Attract, Retain, and Find Employees and Partners in China
by: Erika Visser, Associate partner of Hofstede Insights
Why should I read this document?
The goal of this document is to give foreigners pointers on what they will encounter when hiring and managing people from China. Understanding people management in different cultural contexts is very important before going abroad. What motivates one culture can demotivate another and thus managers need to understand the differences from country to country or they will not be able to attract and retain staff successfully.
The five most important things to know in order to successfully find partners, and attract and retain employees in China:
1. Patience is a key when conducting business in China.
2. Although there are some changes due to the economic boom, hierarchy still exists. Respecting the different levels, proper status and titles are important. The Chinese are very sensitive to titles and thus official titles should always be used when addressing your Chinese counterpart.
3. Aim to maintain regular contact and to build long-lasting relations/networks (Guanxi) first before attempting to do any business. Guanxi expresses the relations between parties in a society and the obligation from one party to another. Guanxi is not only limited to business transactions or favours, but can also extend to personal favours. There is a fine line between guanxi and corruption and it is important to have an experienced third party connection that can help navigate this concept.
4. The concept of face (Mianzi). Face can be given, gained or lost. It is also important to give Chinese counterparts the chance to restore their face. Giving face usually means to show the appropriate amount of respect depending on that person’s status or age. Never let a Chinese counterpart lose face as it will damage and possibly end business relations.
5. Building trust. Chinese build trust in a more emotional way compared to high IDV, low PDI cultures. Chinese prefer to do business with people they know and thus third-party mutual connections should be used to help to establish trust.
2. Although there are some changes due to the economic boom, hierarchy still exists. Respecting the different levels, proper status and titles are important. The Chinese are very sensitive to titles and thus official titles should always be used when addressing your Chinese counterpart.
3. Aim to maintain regular contact and to build long-lasting relations/networks (Guanxi) first before attempting to do any business. Guanxi expresses the relations between parties in a society and the obligation from one party to another. Guanxi is not only limited to business transactions or favours, but can also extend to personal favours. There is a fine line between guanxi and corruption and it is important to have an experienced third party connection that can help navigate this concept.
4. The concept of face (Mianzi). Face can be given, gained or lost. It is also important to give Chinese counterparts the chance to restore their face. Giving face usually means to show the appropriate amount of respect depending on that person’s status or age. Never let a Chinese counterpart lose face as it will damage and possibly end business relations.
5. Building trust. Chinese build trust in a more emotional way compared to high IDV, low PDI cultures. Chinese prefer to do business with people they know and thus third-party mutual connections should be used to help to establish trust.
Although national culture plays an important role in attracting and retaining business partners and employees, organisational culture plays an equally important role. This article will mainly address national culture: a) finding a good local business partner b) what an ideal boss in China looks like and c) how to motivate his/her staff.
Finding Local Business Partners
Finding a Good Local Business Partner:
Have a designated team in place with professional advisors to look for appropriate business partners. Teams can conduct a market analysis, meet with and build rapport with potential stakeholders.
- Knowledge of Chinese business culture and etiquette are essential.
- Business partners should have complimenting resources and networks.
- Find partners with experience with government policies and the local markets and that have strong networks and good connections with the government.
- Find partners that have experience in doing business with different cultures and therefore are sensitive to the direct way of communication and task orientation of high PDI, low IDV cultures.
- Always ensure that you have a third-party contact on the ground that can check the credentials of your potential partner first.
Short Case Study: Bundaberg Brewed Drinks from Asialink Business
Australian beverage producer Bundaberg Brewed Drinks discovered that in China, choosing a business partner can make or break a business. Bundaberg entered the Chinese market in the early 2000s and took on a local partner with little research and preparation. It quickly found that the relationship was very one-sided, with the partner’s lack of transparency on sales, distribution, and customer details causing issues, as well as different values, business ethics and a lack of control. Since acquiring knowledge of the complexities of the Chinese market, Bundaberg has focused on finding Chinese partners that meet its stringent selection criteria. It has considered having several partners across various regions of China. The search for a partner that supports Bundaberg’s values is an ongoing challenge. “I want a partner who I would gladly invite to come and stay at my house as a guest,” says CEO John McLean.
Australian beverage producer Bundaberg Brewed Drinks discovered that in China, choosing a business partner can make or break a business. Bundaberg entered the Chinese market in the early 2000s and took on a local partner with little research and preparation. It quickly found that the relationship was very one-sided, with the partner’s lack of transparency on sales, distribution, and customer details causing issues, as well as different values, business ethics and a lack of control. Since acquiring knowledge of the complexities of the Chinese market, Bundaberg has focused on finding Chinese partners that meet its stringent selection criteria. It has considered having several partners across various regions of China. The search for a partner that supports Bundaberg’s values is an ongoing challenge. “I want a partner who I would gladly invite to come and stay at my house as a guest,” says CEO John McLean.
Attracting and Retaining Employees
An Ideal Boss in China (PDI & IDV)
China is a Family culture (High PDI, Low IDV & Low UAI). There are many similarities between Family cultures within Asia as a reflection of a similar combination of cultural dimensions. China has a score of 80 on the PDI dimension and thus leaders tend to be more autocratic and paternalistic compared to lower PDI countries. The boss should thus be a benevolent father, like a parent supervising his or her children. Respect and discipline are important, and staff are usually managed on a micro level where tasks are inspected and checked. An ideal boss should be directive, however, there is a gap between management and staff due to the hierarchy and thus staff are reluctant to express their opinions and suggestions. Chinese managers usually keep information, such as their plans and intentions, to themselves and do not share decision-making with employees. Employees in return usually do not take responsibility for making decisions and prefer the top-managers to take the initiative and make decisions. Family cultures believe that their supervisors have been chosen because they have more experience and greater knowledge than those they manage, and it is therefore inappropriate for them to consult with lower-ranking staff when making decisions. Tasks are delegated but power belongs with the top-manager. Employees will agree with the boss as they do not want to contradict or let the boss lose face. Promotions and business deals are very dependent on ‘guanxi’ or personal relationships rather than performance. An ideal boss also spends time caring for the personal welfare of staff as part of his/her job. Titles play an important role as they will allow them to show appropriate respect to superiors.
China as a collectivist or group culture has a score of 20 on the IDV dimension and thus Chinese society is centered around relationships rather than tasks. Due to the concept of face or ‘mianzi’, employees also do not want to stand out from the group, this is highlighted by the Chinese expression: ‘the bird who sticks his head out gets shot’. Communication is indirect and negative feedback hidden. Staff do not want the boss to lose face and will share information a boss wants to hear rather than volunteering bad news which creates bigger problems in the long-run. The focus should always be on relationships and not the task, and time should be invested to strengthen relationships with staff in return for their loyalty. The boss should never single out or embarrass employees as this will erode trust and disrupt the harmony. As foreign bosses are not part of the in-group they are not trusted, thus they have to invest in building trust and long-lasting relationships.
How to Motivate Staff (MAS)?
China has a score of 66 on the MAS dimension, affecting the way a boss will motivate employees. Status and visible symbols of success are important and material gain brings motivation. Chinese people “live in order to work”, and they feel that their entire life is dedicated to work. Employees can be motivated by group bonuses or other group monetary incentives and awards or by promoting staff. Hertzberg theory (intrinsic to extrinsic rewards) of motivation can mainly be applied to individualistic societies, however Fisher and Yuan identified three different categories for collectivist societies: security/material rewards, social factors, and intrinsic/achievement themes.
Motivational factors ranked high by Chinese employees:
- Good wages
- Housing subsidies
- Good working conditions
- Support and benefits from the boss
Motivational factors ranked lower by Chinese employees:
- Interesting job positions
- Being involved in decision-making/taking initiative
- Being recognised/showing appreciation of your work
Attracting and Retaining Staff
Companies operating in China need to have good attraction and retention policies in place as China is currently facing a labour shortage. Labour shortages are mainly due to the one child policy and rising living costs resulting in a shrinking pool of experienced and skilled workers. Due to the labour shortage, as well as a means of motivation, competitive salary packages are key in a high MAS culture. Chinese employees are also no longer reluctant to look for a new job before leaving their current job as they are likely to find a higher paying position at a factory ‘next door’. Another reason for Chinese employees to leave their jobs is due to a lack of support and benefits from the boss. As a high PDI/low IDV culture, relationships are key and the boss should be paternalistic and care about the welfare of their staff. If Chinese employees do not feel this support they are likely to quit. As for foreign bosses, only time, effort, and sacrifice can help to establish trust and strong relationships as there is usually a lack of trust between management and staff (due to the hierarchy high PDI and in-group mentality). Unfortunately, at times is can be a vicious circle with management not investing in staff as they might leave after a year or less. Staff in return leave because they are not provided with the support, benefits and training that they require.
Ways that managers can attract and retain staff:
- Provide competitive salary packages
- Provide housing subsidies
- Create good working conditions
- Provide support and benefits including training needs
Implementing Structure vs. Flexibility (UAI)
China scores low on the Uncertainty Avoidance (UAI) dimension with a score of 30, and thus shows a low preference to avoid unpredictability. This means that Chinese people have a more relaxed attitude in which practice counts more than principles and deviance from the norm is more easily tolerated. Chinese people believe there should be no more rules than are necessary and if they are ambiguous or do not work they should be abandoned or changed. Schedules are flexible, hard work is undertaken when necessary but not for its own sake, precision and punctuality do not come naturally, innovation is not seen as threatening.
Short case study
What motivates employees? A comparison of US and Chinese responses. The International Journal of Human Resource Management 9:3. Bond University, Queensland (Resource link).
The result of the investigation made by Fisher and Yuan (1998) showed that Chinese employees thought that good wages were by far the most important job attribute. This was evident amongst both female and male workers, as well as young and old workers. The researchers compared the result of the answers from the Chinese employees with the answers given by the American employees, taken from an investigation made by Silverthorne (1992). Another job factor that was found to be highly important in general amongst the Chinese workers was housing subsidy, which was seen as ”extremely important”. One factor where the answers differed a lot between the Chinese employees and the American was how much he/she valued an interesting job. The Chinese employees rated it as the seventh most important factor, whilst the American employees valued it the second highest. The factor that was ranked the lowest for Chinese employees was the ability to be 'in on things' or being involved, whilst the American employees ranked it higher. Good working conditions was ranked much higher by the Chinese employees than the American, perhaps due to the fact that American employees generally took good working conditions more for granted. The factor that was valued the highest by the American employees was that others showed appreciation of the employee's work, whilst this was only moderately valued amongst the Chinese employees. (Fisher and Yuan, 1998).
The result of the investigation made by Fisher and Yuan (1998) showed that Chinese employees thought that good wages were by far the most important job attribute. This was evident amongst both female and male workers, as well as young and old workers. The researchers compared the result of the answers from the Chinese employees with the answers given by the American employees, taken from an investigation made by Silverthorne (1992). Another job factor that was found to be highly important in general amongst the Chinese workers was housing subsidy, which was seen as ”extremely important”. One factor where the answers differed a lot between the Chinese employees and the American was how much he/she valued an interesting job. The Chinese employees rated it as the seventh most important factor, whilst the American employees valued it the second highest. The factor that was ranked the lowest for Chinese employees was the ability to be 'in on things' or being involved, whilst the American employees ranked it higher. Good working conditions was ranked much higher by the Chinese employees than the American, perhaps due to the fact that American employees generally took good working conditions more for granted. The factor that was valued the highest by the American employees was that others showed appreciation of the employee's work, whilst this was only moderately valued amongst the Chinese employees. (Fisher and Yuan, 1998).