HRM Strategy in Chinese MNC’s in the HRM Strategy in Chinese MNC’s in the UKUK

BY:BY:

Nadeem Ahmed AwanNadeem Ahmed Awan

MS - ManagementMS - Management

Purpose of StudyPurpose of Study

The purpose of this study was to know that how The purpose of this study was to know that how MNCs from developing countries struggle to MNCs from developing countries struggle to compete in developed countries. compete in developed countries.

This was observed by focusing upon the This was observed by focusing upon the strategies used by these MNCs.strategies used by these MNCs.

Nature of ResearchNature of Research

Descriptive & Qualitative Research.Descriptive & Qualitative Research.

MethodologyMethodology

ParticipantsParticipants

Six Subsidiaries of Chinese MNCs doing business Six Subsidiaries of Chinese MNCs doing business in UK.in UK.

ProcedureProcedure Interviews method. Open ended & Semi Interviews method. Open ended & Semi

structure structure

Localization StrategyLocalization Strategy

Applying the management practices of host Applying the management practices of host country to compete in their market. country to compete in their market.

Need & Scope of Localization Need & Scope of Localization StrategyStrategy

Strong Global CompetitionStrong Global Competition Internationalization of MarketsInternationalization of Markets

Reasons for Localizing Management Reasons for Localizing Management PracticePractice

Negative impact of imported policies in the host Negative impact of imported policies in the host Country.Country.

MNCs absorb local advanced international MNCs absorb local advanced international management experience as part of their management experience as part of their internationalization process.internationalization process.

Recruitment of local staff for competitive advantage Recruitment of local staff for competitive advantage in local markets as they can apply the policies and in local markets as they can apply the policies and practices of host country to use local labor resourcespractices of host country to use local labor resources

Cont….Cont….

Reasons for Localizing Management Reasons for Localizing Management PracticePractice

Local constraints in the areas of High Local constraints in the areas of High regulation.regulation.

Cultural Conflict between the country of origin Cultural Conflict between the country of origin and host country.and host country.

Economic Conditions may not support practices Economic Conditions may not support practices of country of origin.of country of origin.

Chinese MNCs, Internationalization and Chinese MNCs, Internationalization and HRM StrategyHRM Strategy

Chinese government policy to encourage Chinese government policy to encourage internationalization.internationalization.

HRM Strategy, a critical factor to meet requirement HRM Strategy, a critical factor to meet requirement of localization Strategy.of localization Strategy.

Changing HRM Practices following economic reforms Changing HRM Practices following economic reforms designed to move china from a command economy designed to move china from a command economy to more responsive to market.to more responsive to market.

Due to increasing adoption, number of factors, Due to increasing adoption, number of factors, strongly suggest that a localization Strategy in HRM strongly suggest that a localization Strategy in HRM would be adopted by Chinese MNCs in UK.would be adopted by Chinese MNCs in UK.

ResultsResultsLocalization StrategyLocalization Strategy

All managers stated that their companies wish to All managers stated that their companies wish to learn and use UK management practices although the learn and use UK management practices although the reasons they gave for doing so varied. Reasons to reasons they gave for doing so varied. Reasons to apply this strategy given by the CEO’s of these apply this strategy given by the CEO’s of these companies are as follow;companies are as follow;

One of the CEO told that they have to depend on local One of the CEO told that they have to depend on local expertise if they want to extend their markets into the expertise if they want to extend their markets into the UK and they could not attract and retain local talent if UK and they could not attract and retain local talent if they did not follow local labor management practices.they did not follow local labor management practices.

CEO from another company says “It was formed to CEO from another company says “It was formed to establish an international business and viewed establish an international business and viewed learning modern techniques on how to manage people learning modern techniques on how to manage people as integral to its success”.as integral to its success”.

Results Results Adoption of UK HR PracticesAdoption of UK HR Practices

Responses from all senior managers indicated Responses from all senior managers indicated that UK HRM policies and practices are that UK HRM policies and practices are extensively used in their companies.extensively used in their companies.

The data showed that a market-led managerial The data showed that a market-led managerial structure has been established in all six structure has been established in all six companies. Moreover, business is no longer companies. Moreover, business is no longer certainly planned by parent companies.certainly planned by parent companies.

A single-line decision-making system has A single-line decision-making system has replaced the traditional dual-line system in all replaced the traditional dual-line system in all the companies, and the chief executive is the companies, and the chief executive is responsible for both business and personnel.responsible for both business and personnel.

(Cont..)(Cont..)

Results Results Adoption of UK HR Practices Adoption of UK HR Practices

Five of the six companies recruited largely from Five of the six companies recruited largely from the local market. Companies also adopted local the local market. Companies also adopted local remuneration structure.remuneration structure.

All six companies have moved towards flatter All six companies have moved towards flatter organizational structures with some delegation organizational structures with some delegation to line managers, and for individuals there are to line managers, and for individuals there are clear descriptions of jobs and responsibilities.clear descriptions of jobs and responsibilities.

Results Results Cross Organizational Learning Cross Organizational Learning ActivitiesActivities

For the purpose of internationalization, four main For the purpose of internationalization, four main diffusiondiffusion

(transmission) activities identified by the Chinese(transmission) activities identified by the Chinese

subsidiaries.subsidiaries.

Providing formal training programmers for the Providing formal training programmers for the managers from home firms and other subsidiaries.managers from home firms and other subsidiaries.

Training home firm managers in the subsidiaries.Training home firm managers in the subsidiaries. Sending local staff to parent companies in China Sending local staff to parent companies in China

to train the managers there.to train the managers there. Introducing and exchanging ‘best practice’ though Introducing and exchanging ‘best practice’ though

conferences or management meetings.conferences or management meetings.

Discussion Discussion

Important structural factor promoting localization in these Important structural factor promoting localization in these six companies is government ownership.six companies is government ownership.

Results showed that market position and business Results showed that market position and business integration also affect the extent and nature of localization integration also affect the extent and nature of localization and diffusion. The more the company depends on a local and diffusion. The more the company depends on a local market for its services, the more localization in HR practice market for its services, the more localization in HR practice is apparentis apparent

The scope of localization and diffusion also reflects the The scope of localization and diffusion also reflects the extent extent

to which they are dependent on local or international to which they are dependent on local or international markets.markets.

A staff composed of both expatriates and locals could A staff composed of both expatriates and locals could provide opportunities for the learning and diffusion of local provide opportunities for the learning and diffusion of local practices (Edwards 1998).practices (Edwards 1998).

(Cont…)(Cont…)

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