Describe about the HR Challenges in China for Chinese Companies.
Foreign direct investment has bought huge investments of the western countries into the Chinese companies through global strategically expansion this has likely to caused a huge amount of growth in the current years. Western countries are taking a lot of interest in the Asian countries due to ample amount of opportunities and resources available here. Western countries are approaching China to explore the available opportunities. One of the major concerns I related to management of human resources. It is difficult for the western managers to meet the conventional practices of Chinese Companies. Training and development is one of the challenging factors that are affecting the process of conducting business (Need, 2006).
Western managers are facing difficulty in adopting the culture and business practices because they are based on the age old norms. It is essential in China to have a good understanding of the local culture, tradition and values to get a fruitful return on investment. The culture in China is very intense and least adaptive. They follow rigid business practices that make it difficult for the western managers to address the rapidly changing needs of the modern economy. In late 1950 China has adopted Iron Rice Policy to manage the personnel that indicate guaranteed job security, income and various other benefits (Nie, 2015). China practice age old human resource management practices that is causing problem in achieving a sustainable growth. Human resource management in China is cultural sensitive. There are four main features of Chinese culture to recognize in order to run an effective business. It is essential to Respect for age and hierarchy that has created a centralized decision making process; secondly, expression and agreement are considered to be one of the significant characteristic of social life in china; thirdly people in China like to be represented on the basis of a group. This creates a sense of responsibility among them; lastly Personal relationships are given importance as mentioned above. Chinese people consider favor in return of friendships (Goh and Sullivan, 2011).
HR is the Biggest Challenge for overseas Companies to do business in China. There are number of factors that are posing distress on the economy but human resource management ranks number one for the foreign companies to do business in China. As per the study conducted by the German Chamber of Commerce in China human resource management will continue to be the serious issue for foreign enterprises (Hedley, 2012).
Talent management
HR profession is still developing like in most of the developing countries. Human Resource profession in China was earlier restricted to administrative practices, recruiting and removal from office and paying taxes. In Employee Handbook in China the effective practices related to human resource are mentioned. In the recent addition Talent management, organizational expansion, instruction, corporate strategies were introduced as brand new concepts. This has caused hiring good staff a biggest challenge for the foreign companies. In China it is difficult to employ good first-tier HR managers (The Great Look Forward: China’s HR Evolution, 2007).
The foreign companies are facing very tough business regulations due to strict legal policies. China has strict legal policies that have created difficulties to recruit staff. Foreign are not permissible to employ directly as they require to go through specifically chosen HR management groups. The labor contract needs to be in Chinese that has created difficulty on the foreign organizations. The law allows only two fixed-term contracts. Foreign companies are forced to follow the high standards whereas the local companies are exempted from following the legal norms. It Very often required taking permission from the government bodies to carry out the permission. Corruption is affecting the whole system and it has rampant the strong regulations (HR Challenges in China, 2016).
Chinese labor law specifies that employers cannot stop employee’s from form creating unions to defend their privileges. Chinese employees will take undue advantage of this particular clause that may create problem for the foreign company to carry out smooth function. The report has established that 80 percent of the foreign firms were unionized in China by 2008.
It is very difficult for the foreign companies to understand the business culture and etiquette which are the key to a successful in China. China has made tremendous growth towards market economy and there are still some people who believe in the age old theory of “iron rice bowl”. Chinese considers face to be one of the most essential features in forming business relations. It is necessary for Chinese people to establish good personal relationship with each other. Personal contacts are carried as a medium to communicate ideas that is the probable reason of distress while managing a large work force. Asian countries are using age old techniques of human resource management and it is even more difficult for any foreign organization to deter those age old practices. Human resource practices are more affected by the personal relationships. It is highly recommendable in China to conduct a thorough study before making personnel choice. At times there is employee who tries to deflect foreign companies to take an improper foreign decision (Challenges for human resource management and global business strategy, 2014).
Chinese gives more preference to the personal relationship. They give more preference to the family, friends and the nation. Loyalty towards the company resides at the last. In such a scenario it has become evident to seek favor from the employees. Personal and vertical relationships are given more importance in Chinese culture. Hence, in China relationship with manager is given more importance than loyalty to the company. Sometimes if the key person leave the organization than whole workforce follows him (Wang, Bruning and Peng, 2007).
Innovation and motivation are two essential elements of a successful business. It is recommended to incorporate the two features in the whole system in order to achieve the goals. Chinese student perform well in the standardized tests but there education system restricts them to perform well by discouraging innovation and creativity.
Assertiveness and accountability is one of the major problem faced by the foreign managers in China. These two are the most common behavioral differences faced by the managers in China. It has created a lot of differences within cross-cultural teams (Weldon and Vanhonacker, 1999).
Recruitment
The major function of a qualified HR is to recruit an efficient staff. They are facing majority of issues while choosing a right person for their organization. It is very much essential to understand the brand for which the organization is being working. This forms an important part of the prestige of the Chinese employees. Small industries are at a disadvantageous position as the employees don’t feel a sense of accomplishment while joining such an organization (Ahlstrom, Foley, Young and Chan, 2005).
It is very difficult practice in China to attain references from the previous employer. References in China are unreliable as they are subject to personal bias. There are high rate of discrepancies in resume by the employees in order to seek recruitment. Background checks are mandatory for the directors, supervisors and the other upper class employees.
There is a lack of availability of talent in China which has caused imbalance in business opportunity. There is shortage of experience in the field of sales, marketing, technology, HR etc. It is one of the major threats faced by foreign companies in China. Companies are finding difficulty in finding the right candidate due to shortage of qualified employees in the country (China Report: Studies in Operations and Strategy, 2016).
Strategies to overcome HR challenges
Challenges in recruitment process
The shortage of employees has caused increase in the rate of labor cost. There has been a hike in the wage rate approximately by 12% that has created a problem for the foreign companies to carry business in China. The country is constantly facing shortage in the skilled human resource that has adversely affected the productivity (Chmielecki, 2012.
Western employers delegates responsibilities upon the Chinese people in order to create a flexible lines of authority. Chinese workers follow a hierarchical structure whereas western managers are accustomed to employees who take their own decision. It is suggested to the employer to use efficient techniques in order to motivate the best out of them. To achieve a desired set of result, it is recommended to divide people in a small group of team with a leader to look upon their performance. This hierarchical structure will help them to clearly keep a check over employee’s performance (Schmidt, Mansson and Dolles, 2013).
Moreover it is recommended to introduce a motivating technique through different salary benefits by judging through special criteria. This will help in increasing the overall productivity of the employee and they will work in an efficient manner. This principle of linking benefit with the performance will help them to achieve their target through regular motivation of the employees.
Chinese believes in establishing good public image within their network. Their culture gives more importance to the personal relationship. It is the duty of the company to adopt the business culture of China in order to achieve a steady growth. The manager should meet individual employee on a regular basis this will help them to gain confidence over each employee (Zhang and Agarwal, 2009).
It is recommended to hire an efficient HR manager in order to get an efficient employee. So it is suggested to hire an efficient local HR manager who has knowledge about the procurement of Human Resource. The company should hire an employee on probation in order to check whether the employee’s appointed are beneficial for the organization or not. This process can be undertaken most of the time while conducting business in China. However it is good to make a wise decision in order to save time from future headaches (Zhu, 2004).
Language is one of the major hurdles faced by the foreign companies to procure an efficient staff. People in China are well-versed with Chinese whereas it is difficult for the foreign employer to manage language issues. It is however recommended to the foreign manager to learn Chinese in order to have a better understanding. There language acts as a hurdle while dealing with the local employees. Skilled employee is again a problem faced by the foreign employers while engaging efficient workers in the organization. It is seen in the organizations that Chinese are more efficient in speaking there local language. It is therefore suggested that companies need to enforce an effective mechanism (Schuler, Jackson and Tarique, 2011).
Conclusion
Effective Human resource practices are necessary for the future growth of the organization. International companies are facing major challenges in recruiting an efficient workforce in China due to difference in culture in China. The foreign companies are facing challenges in the form of recruitment, hiring, talent management due to existence of age old practice in China. It is recommended to the foreign manger to firstly understand the local culture in order to hire efficient workfare. Understanding of cultural difference is necessary in order to achieve growth in China. There is a necessity to keep a focus on the issues like recruitment, talent management, productivity and retention. These are the essential part of the human resource management. Foreign companies need to adopt a comprehensive benefit process in order to provide benefit to the local people to provide them with a sense of accomplishment.
References
Ahlstrom, D., Foley, S., Young, M.N. and Chan, E.S., 2005. Human resource strategies in post?WTO China. Thunderbird international business review, 47(3), pp.263-285.
Challenges for human resource management and global business strategy.2014. Online. Available at: https://futurehrtrends.eiu.com/report-2014/challenges-human-resource-management/ Accessed on: 29 November 2016
China Report: Studies in Operations and Strategy. 2016. Online. Available at: https://d1c25a6gwz7q5e.cloudfront.net/papers/download/BCG_SpecialReport2.pdf Accessed on: 29 November 2016
Chmielecki, M., 2012. HR challenges in China. of Intercultural, 4(3), pp.49-55.
Goh,A. and Sullivan,M.2011. How To Address The Major HR Problems Plaguing China. Online. Available at: https://www.businessinsider.com/how-to-address-the-major-hr-problems-plaguing-china-2011-2?IR=T Accessed on: 29 November 2016
Hedley,M.2012. HR Challenges in China. Online. Available at: https://asia-research.net/2012/07/hr-challenges-in-china/ Accessed on: 29 November 2016
HR Challenges in China. 2016. Online. Available at: https://www.eusmecentre.org.cn/elearning/downloads/HR_Challenges_in_China.pdf Accessed on: 29 November 2016
Need, W.C.D.H.P., 2006. Human resource management: Gaining a competitive advantage.
Nie, W.2015. HR Challenges: Why One-Size-Fits-All Doesn’t Work In China. Online. Available at: https://www.forbes.com/sites/winternie/2015/06/01/hr-challenges-why-one-size-fits-all-doesnt-work-in-china/#3a1d5ab36e08 Accessed on: 29 November 2016
Schmidt, C., Mansson, S. and Dolles, H., 2013. Managing talents for global leadership positions in MNCs: Responding to the challenges in China. Asian Business & Management, 12(4), pp.477-496.
Schuler, R.S., Jackson, S.E. and Tarique, I., 2011. Global talent management and global talent challenges: Strategic opportunities for IHRM. Journal of World Business, 46(4), pp.506-516.
The Great Look Forward: China’s HR Evolution.2007. Online. Available at: https://www.chinabusinessreview.com/the-great-look-forward-chinas-hr-evolution/ Accessed on: 29 November 2016
Wang, X., Bruning, N.S. and Peng, S., 2007. Western high-performance HR practices in China: A comparison among public-owned, private and foreign-invested enterprises. The International Journal of Human Resource Management, 18(4), pp.684-701.
Weldon, E. and Vanhonacker, W., 1999. Operating a foreign-invested enterprise in China: Challenges for managers and management researchers. Journal of World Business, 34(1), pp.94-107.
Zhang, H. and Agarwal, N.C., 2009. The mediating roles of organizational justice on the relationships between HR practices and workplace outcomes: an investigation in China. The International Journal of Human Resource Management, 20(3), pp.676-693.
Zhu, C.J., 2004. Human resource management in China: Past, current and future HR practices in the industrial sector. Routledge.
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