EXPERIENTIAL HUMAN RESOURCES PROBLEM ASSESSMENT

Experiential Human Resources Problem Assessment



Experiential Human Resources Problem Assessment

Since the historic announcement of the economic reform policies in late 1978, China has been striving to attract foreign direct investment. The Chinese Government has a special preference for joint ventures over other forms of direct investment in order to gain access to modern management techniques as well as advanced technology. The year 1992 was a golden harvest for foreign investment in China. During the 12 months, over 48,000 investment projects worth a total of US$58 billion in contract value were signed. This record-breaking level of investment is comparable with the cumulative total for the 13 years from 1979 to 1991[1]. While wholly-owned subsidiaries are becoming more popular, joint ventures are still the dominant form of direct investment in China. In recent years, China has become a rich ground for studying international joint ventures.

Operating in an environment with the legacy of a centrally planned economy, a vast and inefficient bureaucracy and a distinct culture, foreign investors have encountered many difficulties, a number of which simply do not exist in other developing countries. Compared with wholly-owned subsidiaries, joint ventures present an additional challenge because the investor has to co-operate with a local Chinese partner, which means that there is less freedom in managing the business. Over the years, many thorny problems faced by foreign partners of joint ventures in China have been unearthed[2,3,4,5]. Among these problems, human resource management (HRM) is one of the most often cited. In fact, in the case of the Tianjin-Otis Joint Venture, HRM is said to be the “greatest single challenge to the Joint Venture”[6]. Moreover, it is argued by Tsang[7] that, when technology transfer is implemented in Sino-foreign joint ventures, transfer of management know-how, of which HRM is an important component, is often required.

Recruitment

The Chinese partner of a joint venture is usually a state enterprise in the same industry. It is thus a natural source of labour, and many joint ventures, especially during the start-up stage, try to tap this source. The danger here is that, if most of the workers come from the Chinese partner, the joint venture may inherit the power and social structure of the old organization. The inherited structure may become an opposing force in the new environment that the foreign partner tries to create in the joint venture.

Joint ventures are allowed to recruit staff from the outside with or without the help of the local labour department. They are free to advertise in local newspapers and conduct interviews, written examinations and psychological tests to select the most suitable candidates. The huge population in China may lead one to think that the labour supply is abundant and the employer is spoiled for choice. This belief is only true in the case of recruiting non-skilled and semi-skilled workers. Experienced technicians, professionals and managers are rare “commodities”. (The reasons for the shortage are discussed in the “Managerial Skills” section below.) Even with direct appeal to the mayor, it took two years ...