Executive Summary
This report delves into the extensive differences between the U.S. and China and attempts to explain the inherent difficulties most Americans would experience in attempting to setup a new business in China. Through this report, readers will be able to develop a better understanding of the strangeness of the local business culture and the necessary practices they must follow in order to be incorporated into it.
Purpose
The purpose of this paper is to introduce you, the reader, to the business culture, customs and tradition that comes with working in China. Before proceeding, you must understand that China is a nation that is in a constant state of flux wherein tradition and business culture often intertwine resulting in a unique business environment. Furthermore, while China is currently the second largest economy in the world its population does not speak English as a fundamental aspect of its curriculum of education. It is often the case that the Chinese (usually businessmen and the elite) take up English later on in life with a large percentage of the working class having next to no rudimentary knowledge of even utilizing English. Such a factor is quite important to take into consideration given the impact this can have on operations within the off-shored branch of the company.
Within the past 2 decades, China’s economy has grown to become the second largest economy in the world as a direct result of government initiatives into encouraging foreign direct investment, local entrepreneurship and real estate development. The outsourcing industry in particular has greatly improved the Chinese economy within the past 2 decades resulting in not only the rapid development and expansion of various urban centers but the creation of an increasingly prevalent Chinese upper class.
In the case of China, the low minimum wage combined with the low cost of doing business within the country resulted in more companies outsourcing their manufacturing services to the country between the periods of 1990 to the present. This is one of the primary reasons why the company is expanding into the country since the low tax rates and far lower cost of labor make it a more attractive location for operations as compared to manufacturing the same products within the U.S. Despite the obvious cost savings that the company will obtain from outsourcing some aspects of its operations into China, the current business environment must still be examined in order to determine if there are any problems that need to be taken into consideration prior to expansion into the country.
Getting to China
Getting to China is actually rather simple, most of the major airlines within the U.S. such as UAL and American Airlines have direct flights going to Beijing, Shanghai and Guangzhou which are where most of China’s manufacturing centers are located. China’s national carrier, China Air, also has several direct trips going both to and from China thus making it rather easy to take a flight from LAX to several of China’s cities. Fortunately, U.S. citizens normally do not have any problems entering into the country wherein all you would need to do is to present your passport at the gateway. However, for those seeking extended trips or employment within China it is often necessary for a local company to sponsor your extended stay or you can apply for an extended stay visa which can be obtained at several of China’s easily located foreign affairs offices.
This can be arranged beforehand prior to your departure to avoid possible future complications. Do note though that corruption is endemic within several of the China’s government agencies resulting in the need to pay “higher than normal fees” when it comes to applying for particular visas. It is often recommended that a company first setup a local office and have Chinese employees deal with applying for extended stay visas for their foreign colleagues due to the inherent problems with corruption. Another possible route is to utilize a local travel agency to arrange an extended stay visa prior to setting foot in China.
Adjusting to the New Culture
Through the study of Sheer & Chen (2003) which examined China’s business culture, it can be seen that the local business culture within China does not address the concept of corporate social responsibility (Sheer & Chen, 50-85). It simply does not exist in the local business culture and, as a result, you get instances such as the overwhelming amount of pollution within the country as well as the lax government safety standards regarding workplace environments (Sheer & Chen, 50-85). China’s business culture is very opportunistic and focuses on getting as much profit as possible through any means possible while skirting the very edges of the law (Sheer & Chen, 50-85). While this may seem like a biased account, studies such as those by Ooi (2007) back up this claim and state that the pollution and stories of tainted Chinese products making their way into the U.S. is a result of the Chinese business culture wherein company owners skimp on proper safety standards and focus on making money instead (Ooi, 111-128).
Hiring Practices
China has been experiencing one of the greatest instances of human migration in the world with up 5 million or more people per year migrating from various rural regions towards cities and manufacturing areas. However, a large percentage of these workers are unskilled laborers who have come to the city in order to seek what they believe are better opportunities. Current hiring practices within China often involve hiring such individuals and training them in order to perform a single task. This results in training times of 1 week or less yet which helps to boost operational performance due to the high rate of worker attrition yet results in the creation of a relatively unskilled workforce that can do little beyond what they have been trained to do.
It should also be noted such workers often do not have access to advanced training programs and are left in the same position for years at a time or until they choose to leave the company. Based on the study of Kriz & Keating (2010) which examined regional wage developments within China it was noted that the average salary of an ordinary Chinese worker is roughly 2,000 to 4,000 Yuan per month, which when converted utilizing the current monetary value of the British pound is equivalent to 190 and 380 pounds respectively (Kriz & Keating, 299-318). Kriz & Keating (2010) explains that differences in minimum wage levels between countries is brought about through government policies, differences in economic capability, types of industries present in the country as well as differences in the standards of living which come in form of prices for local goods and services (Kriz & Keating, 299-318).
Based on this, while the wage can still be considered relatively low it is still considered by the Chinese government as an adequate level of monetary compensation for a bare minimum standard of living (Kriz & Keating, 299-318). Thus, when it comes to the hiring practices that can be implemented for an outsourced manufacturing division within China, it would not be necessary to implement any advanced training programs in order to attract workers to the company. For manufacturing positions, all that would be necessary would be to implement a competitive enough salary so as to retain enough workers over a given period in order to get goods made and shipped out to various international locations.
Pre-Employment Testing
The study of Ming-Jer & Miller (2010) shows that workers within an average Chinese factory are composed of a “hodgepodge” of different types of workers. They can either be those with several years worth of experience doing the same job or those who are rather new, yet all are paid at nearly the same level (Ming-Jer & Miller, 17-24). This is due to the fact that when it comes to unskilled labor there is no pre-employment testing that is needed. On the other hand, skilled labor often comes with a considerable degree of testing where employability is often determined by one’s score on a test and not necessarily how much experience one has at a particular job (Ming-Jer & Miller, 17-24).
Interviewing
Interview practices are roughly the same as compared to the U.S.; however, in the case of foreigners within China it is usually the case that language proficiency in Fukien or Mandarin is needed. This is due to the fact that few workers in China actually speak English and even fewer are proficient at it.
Job Opening Advertisements
For China’s manufacturing sector, the best way in which employers have been able to reach potential employees has been through local newspaper ads in newspapers such as the China Times or localized newspapers that cater specifically to populations within a particular region. Online advertising ironically is not as prevalent for manufacturing positions given that most people who go for manufacturing jobs do not have access to the internet. In such a case, internet advertising is mostly utilized to attract skilled talent for supervisory positions and nothing else.
Recruitment Practices
Recruitment practices in the case of China often involves placing an ad in local newspapers or going through an employment agency in order to hire semi-skilled/skilled workers.
Cultural Differences
One of the main cultural differences between China and the U.S. is the deference towards age within the workplace. It is often the case that age is viewed as having more experience in doing a particular task and, as such, older workers are often valued for their work experience (Hawes & Eng, 67-83). Another aspect of China’s culture that should be taken into consideration is the fact that many workers lack the feeling of entitlement that American workers have when it comes to job benefits. For Chinese workers, it is more important to have a job that pays well rather than complain about not having enough benefits that should come with it (Kan., 443-463).
Re-entry into the United States
Re-entry back into the U.S. should not pose a problem so long as you have your passport and did not commit any major crimes while in China.
Conclusion
Based on what has been presented in this paper, it can be seen that there are considerable challenges in attempting to penetrate the Chinese market given the differences in business cultures and hiring practices. However, despite such differences, overcoming them has the potential to create great rewards and, as such, entry into the Chinese market must be pursued in order for the company to be able to produce products at a lower cost.
Works Cited
Hawes, Colin, and Chew Eng. “The Cultural Transformation Of Large Chinese Enterprises Into Internationally Competitive Corporations: Case Studies Of Haier And Huawei.” Journal Of Chinese Economic & Business Studies 9.1 (2011): 67-83. Business Source Premier. Web.
Kan, Wei. “Walmart And Carrefour Experiences In China: Resolving The Structural Paradox.” Cross Cultural Management 18.4 (2011): 443-463. Business Source Premier. Web.
Kriz, Anton, and Byron Keating. “Business Relationships In China: Lessons About Deep Trust.” Asia Pacific Business Review 16.3 (2010): 299-318. Business Source Premier. Web.
Ming-Jer, Chen, and Danny Miller. “West Meets East: Toward An Ambicultural Approach To Management.” Academy Of Management Perspectives 24.4
(2010): 17-24. Business Source Premier. Web.
Ooi, Can-Seng. “Un-Packing Packaged Cultures: Chinese-Ness In International Business.” East Asia: An International Quarterly 24.2 (2007): 111-128. Business Source Premier. Web.
Sheer, Vivian C., and Ling Chen. “Successful Sino-Western Business Negotiation: Participants’ Accounts Of National And Professional Cultures.” Journal Of
Business Communication 40.1 (2003): 50-85. Business Source Premier. Web.