When it comes to countries such as china there is a major issue to be considered while planning the offshore activities. The most important aspect of working with china is there culture. Chinese people have being doing business over thousands of years and their business ethics have being shaped by the culture in which it has developed so far. Therefore when it comes to Chinese culture, business system and ethics the keyword to remember is known as guanxi.
Guanxi is literally means networking.Guanxi basically means making connection with other people other than just on business or agreement level. This involves making connections at a very personal level which in turn gives them a lot of trust between the two parties. If conducting any kind of business in china the most important factor for a right business operation is having the right guanxi.
The implication of this process is that it is very hard for the western executives to carry out their hiring practises, since they do not know who the right employees with the right guanxi are.Another problem that possess is most of the companies U. S and other western parts consider guanxi as corruption. The difference can be seen clearly. The western culture is more transactional whereas the Chinese culture is built largely on honour and respect. Due to these cultural conflicts the Chinese employees are forced to abandon the guanxi and follow other western practises which eventually cause a decrease in loyalty to the company.
On the other hand what the western companies do not understand is the importance of guanxi. It cannot be considered as bad for any kind of business.For example for building the production facilities employees who has a connection with local government can provide western companies to get assistance in regulatory or zoning disputes. Another example would be that a friend of an employee would be able to provide supplies at a much cheaper cost or better quality. For the examples provided above a Chinese employee in a western company would return the friend the favour with a gift. But this gift could get the western companies into trouble because of its laws such as foreign corrupt practises act in United States of America.In order to identify few solutions to the negative implications the author decided to look at some of the most successful multinational businesses such as McDonald’s, Coca Cola and Pepsi. These three companies have a very distinct approach compared to other companies.
When it comes to well-known brands throughout the world the demand for labour in those companies is higher. Therefore these companies can afford to force and have dominance over the labour with their organizational culture and corporate values over national culture differences.Although it is not Asia Disney and their venture into Euro Disney also shows a very good example of complacency and balance between the organization culture and the national differences. However although there is a balance there is always a tension between corporate and national culture. In order to achieve success on strong and dominant corporate culture the companies have made it so clear that the easy joiners and people who quickly get on and incorporate with the corporate culture and override their national culture are much rewarded and have a long way up the ladder in the corporate hierarchy.Therefore from these organizations what we can see is that their global standardization in their MNC is is much stronger than their localisation and they have figured out a way to push that by having a worldwide corporate culture with a standardized HRM practises in worldwide basis.
However this kind of approach is not very appropriate when it comes to many MNC’s trying to cope up with the challenges in globalisation. Therefore as a solution we do understand there should be some sort of balance between localisation and standardization.