There are thousands of managers in China, but most of the Chinese believe that there are not enough qualified managers in China’s business community. For once, a high ranking PRC government official complained in his government report: “Many enterprises are poorly run, mainly because of faulty leadership” (Li Peng, 1998).
On the other hand, the Chinese business world is very different from that of the western business world. Chinese has some values and practices that are being practiced by the Chinese’s even along business lines and negotiations (Mille, 2004). It’s been expected that cultural difference in business negotiations will increase in complexity due to the growing interrelationships and business dealings among nations (Czaplewski, 2002). Because of the introduction of globalization, more nations interact with one another in the areas of commerce and industry. These interactions can direct to further evaluation and possible conflicts of cultural issues brought about by differences of values and belief systems among different societies. This current investigation seeks for resolution of cross cultural issues in international human resource management in a big Chinese society. With this differences, there will be various strategies implemented, thus somehow affecting directly the human resources in an organization. For those western businesses that are seeking to put up an Asian base of operations, strategies to be applied in their organization might differ. It doesn’t mean that a successful western business organization in the U.S. might become a successful business organization in Asia. There must be a different approach and strategic positioning in order to create a successful venture in another place.
Hong Kong on the other hand, has been one of the most attractive location because of its proximity to China that certainly provides various resources, and it’s location in the heart of Asia actually makes it a Golden Gate to almost any Asian Country. The reason for this are relatively low taxes, an economic growth rate of 6 percent annually and an easy access by air to most of the major Asian cities. Hong Kong has then become the chief business midpoint. There are approximately 500 banks that operates coming from 43 countries, and has rank itself at the eight places in the world stock market. However, the Asian economic crisis affected Hong Kong’s economy in 1998 (Pacific Bridge, Inc., 2004). In July 1, 1997, Hong Kong revert sovereignty to Chinese after more than one hundred-fifty years under the British rule. The status of a Special Administrative Region (SAR) was granted. Basically, China will have two functions in two contrasting economic and social systems: “semi-communism in most of the country and capitalism in Hong Kong” (Pacific Bridge, Inc., 2004).
Because of this, their will be changes on their employee hiring practices for most of the international companies that operates in Hong Kong. Practically, companies can hire individuals educated and trained locally, locals educated and trained abroad who want to return home, and expatriates. In these cases, skilled labor is very important. The human resource department would have to find ways on how to enhance the quality of the personnel development. Hong Kong in particular, has had a shortage of professional workers as more foreign businesses are being established in Hong Kong. This was due to the uncertainness of the transfer of sovereignty. The Hong Kong Government’s then agree to a labor importation in 1991, thus allowing the employers to hire foreign workers on two-year contracts that can be renewed twice. Basically, the program covers laborers at all skill levels.
Furthermore, the strategies used by most of the companies are to hire local residents. The advantage would be that they already know the language and culture, and most often has connections to the local government and institutions. Hiring local employees cost less. Most often, they are paid lower as compared to the returnees or expatriates and importantly, there are no relocation costs. The disadvantage on the other hand is that locals may not be familiar with western business practices, thus making them incapable to communicate clearly and fluently in English, therefore requiring extensive training.
Pacific Bridge suggested some ways on how to hire local Hong Kong residents:
1.) Advertising in local newspapers. This method may be moderately inexpensive, but is bereft with problems. Ads must be translated correctly into Cantonese or Mandarin so that readers will be able to understand them. In addition, it may be a month or more before an ad is published in some papers because of a large backlog of advertising. On the other hand, newspaper advertising is likely to bring many applications from unqualified candidates; sorting through their applications can be time consuming.
Once a company identifies potential candidates, confirming their qualifications and checking references can be difficult because records often are incomplete and language barriers hinder communication.
2.) Job fairs. Similar problems arise when using job fairs to recruit local candidates. Additionally, job fairs tend to draw job seekers with a wide range of skills, often unrelated to what companies want.
3.) Universities. Several universities have established internal employment centers to help their graduating students find jobs and help employers as well. Verifying applicants' educational backgrounds and checking references are easier through a university. But, while universities are a good source of entry-level personnel, they do not help fill companies' needs for professionals experienced in management, finance, marketing and human resources.
CHINESE CORPORATION LAW
“Traditional Chinese corporation law told a highly idealized story.” (Ruskola, 2000, p. 1)
It is the logic of kinship and family that makes others stand high in the family and the clan, and in the state. Even progressive contemporary Western thinkers submit that the “constraints of kinship, though they are often burdensome and close, are not for that reason unjust” (Walzer, 1983, p. 239). In the past and even until now, the family functions as an exceptionally powerful metaphor for establishing social hierarchy and the unequal distribution of material goods (Ruskola, 2000).
THE STORY OF REPUBLICAN CORPORATION LAW
[China's] isolation having come to a violent end by the medium of England,
dissolution must follow as surely as that of any mummy carefully preserved in a hermetically sealed coffin, whenever it is brought into contact with the open air. (By: Karl Mar)
However, the new company law existing today is the latest chapter of the ongoing saga of foreign corporation law in China. The Company Law of 1904 was one of the first parts of legislations produced by the newly established Law Codification Commission, whose task therefore is to bring China to legal modernity. To be certain, corporations had existed preceding to the ratification of this legislation. In the coastal Treaty Ports which had been opened for Western trade after the Opium War, foreign investors established several corporations, that includes the Hong Kong and Shanghai Banking Corporation, the American-run Shanghai Steam Navigation Company, and the British shipping company Jardine, Matheson & Co.. However, the Company Law of 1904 was a modern governmental transplant with comparatively complete corporate governance provisions for the new creature called a joint-stock company (Ruskola, 2000).
On the other hand, in 1929 almost immediately after the materialization of the Nationalist government, China was given its third corporation statute in the span of fifteen years. The new Company Law was rather shorter than the 1914 Regulations, other than in keeping with the Nationalist government's longing to apply strong control on all aspects of social, political, and economic organization, it required to standardize private capital more tightly. The Company Law of 1929 defined them as "legal persons" formed "with a view to profit". Unsurprisingly the Law caused no uprising and Chinese industry operates continuously without legal status regardless of foreign observers' warnings that the "defects" of the Company Law would inflict "severe handicaps" on the country's business operations. In fact, the most significant new growth was the "nationalization" of the corporate form. Thus, it became the principal organizational form for the Nationalist regime's state enterprises (Ruskola, 2000).
CHINA AND THE WORLD TRADE ORGANIZATION (WTO)
Prof. Xiao Lian (2004) stated that China and WTO entry is a going-on process but not in practice and that big debate surrounded by within China as well as outside of China in terms of economic and non-economic issuers. Here are the following issues he cited:
A.) WTO as a Multinational Economic Organization being dominated and benefited by the US.
The World Trade Organization (WTO) is basically dominated by the US and other western industrial countries. The rules and standards applied by the organization are prejudiced against developing countries and the poor in which regardless of their majority in number have little to say. By imposing the U.S. American concepts e.g. intellectual property rights, legal systems, and accounting regulations there will be loss in diversity which for a fact is the source of life for the future survival of the global community.
However, Mr. Kike Moore, Director General of the World Trade Organization has suggested that the allegation that industrialize countries dominate the WTO is not the case. It is said that WTO members comprises two-thirds of the developing countries and decisions are made on the basis of consensus in the WTO. For this they have the greater amount of influence.
B.) Why China Wants to Obtain Entry into the WTO?
There are some reasons why China wants to obtain entry into the WTO stated as follows:
b.1.) The Political Need
China, upon joining the WTO has become the world's largest developing country and will therefore have an influential vote, and an effective veto, in any future efforts that WTO wants to achieve in reforming the ground rules of global markets beneficial to developing countries.
b.2.) The Economic Need
Almost half of General Domestic Products (GDP) in China is achieved through out the global markets. In fact in 1998, the values of international trade by all of members of the WTO are US$ 6.5 trillion with 20% taking of GDP of the global markets.
b.3.) The Legislation Need
As a developing country, China therefore needs to introduce the advance legal system regarding international trade, international accounting, IP protection, learning for protection by using international legislation, in order to reduce the economic gap between the western countries and China itself.
C. The U.S. Agreement with China's Entry into the WTO
The China's WTO entry will allow the US firms to have direct access to China’s high-quality and value-priced goods, as well as direct access to the largely unexploited Chinese marketplace. China's WTO entry is a challenge, not a reward.
D. The Impact of China's WTO Entry to the Chinese Economy and Society
a. Opportunity rather than a guarantee
1. To urge China to open doors more widely as compared before.
In agreement with the recent study being published by Goldman Saches, it is estimated that China's total trade (import plus exports) would double up to $600 billion by 2005 from $324 in 1998, if China were to agree to the WTO. By 2005 China's accession to the WTO would boost China's total annual imports by $105 to 115 billion, with $65 billion coming from the lowering of tariffs, $20 to$30 billion from the removal of non-tariff barriers, and a final $20 billion from the expansion of foreign direct investment (FDI) in China. The share of international trade in the total GDP in PRC will be promoting from 33% (import takes 14%, export takes 19%) at present to 36% (import has 26.9%, export has 25.8%) by 2005. The increasing of GDP driven by expanding of import will be promoting to 14.3% from 11.9%, and the increasing of GDP driven by expanding of export will be reaching to 12.2% from 10.1% at the some period of time.
2. Accelerate the economic growth rate in PRC.
According to the statistic figures wrote by Development Research Center under the State Council of PRC (please see table 1), by 2005, the growth rate of real GDP in PRC will be reached 1.53%; the consumption will be expanded 0.58%; the investment will be increased 1.57%.
3. Improve the adjustment related industrial and economic structures.
The industrial and economic structures in China will be focused on the roles of intellectual knowledge and educated specialists. This is because of the expanding international trade.
4. Stimulate enterprises to enhance their ability to take part in global competition.
It is very difficult for Chinese enterprises (especially for state own enterprises) to join the international competition under the agreement with standards of WTO led by the western countries.
5. Reform China's legal regulation system in accordance with the WTO standard
There more than ten thousands of regulations, rules of law that will be reformed and changed according the rule of law of the WTO or else, China could be rebuke by the disagreement system of the WTO, if there are some conflicts between China and other members of the WTO.
b. Challenge
The WTO gives emphasis to privatization, liberalization, and deregulation, which seems to be opposite from the current system emphasized on centralization and communism. China's membership of WTO has not only been a source of concern within the political bureaucracy, but also animated conflicts over national economic policy, the ongoing debate over which economic development strategy will be most successful for China and the role of the member of WTO plays in these strategies. These debates were based on about the ten unresolved questions: (1) Are the concepts of -national economy" and -national industry" still applicable today? (2) Who takes advantage of whom? (3) Does the strategy of "trading market access for technology" work? (4) Are multinational corporations (MNCs) benevolent towards the investors? (5) Is China a capital and a technology scarce country? (6) Is there too much FDI for the Chinese economy to absorb? (7) Does FDI encourage state ownership enterprises (SOE) reform? (8) Should China open markets to domestic investors first, before opening them to the foreign ones? (9) Should China allow foreigners to hold majority shares of FIEs? (10) And does China need a concept of "industrial security"? The government should retain the current standards of industrial security that prevent FDI from dominating strategic industries. According to Clinton (2000), open markets will also accelerate the information revolution in China. In the past year, the number of Internet addresses in China has more than quadrupled to nine million. This year, the number is expected to grow to more than 20 million. China's restrict access to some Web sites only proves how these changes threaten the status quo.
E. The Impact of China's WTO Entry to Asia
China’s WTO entry, as the biggest developing country in the world, will play a vital role in the global multinational trade system, in which China could stand for the interests of the greater part of the developing countries in Asia to set up the new regulation benefited for this region. Countries located in the North America and in Europe (the majority of countries) benefits from the indicated trade organization above. Though, it is very difficult for other counties in the other part of the world to move into the trade block or to be benefit from these regional economic and trade organization. However, China's WTO entry will be bringing out peace and security for Asian countries. As much as possible, China will try to keep the commercial environment established.
lll Research Method (Quantity Method)
In order to determine the effects of the strategies being applied to organization in its human resource function the quantitative research method will be employed. Structured survey questionnaire will be used in this investigation. The questionnaire will contain a set of attitude statements. The purpose of the set of attitude statements is to determine the level of agreement or disagreement using a five-point Likert Scale. In the Likert technique, the degree of agreement or disagreement is given an equivalent numerical value ranging from one to five, thus a total numerical value can be calculated from all the responses. The equivalent weights for the answers will be:
Range Interpretation
4.5 – 5.0 Highest
3.5 – 4.0 Higher
2.5 – 3.49 Middle
1.5 – 2.49 Lower
0.0 – 1.49 Lowest
Three questionnaires will be created by the researcher. The first questionnaire will be a five point scale that will empirically assess the respondents’ level of racial discrimination. The second will again be a five point scale measuring attitudes towards out groups of different races or cultural backgrounds. Finally, the third scale will measure how willing the respondents are to get acquainted and work with co employees who are of different races in a single team.
Aside from the questionnaire a cultural training program will be prepared. This training is aimed to provide cultural appreciation and ensure understanding of the differences of cultures and provide adequate information and knowledge of the various culture types they are most likely to encounter in the organization.
In first phase, similar research works will be gathered. Using published literature as mediums is a more reliable way of acquiring established information. However, there are instances that these published literatures are biased. To ensure that the acquired information from these published literatures, evaluation is done. Criteria’s will be indicated for the selection of the research work.
The next phase would be to acquire data through surveys and questionnaires. One hundred newly hired employees in an international company will be recruited to take part in the study. There will be an equal number of males and females to serve as respondents. Half of the respondents will come from the same cultural background while the other half will come from a different cultural background. At the beginning of the training program, the respondents will be provided individually with research questionnaires assessing their level or racial discrimination, attitudes towards other races and willingness to work in with individuals of other cultural backgrounds.
In an effort to minimize confounding variables, half of the respondents of the same culture will stay in one room while the other half of another culture will be in another room. The purpose of this is to minimize the mere exposure effect, which states that the mere constant exposure of an individual belonging to an out group will decrease discrimination and bias to that person and to that out group. Therefore, to reduce familiarity, these two groups will be separated initially. After answering the questionnaire, individuals will be randomly assigned a partner each. A respondent’s pair will be assigned to the same condition as he is. But this time, one’s partner will be a person of a different cultural background. All pairs will be provided with a problem of which they will jointly solve. After the problem solving activity, all solutions will be assessed by the manager in terms of feasibility and effectivity to solve the said problem. After the said activity, the respondents will be divided into two groups. The first group will undergo a cultural study course class for one day while the second group will act as control group and will be attending a talk on an entirely irrelevant topic. Every group will also be divided into two sub groups. The first group will be allowed to interact with other colleagues of other races during the course of the training, while the other will not be allowed any form of interaction. After the one day seminars, all respondents will again answer the same questionnaires that they answered before the talks. They will again be paired randomly with someone in the same experimental condition but of a different cultural background.
lV Result (Statistic Analysis)
Data Analysis
Data will be analyzed using the 2 x 2 x 2 factorial design. The independent variables are time tests were taken (before and after treatment), type of training (cultural training, control group), and interaction with other races (with interaction, without interaction). Since there are three dependent variables, three Analyses of Variance will be made. This analysis will look this way:
V Conclusion
This study will be beneficial to organizations that constantly evaluate its strategies being applied to organizations. Furthermore, the differences to the different human resource functions will be determined in order to develop rooms for improvements in every organization. Cultural diversity has a big impact on the development of companies from all over the world. That’s why various ways and implementations differ much in order to adapt the existing culture of an organization in a certain locality. Today, the different business strategies are given importance because of the accelerating changes in the market. The whole idea of the resource that was based from the vision of the firm certainly agreed dominance to the responsibility of people who are the basically the ultimate source of distinctive and difficult capabilities. Similarly, that the competitive advantage that is to be derived from learning also places the Human Resource Management at the midpoint period.
There are several businesses that focus on corporate strategies that are now regularly covering ideas that defined in general terms, Human Resource lessons that are needed in order to search their full meaning that includes their dimensions and even difficulties. The existence of Human Resource Management is very essential to allow the organization in having a organized and competent performance. This could only be possible if the personnel have been informed of several skill priorities and other necessities that could help the organization grow and prosper.
The Human Resource Management plays a vital role in business management and evaluation of careful concentration by almost all kinds of managers within the organization not considering of their differences in functional responsibilities. The different strategies to be applied are very important in determining the different approach to be used in handling the organization. It also affects the most important human resource functions and activities.
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