This morning is our final class meeting in China. Our business briefings are done and reports will be presented by all six research teams. Primary data collected from the 13 multinational organizations who have briefed us during our three week visit will be used to draw conclusions on managerial adaptation in China today.
A re-cap of these meetings prepared by Alex Roberts, Primary Research Coordinator follows:
1. American Chamber of Commerce
People’s Republic of China
Fast Facts
· AMCHAM is a non-profit organization, and non-governmental organization, of 1,200 members, which represent U.S. individuals and firms doing business in China.
· AMCHAM’s objective is to support U.S investement in China through advocacy, networking, and Business support systems.
Talent Pools
Chinese higher learning institutions have the largest scale in the world
· 29.2 million students are enrolled currently
· 8.1 million students graduated last year
China holds an education requirement of 9 years, beginning at age 6
Socio-Economic Changes
· China’s GDP rate has been growing by a rate of 10% in the past 30 years
· School students no longer keep a high respect for their teachers as they have in the past
· Chinese society no longer has a superior leader like Chairman Mao à there is no single superior that will be followed by the entire country
· Attention on money vs. ideology; materialism vs. simple life
· Emphasis on individualism vs. collectivism
· Single child (“six pocket child”) is less traditional, the child is coddled as a “little emperor/empress,” and is dependent on the family
· Young and educated youth favor individualism and are independent
· 350,000 Chinese students are studying overseas, with about 150,000 in America (many choose to return with a Western education)
· An emphasis on avid pursuit vs. modesty
Constant
· The goal to have a family, an education and a good job
· Human relationship (“guanxi”) vs. legal agreement à a combination of both is valued in China, guanxi is an important factor in hiring, and legal agreement is more important in career development (an employer needs a contract when hired, but guanxi when hiring)
· Market economy since 1992à needs legal system to support
Labor Contract Law (2007)
This law includes regulations on hiring practices and treatment of employees
· This protects the employees by preventing an “I owe you” payment
· The government must clarify this law because employers are still able to shift the law and bend the rules to their advantage
Social Insurance Law (2011)
This law forces employers to pay foreign employees
Results include:
· Employers will hire locally to avoid this fee
· Employers will hire abroad employees nonetheless if the company is from elsewhere
Education
China currently operates with exam-guided education
· Positive: one uniform test is fair to compare test scores of students
· Negative: the test excludes unique talents
· Negative: even if the student receives a high score on the exam, they will not know what to do once hired
“Face”
Factors:
· Education
· Reputation
· Personal commitment
· Initiative
Making money used to be means for losing face; now having a big face is to be rich
Quotes
· Wang explained, “…there will be a lack of trained/skillful managers in the context of fast business expansion vs. limited pool of professionals…”
· Wang explained, “…education needs further reform to balance obedience and initiative.”
· Wang explained, “…recommendations help when face to face relationships are not available. When things have to be done through technology, trust is used.”
2. American Chamber of Commerce
3. Hill and Associates Risk Management
Shanghai
Fast Facts
· China has the world’s second largest economy as of 2010
· The majority (80%) of Shanghai’s GDP comes from services
· US is the top investor in Shanghai with 6,600 invested projects
· Hong Kong is still considered to be more attractive as a regional headquarters
· American companies in China are doing really well à great growth rate
· China has HR problems; there is a large amount of companies and demand for employees, and retaining employees is challenging
· Rule of law is soft, and enforcement is lax
· Hill & Associates Risk Management deals with various business risks within China
Guanxi
· Guanxi works well, but there are responsibility and accountability issues.
· Guanxi develops overtime; employees may not take initiative for fear of questioning authority, but eventually they seem to gain confidence.
“Face”
· Saving face is leadership and management 101
· Giving face is associated with compliments in front of peers
· Taking face is associated with being punished in front of peers
· The better the relationship, the better the business exchange
· Caution: relationship building can cross the line into bribery
· Hierarchy oriented
Human Resources
The issues with HR are responsibility and accountability; there is a low initiative due to the fact that one avoids responsibility in order to not be accountable. To combat this, one must instigate constant communications and support, and not single any one player out, in order to promote participation and initiative.
Jay Hoenig
· “You’re not in Florida anymore!”
· Emphasis on emergency and defense
· Hill & Associates Risk Management works toward a balance between cost, schedule, people and impact of decisions
· He explained the importance of being, “street wise and operationally smart”
· Due diligence: one must not rely on the law or the law’s enforcement, background checks are necessary, know your stakeholders!
· “Money trumps guanxi.”
4. Marriott International: JW Marriott Shanghai
Opportunities and Development for Associates
Michael Malik
· Take difficult assignments that others may avoid
· Understand the culture and learn the language; show your effort
· Empowerment of the associate is essential to the benefit of the customer
· Prepare by finding opportunities/assignments abroad
· When managing, set a direction to the associate rather than dictate the assignment
Crystal Song
· S: specific
· M: measurable
· A: achievable
· R: realistic
· T: time measurement
· It is culture to drink and then discuss business
· When addressing a superior, always follow and be available 24/7 as a sign of respect
Jerry Tan
· Be open-minded, yet know the goal and how to achieve it
· “Safety and security” are the most important components to the business
· Strategic planning is always in reference to the customer, GSS (guest survey satisfaction)
Questions: What types of policies and procedures are most vulnerable to cultural adaptation?
Tan Chuei Yee
· Marriott has Open Door policy & Guarantee of Fair Treatment. Our employees sometimes will be hesitating to use those approaches since they are afraid of revenge. Sometimes we do receive anonymous letters for complaining. In our mind, it is not suitable to complain to General Managers about his / her superior.
· We have introduced the Empowerment guidelines to the employees during different training programs. However, the common practice for most of our employees is still to report out and let their superior make decision.
· Comparing with the first line employees from other countries, our Chinese employees are more conservative and reactive in service job. Overseas management trainees have great service mind and service sense.
Questions: What are the challenges in recruiting, selection, training, compensation and employee engagement?
Gary Gu
· Young graduates are not willing or interested in working in service industry. They think the service job is lower pay and labor intensive.
· With the development of 2nd and 3rd tier cities, people are unwilling to relocate and rather, prefer to work in their hometown. Thus the labor supply is shrinking in big cities.
· Competition is intense. There are continuously new hotels opening and the requirement from 4 or 5 star hotels are higher but the pay is not attractive.
· China has adopted one child policy in later 70s. Nowadays 6-pocket child is now coming out of campus and looking for job. They are talented, aggressive, open-minded, open for communication, and trendy. However, they also don’t like hard working. They have higher expectation. They are not hands on and rather, self –centered and not a good team player. So the department heads or senior leaders need to look at each individual and set up career path for them, share the success stories with them, be patient and be their good mentor and friends.
· When doing the campus recruitment, we have to make a comprehensive and beautiful PowerPoint Presentation or even bring in IPAD (trendy facilities) to make our presentation more vivid.
· Communication via social media, like Marriott Careers Blog and Ren Ren game are our talent acquisition strategies for young generations.
· We have culture diversity training in place for those overseas employees, which will be delivered in classroom by training manager. In addition, we have on our company website self-learning web based culture adaption training and can be accessed by our employees.
· The business, which is owned by the government, is run by team values
Questions: Do you find that the cultural values of your Chinese workforces require different kinds of human development programs?
Violet Wu
· We have various development programs in place, for example for supervisory position, we have Management Candidacy Review Board policy, which encourages our supervisors to self nominated to be further developed to future managers. But there is always assumption for the supervisors who are endorsed in this program that they will become managers very soon. Therefore, we need to involve mentorship and career talks in the process to help them set the right expectation.
· Marriott China now has the PRC GM program and high potential leaders program in place, which is to identify some key local talents and groom them to become future PRC General Managers and also to tackle the fast expansion for Marriott in China. It really encourages our local talents to stay in the company.
· Changes in the business cater to generation Y, because generation X is not resistant to change.
Questions: What role does training play in communication?
Maggie Jiang
· Our training programs are comprehensive and cover all levels of employees.
· There are a lot of means of communications, including daily briefing, emails, daily newsletter, performance review process and training.
· We have reiterated the importance of communication to all our employees. However, we rely on our department heads to make internal communication more effective.
· Chinese culture: our department heads are hesitate to give constructive feedback and even sometimes hesitate to recognize or appreciate our employees even for little things or achievement they have done. (When you ___, I feel ____, because _____.)
Questions: Careers opportunities inside your company for graduates today
Joy Dong
· Relationships + Qualifications = Success
· Local intern: average 12.5% of the total manning
· Overseas Management trainee: average 2-3 each property
· Voyage Graduate Management Program: currently 10 Voyagers, next batch: 7 Voyagers on board in Feb.
· Overseas MT demographic: mainly from Europe, USA, Japan, Korean, Russian (in Front Office and F&B service disciplines)
· Local intern mainly from the colleges in 2nd or 3rd tier cities, working in Front Office, HSKP, F&B service, culinary, and a few percentage working in HR, Finance, Sales.
· Voyage is 2-year fast track program, tailor-made for Chinese national fresh graduates and aim to develop them to the entry-level managers after 2 years. The applicants must be bachelor degree or above.
· Challenges: local intern—dormitory capacity, overseas MT—working visa application requirement (applicants must have 2-years consecutive related working experience), brand concerns and location concerns. Voyagers—must be willing to relocate within Mainland China
· One spends more time with their colleagues than with their family
How
Consensus shared by all speakers
· Abide by the 6 Core Values: Equity, Respect, Trust, Care, Honesty, Integrity, Foundation
· Put the people first
· Honor loyalty that is so highly valued; compensation is given to long-lasting associates
· Mind your attitude. If you can perform well, Marriott will give you opportunities for development (mentorships, internships, fast-track programs), hire the attitude, then train the skill
· Take the initiative! Associates compete for desired positions, they do not wait for an offer
· Be a team player, management looks for a passion for the industry
· Embrace change; success is ongoing
· Give and consider constructive criticism
· Be flexible and be willing to work in all brands of a company in all locations
· Pay attention to detail and be organized
5. Citigroup
· 1,000+ cities
· 160 countries
· 13 cities in china
· Value CSR
· Less aggressive after the crisis, monitored by government
· 16% joint stock, 49% state owned banks, 2% foreign markets
China Strategy
· As an international financial institution, you must have a “China strategy”
· 42% of Asia’s revenue is from china
Government
· “If we cooperate with the government, things go as planned”
· ICBRC
· There is a regulatory restriction limit product range, one must apply to the government for permission to expand
Challenges for Foreign Banks
· Credit tightening
· Limited branch network
· Low market share
· China reserve ratio is 12%
· The Chinese will continually remind you of where you are by always speaking Chinese at meetings and forcing one to use a translator.
Opportunities
· China has money and desire; the Chinese will travel
· “China’s making decisions, the west isn’t…when they get together it’s complicated.”
· Leverage of global footprint
· Innovation in liberalizing the market
· Provide offshore and onshore private wealth management
Look online for a link to “Citi China Fact Sheet” for more information
6. A PLUS Manufacturing
Control Area
· In China since 1989
· Disposable medical device manufacturer
· 9 facilities in China
· This particular facility, or control area, produces two main products: drape and surgical gowns for the ER. Both products are sterilized and packaged.
· Purified water is used to enhance the cleanliness of the “clean rooms”
· A PLUS is sourcing globally à there is a required 12 month forecast contract, 120 days are given to respond. If the buyer finds a competitor offering the same product for a less price, A PLUS has 15 days to determine if they will meet the price, if A PLUS declines, the buyer may transfer out of the contract.
· A PLUS updates their prices every 6 months
Compensation
· Workers are paid 10 RMB/hour ($1.50) for 10 hour workdays
· Priority: price, quality, then service (investors/contractors)
· Priority: quality, service, then price (medical field)
· Wages increase with speed and quality on a day to day basis per person
Work Life
· The average worker is between 18-25 years old
· 10% of employees work more than 3 years
· Employees work the same position their entire career, they are not allowed to change
· 10:1 female ratio, females leave to get married after a few years
· 2 breaks each day (lunch and dinner)
· The control area runs 22 hours each day
· The best/fastest workers wear red armbands, they supervise their given area and jump in if the line slows
Human Resources
· Hiring is based 50% on performance and 50% on the relationship
· HR must understand the company’s culture: what is needed, and their ability to achieve it
· 25% of each day is spent on HR concerning their 1,800 workers, specifically focusing on promotions, direction, culture, encouraging performance, and targets of the future
Issues
· Any issues are reported to the FDA and are filed
· Issues must be listed along with the appropriate action taken
· If one does not abide by the FDA regulations, the company is put on a block list where there is a 100% inspection before every arrival
7. Euromonitor International
Michael Yunker
· Lucky: putting oneself in a position to be lucky
· Fill your resume, there’s global competition à get involved
· “Money motivates everyone.”
· It’s not as much censorship as it is protectionism. Blocking certain cites from around the world supports local businesses, though Yunker also believes that this “dumbs down” the population on a large scale.
· “People have the hardware, but not the software.”
· Guanxi: family and the people you meet along the way, this takes luck and time à meet people while out, no one in Shanghai’s company is over 45 years old
· Knowing the local culture, “Know how to adapt and assimilate”
· There are less expats in managerial positions in China (increased education)
· Definitions are important to ensure consistent methodology
8. Charlotte Dorris/ EF (English First) China
· Acquire specific experience tailored to the job you want
· Localize yourself
· Teaching English is one of the best ways to get a work visa
9. U.S. Consulate, Commercial Sector Shanghai
Goodyear Tire and Rubber Company
Ricardo Pelaez
· U.S. and foreign commercial service, enforce treaties, help exports around the world (like a consultant, they make helpful connections and do full background checks)
· “Everything is happening in China.”
· Largest non-defense unit
· Funding towards R + D
· Non-fossil fuel energy consumption target: 11.4%
· Since 1980, 235 million people have left poverty. Since 1985, over 200 million people have moved from the countryside to the city, “to have opportunity to make some money”
· Living target: construction of 36 million low-income apartments
· Energy consumption increases 6% each year
· Over 150 cities in China support a population over 1 million people
· China plans not to exceed a population of 1.39 billion people
· Minimum wage: 2-3,000 RMB/month, China plans to increase minimum wage by 13% annually
· GDP growth after WTO, to grow 7% annually
· In 10 years, 10 new subway lines were created. Reports say that by the time that the new subway in NY is finished, the project will have taken roughly 18 years.
· Corporate gifts account for a large percentage of consumerism
· China is the largest coal and oil user and will need more oil than is available
· China is the largest automobile market (18 million cars sold in 2011), China is also accountable for 20% of the world’s annual CO2 emissions
· Setbacks: China economy slowdown, global economy slowdown, labor costs, the Chinese have not experienced anything less than growth, and profit does not come quickly à it is a long-term investment (One must set realistic expectations.)
Scott Yao
· Urbanization gives the opportunity to foreign companies to connect locally
· “Green beauty” is dependent on the quality of the air, soil, and water
· China exports 95% of their solar products, they are too expensive for them to buy
10. Wendy Radtke, Talent Management + Salary Trends in China/Goodyear
· Factors to apply for a job: pay, opportunity, relationship
· Factors to keep a job: sensitivity, stamina, integrity, understanding, respect
· 114 male to 100 female
· 36% of the population is under 25 years old
· Today’s 37 year olds are the first to be able to choose their job (no longer determined by the government)
· No “one size fits all” strategy
· Chinese desire: harmonization and social stability
· Chinese workers should share economic achievements
· There is a needed increase in domestic consumption
11. Shanghai Volkswagen
· China + Germany
· VW covers all levels of cars in China
· China is not the small unknown country it once was
· Strive for excellence, for the people behind the wheel, “in the end we talk about people”
· Labor market not able to provide highly qualified people for jobs
· Companies need to develop people’s long term perspectives and to strengthen their weaknesses
· Compensation and benefits need to be able to retain employees
· Foundation on policy is essential, “exceptions undermine structure”
· 95% employees have a permanent contract, others average 3 years of work
· Evaluate performance every 6 months
3 Top Challenges
· (1.) Hire the best candidate for future growth à assessment center checks background, qualifications, and self skills
· (2.) Establish long term personal development à career plans, recruiting
· (3.) Compensation and benefits à transparent grading and salary structure as well as clear rules for further development
Dynamic Growth in all Branches (Within Nation of 1.3 Billion)
· Different needs for different departments
· Lack of management potential within China because of generation and cultural issues
· Loyalty is weak
· Mismatching is a great challenge in Chinese businesses
· Soft skills are important in assessment centers for VW to ensure quality of candidate
Establish Long-term Personnel Development
· Strengthen benefits and compensation
· Achieve goal through excellent performance
· Strengthen career path of all employment
· Many Chinese “jump ship” for other jobs, the goal of any company is to keep good candidates and talent
Two Groups in Chinese Business Working Class
· Young professionals (go abroad, learn western values) à very active, not silent, strong personalities, best oriented for management positions
· Grow up in China, work in China à not like first group, more like typical Chinese culture
Initiative
· It’s hard to find a job: 15,000 applicants to VW, only 500 are chosen
· Self promotion is essential: the young generation is anxious about their future and jobs, therefore they feel the need to be very competitive and not as humble as they used to be
· (“What will I be after 2 years at this company?”)
12. Microsoft
Judy Wang
· Received her MBA
· Worked for HP in Singapore for 10 years
· Moved back to China because she found that China was more developing and faster paced; while Singapore had already finished developing.
· Found that a software company is very centralized, culture very consistent
Xuan Zheng (Tommy)
· Received his MBA
· He has been working at Microsoft for 10 years; he has had the same position for 6 years
· He had a very intensive interview at Microsoft; it was a 9 round interview. HR interviewed him, his English was tested, there was a technical interview, 5 different technical masters interviewed him, than a manager interviewed him; all of this occurred in one day. The next day he got the job offer.
Judy Wang
· Microsoft’s top 100 accounts are based in Hong Kong and Beijing
· For these they have a one voice, one approach, one strategy mentality
· For the downstream country they give them the same quality product to the customers
· This is heavily learned from business schooling
· Main goal is to maintain the same customer coverage
· Microsoft has a Gerber account that is very centralized
· They use COE (Center of Excellence)
· They use knowledge base/expertise, this is used for solution
· The local teams deliver to make it more cost effective.
Xuan Zheng (Tommy)
· China has same semidry as U.S.
· There are 5 thousand employees in China; worldwide there are 85 thousand
· 3 sales offices: Shanghai (headquarters) with 1 thousand employees, 2 others in Beijing and Suzhou
· Their most famous product is Windows Office, which is made in China, but usually they do designs in the U.S. and then they build the products in China
· Their first headquarters in Redmond (U.S.) will look at the product and than tweak it, than they will ship it back to China if something needs to be fixed
· HR hires people; Microsoft gives internships to post grads or MBA graduates (They will go to colleges to recruit people and to do campaigns.)
· They offer summer jobs which tend to be mainly developer work
· Microsoft has a training program; they have their own university type thing for this.
· For each job they focus on specific courses for specific areas, there are different roles, different principles, and different things to learn
· Microsoft is a very diverse company, all managers have an open door policy, and as a whole they are very team based
· You can bring up your issues to the managers
· They encourage different thinking because there are different cultures found
· The only problem is that there can be struggles with communication.
· At Microsoft you must be honest and abide by the companies policy and rules
· At Microsoft they count by contribution, not by just showing up for work
· Can work at home if you don’t need to report, the manager will approve of this
· Normally people only come in for meetings. Employees are allowed to do this because they are given the equipment that they need to work for their homes.
Question: Is there a problem with working from home/ the quality of the work?
· Performance is reviewed by the manager, at Microsoft they count by contribution; each person has a target they must meet. They have a ½ year review (middle year). Each target must be met by each person.
· You cannot hide if you do not get work done, if you don’t do work than you do not exist at the company. Results are the best way to show efforts, you must finish goals or your work is not good.
Question about Promotion
· HR always promotes and teaches each person
· When someone first comes to Microsoft, the HR and managers must look at if that person accepts their challenges
· Their behavior is evaluated
Question about the Younger Generation and Self Promotion
· Microsoft offers a very stable environment so there is a lot of retention when it comes to people staying
· The industry in China is more eager for faster promotion/salary increase.
· Microsoft gives you a salary and benefits, the salary stays pretty much the same but the benefits are what can increase. At Microsoft people tend to not focus on salary increase, they focus on their work. At Microsoft you are given a balance.
· China is growing and developing fast so people can get an increase in their salary at jobs, so people at most jobs only stay there for 2 years; but at Microsoft they tend to stay longer.
· This depends on the situation and managers; the managers to the individual can only show results to individual not to the group. This means that the middle year review is one on one.
Question about Guanxi
· This concept is very systematic and they do not use it at Microsoft
· Managers and colleges can give feedback
· If someone does not agree with the feedback that they receive, they can report to HR over the bad review and an investigation can be held.
· Employees can nominate themselves for rewards (self promotion)
· Merit and qualifications are important; the global impact is what makes the key difference
· People never get promoted because of a relationship that they might have with someone else within the company.
· Career development model, individual contributor is more important
· You can be promoted to a manager position and that only changes your type of contribution/job, but you as a person are not better than anyone else at the company.
· A lot of people still abide by the Chinese culture; because of this some workers are afraid to talk to their managers. At Microsoft they try to teach the managers to stop this from happening.
· The managers get training on how to be helpers and not Gods. Everyone at Microsoft is a team; you can also promote employees to be managers.
Question about Expectations
· Not all employees are technical experts
· Orientation helps with people in receiving a smooth start at Microsoft
· It explains the different labors and possible meanings of words or concepts that could mean something else in a different culture.
· There are different communities that you can join; this can help you in meeting new people. At these different functions you can test new products, but you must also give feedback on the product.
· Microsoft is always changing, people can move to any position based on what the company needs.
· The organization is always changing; performance is changing, and efficiency. There is also as strong encouragement in different positions in the company.
The Future
· Microsoft expects to have the whole environment to live like how they showed in the video by 2021
· They hope in the next 2 years to have a break on the new technology
· They hope to have surface technology for a home, run by touch
· In the video they had glasses that can give you directions; they will take this from the mobile phone. They can also translate things. They show virtual maps called Location Based Services. They also focus on a position.
13. 3M
· Mission: to be the most innovative enterprise and be the preferred supplier in markets served.
· $30 billion worldwide last year
· “Making life more convenient and more fashionable” (2009 slideshow)
· Prioritize, localize, market excellence, win culture
· Goal: $5 billion company in less than 5 years
· 47 technology platforms
· Voluntary turnover rates are 1/3 of those of competitors, but still have back ups ready
· “Leadership, not management”
· Select the right people, clarify the objectives, encourage employees, and practice patience
· Enhance training and exposure
· Outside the Box: aspiration + growth mindset, borderless, collaboration, sustainability, commitment to society
· Guanxi: relationships boost confidence, though foundation must be on rules
· Challenge: local competitors
· Strengths: cross-functional collaboration, understanding of different objectives