and China is substantial. It can be recommended that the culture, HRM policies and recruitment and selection process of Gamescorp plc for its store in China should focus on profitability for its shareholders as well should create long term value for all its stakeholders.
The organizational orientation should preserve the corporate culture of the home country, however the management of Gamescorp plc should have a substantial proportion of Chinese manager who will be able to communicate in the local language with Chinese staffs and managers from China will interpret the psychology of the Chinese local staffs more effectively Also, Gamescop plc should implement a geocentric orientation for its software store in China. A geocentric orientation will enable the workforce of the organization to have a talented pool of managers and staffs irrespective of the nationality. Gamescorp plc must adopt a geocentric orientation as by this process the organization will be able to implement its already established corporate culture for the stores of its host country and modify them slightly according to the Chinese culture.
Some flexibility will be granted to the local managers in terms of number and status of their employees in the store of the organization in China. Gamescorp plc should study the human resource policies, laws and regulations of China before hiring the local staffs and managers. The recruitment and selection process should be fair and transparent and biases and stereotypes bases on language, culture and ethnicity should be strictly avoided by Gamescorp plc in the recruitment process because the Chinese law strongly disfavors such kind of discrimination. In the recruitment and selection process for local staffs of China, Gamescorp plc must abide by the legal employment requirements of the Republic of China. The recruitment and selection process will be influenced by the Chinese culture and thus the organization will have to modify some of its policies it adopted in the home country, United Kingdom.
Gamescorp plc is a foreign company and does not have sufficient technical know-how about the Chinese HRM policies; it can take help of a recruitment agency supervised by a government labor department to recruit local staffs of China. The recruitment agency can search its database for suitable candidate for the required position of Gamescorp plc. Once, the agency can find a candidate with the desired skills, knowledge, abilities, competency and experience to fill the gap of the vacant position of Gamescorp plc. , it can arrange an interview of the candidate with Gamescorp plc. If the candidate clears the interview and is selected by Gamescorp plc, then the organization must contact the recruitment agency to sign the contract of employment on behalf of the candidate because in this case the candidate will be considered an employee of the agency.
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