Analysis of Socio-Political Factors on Xikron Stores in China

Desklib provides past papers and solved assignments for students. This essay analyzes Xikron's IHRM challenges in China.

International Human Resource
Management

Contents
Introduction....................................................................................................................................2
Discussion.......................................................................................................................................3
Conclusion......................................................................................................................................7
Recommendations..........................................................................................................................8
References.......................................................................................................................................9

Introduction
The following essay provides a brief discussion about the effect of economic, political,
technological and social factors on stores of Xikron in China. The social, economic, political and
technological factors of China are analysed along with their effect on the organisation. Cultural
differences between China and the US are studied. Further, it includes necessities for the purpose
to manage the institutional effects that are on the HR practices in China subsidiary.

Discussion
Impact of political, economic, social and technological factors on Xikron’s store in China.
Analyse the two countries cultural differences and how they influence IHRM practices.
China is one of the attractive locations in the world. The rise of China to become one of the
world’s strongest power has provided a boost to international business. The size of the market,
low labour cost and high growth potential are the major things attracting foreign investment in
China. The opening of China for cross border economic activities has made China integrate with
the rest of the world. The expansion of Xikron is also the result of all these growth factors in
China. But doing international business in China is not so easy because of the various factors
affecting the economy and business market. The major challenges for businesses in China are the
local differentiation, attaining the strategic objectives of reducing costs and to strengthen the core
competencies. The factors affecting the business in China include political, economic, social and
technological factors. Also, the cultural differences between the US and China have a major
influence on IHRM practices. A brief discussion of the effects of political, economic, social and
technological factors and the cultural differences between US and China on the business of
Xikron are as follows:
Political factors
Political factors play an important role in how the organisation carry out its business activities.
Legal issues and Government regulations affect the organisation’s profitability and success rate.
Political factors include various issues some of which are tax guidelines, political stability,
employment laws, trade regulations etc. Xikron should also consider the federal and local power
structure as a shift in power also affects the business (Brombal, 2017). The organisation needs to
abide by both formal and informal rules impacting its operation. The political factor is the most
unsettled force affecting business operations. The stable political environment is beneficial for
Xikron but the major area of concern is unavailability of political freedom. The politically stable
environment provides an opportunity for foreign direct investment (He, 2016). The lack of
openness from the government in the political system of China is questionable. Legal issues
include China drafting legislation for intellectual property rights, tax etc. However any particular
legislation has not been developed regarding digital signatures, validation of electronic contracts
etc (Wang, and Ye, 2016). Political factors conduct regulation and deregulation trends. The

legislation is maintained on consumer and environmental protection. Political factors change the
political environment of Xikron (Liu, and Wang, 2016).
Economic factors
China on the basis of purchasing power is the largest economy in the world. The economic
factors benefitting the operation of Xikron in China are the abundant skilled and cheap labour,
potential urban growth, high savings rate. Economic development has a major impact on the
organisation. GDP rate of China provides that each and every citizen of China is increasing the
value of the economy (Ramaswami et al. 2018). The cost of labour is very low in China and the
growth rate is very high. However, there are some factors which are not beneficial for Xikron.
These include a high inflation rate and high property prices. Reserve requirement and interest
rates both are increased which is a negative factor for the organisation (Yang et al. 2017).
Introduction of a new product requires consideration of current economic growth, interest rates
and inflation. It also has an impact on labour supply and unemployment. It generated the level of
distribution of income and disposable income. The economic factors help in analysing the
importance of the success of the organisation. It includes focusing on all the factors including
inflation, unemployment, interest rates, domestic products and inflation (Hu et al. 2016). It is
very essential to know about the interest rates imposed. High inequality, environmental
challenges and rapid urbanisation are some of the challenges faced in the economy of China.
Cheap labour provides a competitive advantage in the economy of China (Zhang, 2017).
Social factors
China is the highest populated nation having a population of around 1.4 billion. This is a huge
market for purchaser items. Normal pay level has risen throughout the years which brought an
expansion in consumer spending. It is clear to be referred that many individuals of China, similar
to the citizens of other developing nations, look for grown-up toys such as advanced cells,
extravagance vehicles, and fashioner garments to show and fulfil their prosperity (Song et al.
2018). Almost certainly that expanded buyer spending is incredible open doors for the
organizations including both households as well as remote. China has an education rate of
96.4%. Like the amazing advancement in the rate of education, China also made huge progress
in decreasing poverty (Li, and Chen, 2017). More than 68 million individuals in China have been
lifted out of poverty over the recent time period of five years. Also, it is referenced that China
plans to kill total poverty by the year 2020. However, China is still confronted by some social

difficulties even today (Liu et al. 2017). For instance, the maturing populace is a zone of
concern. Numerous experts propose that it should build the rate of birth and progressively
welcome outside specialists. The social factors of China assume a significant role as a society
and economy changes continually. For instance, fluctuation of population and distribution of age.
These can modify social patterns and social qualities. Social practices and size of the family
frequently sway how choices are made. Some of the other social factors are purchaser ways of
life, instruction, religion, and migration. Increased labour costs, poverty rate and all other social
factors affect the operation of Xikron. Changing trends have changed the way local consumers
are shopping. But still, some of the group still avoids the risks associated with adopting the latest
technology and prefer to avoid the use of the latest technology and products (Wang et al. 2016).
Technological factors
There are various technologies prevailing in the business environment of China. With the launch
of ‘mass entrepreneurship and innovation’ programme in 2015, China has the vision to be the
leader of science and technology in the whole world (Liu et al. 2015). This program is focused
on spreading business enterprises all over China. Additionally, it intends to help the country to
shift from a work escalated economy to one being driven by development. Hence it is not very
hard to know how extraordinarily y the doors of China are open for residential and international
organizations, mainly in the area of science and innovation (Yao et al. 2015).
China’s major technological issue is that the development of businesses doesn’t have a stable and
safe online system of payment. As Chinese customers are on a high level of Uncertainty
Avoidance and Long-Period Orientation, the issue strengthens.
The cultural differences of both the centuries also have a major impact on conducting the
business and on IHRM practices. As the culture of both countries differs from one another the
organisation needs to change its policies as per the requirement of the economy and society of
that country (Walcott, 2017).

Managing the institutional effects on the HR practices in the China subsidiary
The United States is a generally little power distance nation, whose employees tend to not
acknowledge the idea of administrative benefits, the lower level normally thinks they are
equivalent to the higher level. So the connection between workers and management is
increasingly equivalent. The staff is great at getting the hang of, advancing, outperforming
ourselves and acknowledging individual incentive in the United States. Generally, China is a
nation with a bigger power separate, where the status symbol is significant (Noe, 2017). Also, it
is thought to underestimate that the predominant have benefit, which enormously helps to the
usage of the power from better than subordinate. These highlights clearly against the agreeable
connection among representatives and chiefs and continually learning and advancement of
workers in the endeavour. Along these lines ventures in China ought to receive the humanistic
approaches, which incorporate building the agreeable connection among staff and directors,
giving the chance to figure out how to representatives work, and keeping them advancing. It is
vital for the supervisor to lessen the separation between the venture interior powers practically
speaking, which can elevate to accomplish the board goals better.
The United States is the general public of the low degree vulnerability shirking, the equivalent
humanistic approaches do not work in the venture of United States, for example, 'in general
quality administration' actualizes great in China but it has no impact in the United States. China
additionally has a place with the general public of the high vulnerability evasion, in this manner
it ought to be reasonable and viable to actualize worker support in the board and increment the
security of professional humanistic approaches in China. What's more, in the general public
having the low vulnerability shirking level, the people will undoubtedly recognize the
characteristic vulnerability of life and can recognize more suppositions, the subordinate's
approval from the unrivalled is executed all the more altogether and the representatives watch
out for free administration and autonomous work. What's more, in the general public with a high
level of vulnerability shirking, the better tend than the severe control and clear directions to a
subordinate.
All these differences between China and the United States make it clear for Xikron to form its
policies for China subsidiaries as per the economy and society of China and successfully manage
the institutional effects on the HR policies (Brewster, 2016).

Conclusion
From the following essay, it can be concluded that the political, economic, social and
technological factors have a great impact on an organisation. All these factors present in the
market of China are analysed and the way they impact the business of Xikron is studied. The
cultural differences in the US and Chian are studied with their influence on IHRM practices
along with providing how the institutional effects that are on the HR practices in China
subsidiary can be managed.

Recommendations
The recommendation for Xikron to successfully conduct business in China subsidiary and keep
growing continuously is that it gives up the policies which have a cultural and economic
difference in US and China and frame policies which are suitable as per the culture and economy
of China, which will be beneficial for the organisation as well as the country.

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