Strategic IHRM: British High-Tech Engineering Firm in China

This report analyzes the ideological framework of China and the UK, focusing on the importance of understanding multinational corporation (MNC) intentions when expanding into a new market. It discusses how a British high-technology engineering company can establish its R&D subsidiary in China by aligning its business intentions with China's ideological framework. The report examines different strategies such as ethnocentric, polycentric, and geocentric approaches, and the challenges employees face when transferred from the UK to China, including cultural differences, values, and lifestyle adjustments. It also delves into cultural considerations based on Hall and Hall's theory, emphasizing individualism/collectivism, masculinity/femininity, and power distance. Furthermore, the report addresses institutional considerations, comparing employment laws, trade unions, and labor market segments in China and the UK, and highlights the institutional gap between the two countries. Finally, it explores employee relation considerations, contrasting leadership styles and trade union control, and emphasizes the importance of understanding HRM practices in MNCs.

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Ideological framework of China and U.K
Ideological framework mainly consists of culture, value, believes and Ideology. In very short
period of time China has increased their presence in the global platform because this country has
truly identified their all business factors which are essential for growth and development of any
country like economic, cultural, political and technology (Ralston et al., 2008). China national
environment mainly national circumstances are totally contradicted to British cultural principles
of individual liberty, equality and human rights. China is governing by the communist party and
hence the country is displaying autocratic ideology by even monitoring disagreement between
the citizens of the country which provides them control over the political aspect. While Britain
government support democratic ideological by allowing citizen to put their differences in front
because they believe that it is not always right to node our head in every situation. Britain offers
full support to freedom of expression as compared to China (Massetti, 2009).
Varieties of capitalism
China has a very robust policy related to export which has helped them in generating huge
amount of foreign exchange reserve. Similar kind of ideology was followed by Hong Kong,
Singapore and Taiwan in their earlier development phase. In China, the government has full
ownership of the land and land is not considered as the private property. Instead of that a long
term lease is being circulated which is uncommon in countries like Britain (Hall and Thelen,
2009). In China, the government has full control over the capital account which is still being
practiced in various countries. At present China must be compared with developed countries like
Britain as compared to developing country in terms of their growth and development.

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(Source: Swanson, A, 2015)
(Source: Statistics on world population, GDP and per capita GDP, 2008)

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(Source: Swanson, A, 2015)
Importance in understanding MNC intentions
As per the study, MNC is considered as the part of society which promotes continuously
relationship among the people of the country. It can be said that the aim of present MNC is
directly linked with the society benefit, so as their intentions. Hence, it is very important that the
intention of the company must offer the social benefit to the society in which they are going to
operate (Ahlvik, Smale and Sumelius, 2016). Hence, if British high-technology engineering
company wants to establish its R&D subsidiary in China, it has to match their business intention
with Chinas ideological framework. In addition, MNC intention must be connected to the
technology advancement in the life of the common individual both at personal and professional
stage.
Ethnocentric strategy will help the British high-tech engineering company to expand their control
on the business operation on the base of cost related to the responsiveness from China but overall
control will be in the hand of the parent company. It can be said that business operation control
will be under the centralized system (Lauring and Klitmøller, 2015). While polycentric support
decentralized business system because they believe that China local people are more aware of the
business environment in their country as compared to people sitting in Britain and hence support
localization of business. Geocentric approach will help in offering competitive advantage

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connected to the British company which can offer both local and international benefits. More
even these approaches are totally dependent on product, geography of location along with
operating decisions (Jin et al., 2014).
When an employee will be transferred from the UK to China, employee will face various kinds
of challenges in terms of cultural difference, values, language and lifestyle. The employee has to
adjust not only in professional lifestyle but also in personal lifestyle. Hence in this situation,
British High-tech engineering company has to invest some amount on the training of the
employee (Hartmann, Feisel and Schober, 2010). In this training, the person will be made aware
of the value, believes and working behavior of China culture and according to Dowling DeCieri
model, all these aspects must be linked with the internal and external strategy of the
organization. In the foreign project, failure mainly occurs when the employee is not able to
adjust in another country because of an effective compensation strategic plan and cultural
differences. In order to handle this situation, management will be provided a helping hand in the
form of better compensation plan so that employee will remain satisfied in China working
culture. One of the best examples is KFC, which entered in the China business and trained their
executive in terms of culture, behavior, and values related to the China business culture (David
Bell and Shelman, 2011). Another best example is Apple, which entered the China market by
developing trust and friendship connection through their exclusive mobile as compared to China
mobile.
Cultural consideration
Hall and Hall theory mainly focus on cultural differences or gaps in terms of specific dimension
like individualism/ Collectivism, masculinity/femininity and power distance. Among these
sections mostly used dimension is individualism/ Collectivism because it offers the level up to
which the person is engaged with the group. China culture supports very little to individualism
concept which is connected to personal space which seems to be important for western trend.
While Britain culture is always in favour of individualism aspect because personal space is very
important for them in terms of personal as well as professional life. In China, work is generally
associated with a collectivistic culture prospect which is directly linked with the organization
while in Britain, work is generally considered as the responsibility of the employee which is
associated with the organization (Anderson et al., 2010). In China, organization executives

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usually use the relationship as an important tool to direct their employee while in Britain;
organization executives usually make use of their influence to control the function of their
employees. In China, employees are mainly influence by autocratic leadership as compared to
Britain which follows democratic leadership in the organization business operation. When it
comes to power distance, China seems to be ranked at the top as compared to Britain because in
China organization, power is unequally distributed and British company must focus their interest
in the favour of their China strategic partners. In addition to, China usually try to engage
themselves in slow negotiations as compared to Britain who wants immediate results because
they believe time is equal to money. As China follows particularistic culture, therefore friendship
relation plays a very significant role in the achievement of business negotiations and if any
business deal situation, friendship like environment is not displayed then there is maximum
possibility that they will refuse to carry out deal (Tung, 2008). In addition, China citizen believes
that a person should carry a gift as a token of friendship while getting engaged in any kind of
business deal which is not common in British business culture. British people like surprise and
are ready to deal with the stranger for profit but when it comes to China people, they are not
comfortable with surprise and will deal with that person which they can see from friendship
point of view. It has been some case, many organization overlook the culture difference between
two countries and as a result of this, the organization has to face heavy loss. Hence, the employee
who is working in China from Britain must take care of all the cultural aspects associated with
local people in order to form a strong base in China.
Institutional consideration
In China, law related to employment includes aspects that are related right from recruiting person
till the person is fired from the company and has no space for any party to interfere in this matter.
While in Britain, law related to employee mainly focus on the restriction towards exploitation of
labour and is completely influenced by the labor party ideology. Both China and Britain
government has complete control over the trade intervention related to their countries. All-china
federation of trade acts as the trade union of China while in Britain the union is controlled by
British Labour party which has fought for its value in the business world. In China labour market
segment includes different kinds of worker, right from local urban labour to migrant workers,
contract or permanent workers (Kshetri, 2009). All these types of worker perform almost similar

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kind of duties which is mainly influenced by type of industry. In Britain, Labour market has
changed its image due to the lack of employment or rise in unemployment which has hampered
their labout market. At present time there is huge Institutional gap between UK and China
because China has advanced its production operation which has offered them an additional
advantage over UK and even China has displayed serious threat in terms of GDP. In this
situation, Britain Company has to put a lot of effort in order to overcome the gap between the
two countries with the help of their advanced technology. Chinas stronger GDP acts as
opportunity for this British High-Tec engineering company to increase their market share by
targeting this huge population country with their high quality products. In addition purchasing
power of China is good which a beneficial point is for the company. One of the best examples is
KFC Company, in which company overlooked the influence of national institute by entered in
the China market with the same business prospect functioning in their home country and as a
result of this the company has to sustain heavy loss in terms of sale.
Employee relation consideration
Key ideological difference between UK and China is that UK follows a democratic leadership
style while China follows the autocratic leadership style. In addition, China seems to be more
complicated in terms of culture and believes as compared to Britain culture. In China, Trade
union is under total control of the China government and all-important decision is taken by
government officers. In China pay and terms & condition of the employment will be totally
dependent on the labour way policies under which a written contract will be offered to the
employee which will specify time, job description, place, leave and working time before signing
(Ngo, Lau and Foley, 2008). The employee will work for 40 hours per week and will be offered
overtime in case of spending more time then set up working time. Overtime should be in the
percentage of 150, 200, 300 dependent on the working situations. While appreciating employee
in China these are some patterns which must be avoided. Rewards should not be promised in
advance, reward should not be given in public and third thing is that rewards should be given to
peers not only to subordinates in the company.The employee can discuss their issues if they are
not satisfied with the business operation of British company. One of the main difference between
employee relation between UK and China is that UK employee has the power to claim over

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dismissal as compared to China by displaying the enforces power like workplace discrimination,
breach of contract and so on.
Countries’ institutional
environments are key
features in codifying how
HRM practices of MNCs

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