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Overseas Job Opportunities for Hrm Graduates document sample
Document Sample
Managing people – Foreign MNCs in China and
Chinese MNCs abroad
Overview of the session
Part I:
Key features of and changes in employment relations (ER) in China
Part II:
Characteristics of ER in western MNCs in China
Part III:
Motives of Chinese firms investing abroad
Major challenges to ER of Chinese MNCs in different parts of the
world
Case study of a leading Chinese IT MNC – Huawei Technologies Ltd
Questions and discussions
Fang Lee Cooke, MBS, UK 1
ANBS Fellow, Australia
Part I: Key features of and changes in ER in China
Key elements influencing employment relations
Industrial sector (e.g. manufacturing v. service)
Ownership forms (e.g. state-owned, private, foreign-funded)
Labour market characteristics (e.g. bargaining power of the
workers)
Employment legislation (level of provision and effectiveness)
Strength and role of the trade unions (e.g. level and nature of
representation)
Product market competition and level of globalisation (pressure on
employers)
Fang Lee Cooke, MBS, UK 2
ANBS Fellow, Australia
Traditional employment relations in the state sector in
China
A dominant sector (80% of all urban employment in 1970s to less
than 24% in 2005)
State-sponsored miniature society with extensive welfare and job-
for-life
Centralisation, formalisation and standardisation of personnel
policies and practices (e.g. job allocation, wage determination)
Personnel department at organisational level only play
administrative role
Employees had no real voice in the business but could expect to
be relatively well looked after as ‘the master of the country’
Fang Lee Cooke, MBS, UK 3
ANBS Fellow, Australia
Changes in HR policies in the state-sector in the
1990s
The need to revitalise the state sector and improve productivity
and service quality
‘Three Systems’ reform in SOEs:
Fixed-term employment contract – the end of job-for-life
Performance-related pay (wage linked to position, compete for
the post)
New welfare schemes in tripartite system between employer,
employee and the insurance company
Withdrawal of other welfare benefits, e.g. housing
Mass scale laid-offs since mid 1990s (27 millions from SOEs)
Privatisation of small SOEs
Fang Lee Cooke, MBS, UK 4
ANBS Fellow, Australia
Table 1. Employment growth in the private and other forms of
ownership between 1990-1999
Year National State-owned Collective Foreign- Self- Private- Private-
growth growth (%) ly-owned owned employed owned owned
growth growth (%) growth (%) growth
(%) (%)
1990 155,100 2.35 1.34 40.43 8.45 1,700,000 3.66
1991 13,900 3.07 2.23 150.00 9.64 1,840,000 8.24
1992 11,700 2.11 -0.19 33.94 6.93 2,320,000 26.09
1993 12,500 0.28 -6.30 30.32 19.12 3,730,000 60.78
1994 12,400 2.69 -3.18 40.97 28.44 6,480,000 73.73
1995 11,100 0.42 -4.20 26.35 22.19 9,560,000 47.53
1996 13,300 -0.15 -4.16 5.26 8.73 11,710,000 22.49
1997 10,900 -1.78 -4.41 7.59 8.45 13,500,000 15.29
1998 5,100 -17.98 -31.91 1.03 12.37 17,100,000 26.67
1999 9,000 -5.37 -12.79 4.26 2.08 20,220,000 18.25
Average 11,100 -2.06 -7.78 28.07 12.84 31.67
growth
Sources: China Statistics Yearbook, 2000; Forty Years of China Industry and
Commerce Administration Management, 2000.
Fang Lee Cooke, MBS, UK 5
6
ANBS Fellow, Australia
Employment relations in the new forms of ownership
Privately-owned companies and self-employed businesses
Once marginal and marginalised sector at odds with socialist
ideologies
Growth since the 1980s an outcome of shift from state-controlled
planned economy towards a free market economy
The need to revitalise the economy and create employment
opportunities
More flexible, smaller in scale, less employment protection,
worse employment terms and conditions (e.g. longer working
hours, lower level of pay, labour rights), higher labour turnover
rate
Fang Lee Cooke, MBS, UK 6
ANBS Fellow, Australia
Employment relations in the new forms of
ownership (cont…)
Foreign-funded businesses, Sino-foreign joint ventures
An outcome of the ‘Open Door’ policy since late 1970s
China as the second largest FDI recipient country
Only allowed partial freedom in the 1980s, but now full
operating rights within regulations
Blue chip MNCs as well as sweatshops
HRM practices differ from domestic Chinese firms
Fang Lee Cooke, MBS, UK 7
ANBS Fellow, Australia
Employee representation (1)
The role of the trade unions
Only one union recognised – All-China Federation of Trade
Unions (no ‘trade’ characteristics)
Welfare role and training role under the leadership of the
Communist Party
Unionisation level high in the state sector but low in private
sector
Union presence has little impact on wage level
Fang Lee Cooke, MBS, UK 8
ANBS Fellow, Australia
Employee representation (1) (cont…)
The role of the trade unions
Trade unions more organised and competent in certain
sector (e.g. large SOEs)
Misguided perceptions of managers and TU reps about their
role
Union reps lack of collective bargaining or negotiation skills
and other resources
Low opinion of workers on the effectiveness of the TU
Trade Union Law (1950, 2001)
Fang Lee Cooke, MBS, UK 9
ANBS Fellow, Australia
Employee representation (2)
Workers’ Congress
Made up of workers’ representatives to supplement the TU
Little effect of Workers’ Congress – annual meetings not
regularly held
Many companies do not have the forum in place
Fang Lee Cooke, MBS, UK 10
ANBS Fellow, Australia
Table 2. Union membership level in organisations where unions were
established
No. of No. of No. of No. of No. of full-
grassroots employees Female Membership female time union
Membership
Year unions (1,000 employees (1,000 members officials
density (%)
(1,000 units) persons) (1,000 persons) (1,000 (1,000
persons) persons) persons)
1952 207 13,932 -- 10,023 -- 71.9 53
1962 165 26,671 -- 19,220 -- 72.1 86
1979 329 68,972 21,717 51,473 -- 74.6 179
1980 376 74,482 25,186 61,165 -- 82.1 243
1985 465 96,430 35,967 85,258 31,492 88.4 381
1990 606 111,569 42,910 101,356 38,977 90.8 556
1995 593 113,214 45,153 103,996 41,165 91.9 468
2000 859 114,721 45,345 103,615 39,173 90.3 482
2001 1,538 129,970 50,879 121,523 46,966 93.5 --
2002 1,713 144,615 51,576 133,978 46,652 92.6 472
2003 906 133,016 50,793 123,405 46,012 92.8 465
2004 1,020 144,367 55,026 136,949 51,353 94.9 456
Source: adapted from the China Statistics Yearbook 2005, p.777.
Fang Lee Cooke, MBS, UK 11
ANBS Fellow, Australia
Employment legislation in China
Framework:
The Labour Law of China (1995)
The Trade Union Law (amended 2001)
Equal opportunity regulations
Minimum wage regulations (1993)
Other regulations specific to sector (e.g. The Civil Servants
Law), ownership (e.g. MNCs and JVs), or HR function (e.g.
training and recruitment)
Labour Contract Law (2008)
Fang Lee Cooke, MBS, UK 12
ANBS Fellow, Australia
Employment legislation in China (cont…)
Effectiveness?
Loopholes in the regulations themselves (e.g. age differences
in retirement, minimum wage)
Low level of awareness of regulations from employers and
workers
Tolerance from workers of employers’ unlawful behaviour for
fear of job losses
Unsympathetic attitude of labour officials towards (rural
migrant) workers
Dilemma of/conflict between law enforcement and
employment pressure for the state
Fang Lee Cooke, MBS, UK 13
ANBS Fellow, Australia
Part II. Characteristics of ER in western MNCs in
China
Employers of choice for young graduates
Sophisticated selection and assessment process for
recruitment
More extensive training and career development opportunities,
including overseas training and assignments
More focus on performance management for pay as well as
development purposes
Higher level of pay for regulations and competition reasons
Fang Lee Cooke, MBS, UK 14
ANBS Fellow, Australia
Part II. Characteristics of ER in western MNCs in
China (cont…)
Pay more closely related to performance level instead of
seniority
Higher level of adoption of western oriented HRM practices,
e.g. org. culture mgnt, quality mgnt, EI to enhance
performance, talent mgnt, work-life balance initiatives
Proactive in CSR but pragmatic approach to trade unionism
Key HR challenges: – retention
– motivation
– management competence
Fang Lee Cooke, MBS, UK 15
ANBS Fellow, Australia
For years, MNC like Wal-Mart have resisted the call for
union recognition
Fang Lee Cooke, MBS, UK 16
ANBS Fellow, Australia
Part III. Chinese firms investing abroad
Four major motives for FDI (Dunning and Narula, 2004):
Marketing-seeking
Resource-seeking
Asset-seeking
Efficiency-seeking
Exactly where firms can fulfil these motives are often location-
specific
Firms engage in FDI not only to transfer their resources to a host
country (asset exploitation), but also to learn, or gain access to,
the necessary strategic assets available in the host country (asset
seeking).
J. Dunning and R. Narula, Multinationals and Industrial Competitiveness: A New Agenda, (Cheltenham: Edward
Elgar, 2004)
Fang Lee Cooke, MBS, UK 17
ANBS Fellow, Australia
Motives of Chinese firms investing abroad
Pull strategies by foreign governments – tax incentives and
other favourite conditions
Push strategy by the Chinese government – ‘Go global’, tax
incentives, subsidies, national bank loans with preferential terms
Energy resource seeking – oil, gas, mining
Financial factors – bankrupting firms sold at cheap price, access
to international fund (with low interest), to avoid trade quotas,
money laundering
Knowledge and know-how seeking – to acquire technology and
management know-how through M&As and JVs in R&D centres
Fang Lee Cooke, MBS, UK 18
ANBS Fellow, Australia
Motives of Chinese firms investing abroad (cont…)
Brand name product building – to form strategic alliance (often
through acquisitions) with well-known western firms to overcome
poor image of Chinese products
Market access – to gain access to well-connected distribution
networks (often through partnership with reputable firms in the
West)
Aspiration to be international players, e.g. SAIC, Haier
Increased competition or reduced demands at home – need to
seek overseas market (e.g. bicycles, cars, household electronic
goods)
Expansion and support of export – setting up branch offices and
services centres, establishing a presence in the market
Foreign exchange reserves – if the company makes a profit
Fang Lee Cooke, MBS, UK 19
ANBS Fellow, Australia
Case study of a leading Chinese IT MNC – Huawei
Technologies Ltd
Established in 1988 as an IT product trading firm in Shenzhen
Internationalization drive since 2001, now serving ¾ of the top 50 IT
operators in the world
HW has rep offices in over 100 countries and over 1 billion users
Now employing over 60,000 employees, 48% of whom working in
R&D
Business strategy: innovation, high quality, low cost, and excellent
customer service
Globalization strategy: less developed countries first, then
developed countries; occupy market first (loss-making) then make
profit through maintenance and upgrades
Motives of overseas expansion: marketing and asset seeking, etc
Fang Lee Cooke, MBS, UK 20
ANBS Fellow, Australia
Huawei Headquarters 总部风光
Fang Lee Cooke, MBS, UK 21
ANBS Fellow, Australia
Huawei R&D Centre
Fang Lee Cooke, MBS, UK 22
ANBS Fellow, Australia
Huawei HQ Staff Condominium 员工公寓百草园
Fang Lee Cooke, MBS, UK 23
ANBS Fellow, Australia
HW’s global HR strategy and challenges in ER
HR strategy:
Deployment of Chinese expatriate to set up operations first
Localization to overcome language and cultural problems, also
to show commitment to local economy and observation to local
labour law
Fang Lee Cooke, MBS, UK 24
ANBS Fellow, Australia
HW’s global HR strategy and challenges in ER (cont…)
HR challenges:
Retention due to lower pay than western MNCs
Low competence of employees in poor countries (low PC literacy
and project management skills)
Cultural differences in work values
Cross-cultural issues between Chinese expat & local employees
Lack of identification of local employees with HW’s corporate
culture or HW as their employer
Fang Lee Cooke, MBS, UK 25
ANBS Fellow, Australia
HW’s global HR strategy and challenges in ER (cont…)
HR responses:
Promote local employees to ranks which they will not get in
western MNCs
Introducing local practices to suit local employees (e.g. bank
loan guarantee letters)
Cross-cultural team building through social events
Sending key local employees to HW’s HQ for training and
development
Deployment of locals as deputy managers to look after
personnel issues
Learning by doing in developing HR practices to suit local
needs, e.g. borrow western MNCs’ good HR practices
Deployment of emotional intelligence in understanding local
employees needs and provide support
Fang Lee Cooke, MBS, UK 26
ANBS Fellow, Australia
Questions????? ????
………. and answers !!!!!!!
Fang Lee Cooke, MBS, UK 27
ANBS Fellow, Australia
