The Japanese vs. the European (Swiss – German) Approach to Human Resource Management in China

Venturing into China is a formidable challenge for almost every foreign company. The entry into the Chinese market offers cheap labour as well as access to 1.3 billion potential customers¹ as China advances economically.

Nowadays Human Resource Management is of vital importance to the majority of companies. Even though companies might not shift their core business functions such as R&D to China or only use it as a cheap manufacturing base, success and failure are to a large extent determined by whether one is capable of handling the local work force.

As will be shown later, Japanese and European companies widely differ in the ways they manage their Chinese employees. The Japanese approach is worth an examination as Sino – Japanese companies operate very successfully and Japanese managers enjoy a reputation for being interculturally sensitive². Still, there are voices describing Japanese as overly xenophobic and cautious in international business only outsourcing functions which allow for a quick recovery of capital³.

It needs to be said that the statements given by the author and the ones referred to should be seen as vague, general tendencies and not as undisputable facts. They may apply to most members of a culture to some degree but not to each and every individual.

Intercultural Dimensions

In the following paragraph I will explain the intercultural dimensions occurring in the paper. It needs to be clarified that not all aspects of the single dimensions will apply a hundred per cent to the cultures discussed. Especially the Chinese culture is developing dynamically⁴ and might sometimes show seemingly contradictory characteristics.

Collectivism vs. Individualism⁵

· Group valued higher than the individual	· Individual achievement
· Group responsibility · Group harmony	· Qualifications valued higher than    relationships

Femninity vs. Masculinity⁶

· Quality of life	· Achievement/ career orientation
· Family orientation	· Personal advancement
· Job satisfaction

High vs. Low Power Distance⁷

· Authority based on position/ status · Hardly any disagreement with superiors	· Authority based on professional    knowledge
· Top – down decision – making	· Subordinates involved in decisions
	· Bottom – up decision making

High vs. Low Uncertainty Avoidance⁸

· Formal rules	· High mobility
· Career security	· Willingness to take risks
· Ambiguity felt as threatening	· Appreciation of performance related pay

Diffuse vs. Specific Orientation⁹

· Mixing of job and private life	· Working and private life kept separate
· Many casual friends	· Few but close friends

Main Cultural Influences in European (Swiss – German), Japanese and Chinese Culture

Chinese Culture

Chinese Confucianism is one of the main influences on Chinese culture. It stresses theoretical learning and the importance of unequal relationships for social stability¹⁰. Therefore, a strong sense of hierarchy exists in the Chinese culture. For the Chinese the family is the most important part of the society. Collectivistic within their families, the society in general can be described as rather individualistic and shaped by a materialistic value system¹¹. Still, perceptions vary as to how materialistically oriented Chinese are, as will be shown later. Communism has only achieved to artificially surpress these tendencies for a short period of time. Due to the social insecurities prevalent and changes during communism the trend towards a low – trust  society has been reinforced¹².

The art of guanxie and the importance of relationships is another important trait which has developed as a result of legal and political insecurity and arbitrariness over centuries¹³.

Japanese Culture

The Japanese culture is determined to a large extent by Japanese Confucianism. In contrast to the Chinese Confucianism it places more emphasis on loyalty, approves of business and trade and is one reason for the Japanese preference of practical learning¹⁴. Together with peasant values and the will and tradition to live to work, a unique work ethic has developed. The Japanese culture sees willingness to learn as a virtue (from books as well as from foreigners)¹⁵.

Often, the Japanese society is referred to as a “block of granite” because of its highly collectivistic nature¹⁶.Both the Chinese and the Japanese culture are rather particularistic and lack systems of absolute and universally applicable rules. They usually approach each other with caution due to the historical difficulties^17,18. Their attitude towards foreigners is rather ambivalent and often reflects their mistrust. Especially the Japanese tend to be cautious in international co-operations¹⁹.

Swiss - German Culture

The Swiss-German culture is based upon a rational and logical thinking model. Owing to the protestant and Calvinist influences the culture enjoys a distinct work ethic²⁰.

The society is individualistic and materialistically oriented, even though self-actualization has become important at the work place. Decisions are usually made democratically, though not always taking into account the will of the minority.

Private and public space is usually kept separate showing their specific orientation²¹.

Universally applicable rules are assumed and a high degree of importance is placed on written instructions, contracts and rules²².

Issues Important in HRM in China 

I will now concentrate on important aspects of Human Resource Management. First I will examine how firms recruit their employees and their expectations towards these. Often, education is needed to better integrate Chinese employees into the work place and to enhance their qualification. The second part will therefore scrutinize education and training concepts. Conclusively, different approaches of remuneration and motivation will be looked at and their effects compared.

The Recruitment Process

Recruitment is nowadays not usually carried out by guanxie any more as far as European and Japanese companies are concerned. The most important channels are²³:

·         Local labour bureaus

·         Ads to attract local workers

·         Talent fairs

Firms establish direct contact with university graduates and seek to attract Chinese “high potentials”

·         Co-operations with universities and offering of internship opportunities

·         Headhunters

Though not yet commonplace in China, headhunting is a popular tool to find local candidates for top management positions

CVs and school reports are usually vague, difficult to verify and often overly positive²⁴. Most firms have therefore opted for a sophisticated application procedure. Written test are conducted to assess a prospective employee’s general education and English skills. In Japanese companies and joint ventures in China written tests play a larger role than in European ones and tend to be more extensive in general²⁵.

European companies conduct multiple interviews with the applicant. Up to three interviews take place, compared with usually one in Japanese companies. This exemplifies the different priorities in recruitment. Japanese companies generally care less about an employee’s attitude towards work and focus more on professional knowledge²⁶.

European companies on the other hand regard the personality of a future local employee as the main criterion for hiring²⁷.

Education and Training 

Especially the Japanese view the education standards in China as highly inferior and as a major obstacle to businessman. This contrasts with the view of Robert A: Theleen, chairman of China Vest, the oldest established venture capital firm in Greater China who praises the Chinese institutions of higher learning and states that China has already more engineering undergraduates than Western Europe²⁸. Even though, his statement might not refer to semi- or unskilled labour.

To improve the managerial and technical record of its workforce European and Japanese companies take different approaches. The European companies prefer local facilities to train their workers. They have made the experience that overseas training is costly and that a substantial number of employees looks for a new employer after having undergone overseas training. The defensive attitude of older employees towards further education often frustrates European businesses²⁹.

Japanese employers administer technical education locally but send a much larger number of employees to Japan. The training in Japan aims at indoctrinating the Chinese employees with company values and philosophy as well as Japanese work ethic³⁰. One reasons might be that Japan is simply geographically closer to China. Often Japanese companies believe that some competencies cannot be developed outside their home country. Overseas training in form of cultural indoctrination is carried out for Chinese employees of those other nationalities as well. Therefore Japanese companies seem to have a ready – made  infrastructure for such measures³¹. The number of employees leaving the company after overseas training is considerably lower than in European companies³².

Concepts popular in Japan such as job rotation or team work are not suited to the majority of Chinese employees who prefer to specialize and work on an individual basis. The Chinese preference to work individually exemplifies their individualistic orientation³³.

Motivation and Remuneration

Japanese companies are known for fostering a unique relationship between workforce and company. Ideally, the worker is rewarded with life – time employment, though this has begun to change in the 1990s due to economic reasons³⁴. Good human relations and a strong sense of group responsibility usually serve as the main motivators in Japanese companies. Operating in China, Japanese often perceive the Chinese as ranking low on Maslow’s pyramid of needs and therefore concentrate mainly on material incentives to motivate the local workforce³⁵. Differences in payment are considerably larger, more performance – oriented than in European companies and average at 29% with similarly qualified employees.

The European companies, mainly motivating its staff through the prospect of financial rewards and personal achievement, take a different approach. Differences in salary are lower to ensure a harmonious climate. They offer promotions, status, prestige and good career opportunities including the possibility of self – actualisation to local employees³⁶. In the European view, the Chinese have already begun to move towards a stronger femininity orientation than is perceived by Japanese companies.

One effect of these different policies is obvious in the composition of the work forces. Japanese companies in their majority attract mainly younger Chinese and have a higher rate of personnel turnover than their European counterparts (25 to 35 years and 3 – 5% to 5 – 15%)³⁷. This composition provides evidence of the Japanese preference for employees not heavily influenced by communism and also indicates that young Chinese employees have a lower uncertainty avoidance than their older peers.

 Conclusion

The most striking difference between these HRM approaches seems to be the reversal of roles taking place in China. European companies place their bets on self – acutalization and Theory Y³⁸ management practices. Japanese companies harbour a certain mistrust towards their employees and therefore are more Theory X oriented. Theory X is applied by managers who mistrust their workers and place them under constant control. Theory Y implies trust in employees and allows them more freedom to take own decisions.

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