BAM777 Case Study: Xikron's IHRM Challenges in China

This case study examines Xikron's expansion into the Chinese market, analyzing the political, economic, social, environmental, and legal factors influencing its operations. It explores cultural differences between the US and China, utilizing Hofstede's model to illustrate their impact on IHRM practices. The report highlights challenges related to human rights, political risks, and cultural values, as well as economic factors like FDI and inflation. Technological advancements and infrastructure development are also considered. The analysis provides insights into managing institutional effects on HR practices, recommending strategies for navigating the complexities of the Chinese market, including employee relocation, cultural training, and adapting HR practices to the local context to ensure the success of Xikron's subsidiary in China.

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International Human Resource Management
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Introduction
Over the past decades, China's economy has grown to be the second after the United
States in the whole world. The rapid development in China is attributed to technological
advancement, increased foreign investment, and enhanced productivity, as well as new potential
market opportunities, thus becoming their largest trading nation after the US and Germany. (Gao
& Banerji 2015) China’s potentiality thus provides numerous multinational cooperation’s with
the opportunity to expand into the China market. The following report explores the expansions of
Xikron’s store from the US into the Chinese market. The report takes into consideration
Chinese’s political, economic, social, environmental and legal factors that might influence the
operations of Xikron’s store. The report further analyzes the cultural difference between the US
and China and illustrate how these differences influence IHRM practices with examples from the
journal. The report consequently summarizes with recommendations on how I will accomplish
the recognized outcomes on the HR habits in the China subsidiary.
Political factors
China is a communist state according to the constitution; meaning that it is under
peoples’ self-governing dictatorship commanded by the salaried group and grounded on the
association of labor force and farmers. The Chinese government is composed of multi-party
collaboration and political consultation led by the Communist Party of China(CPC); thus both
the leading party and consultation parties take part in the country’s crucial decision making
aspects such as on political, economic, cultural; and social affairs.
Human rights -China does not pose well developed human rights safeguarding entire
country’s population. Human Rights Practices and International Religious Freedom Report of

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2007 indicated that China was still on the verge of abusing global human rights and norms as a
result of an inadequate legal system (Li, 2013). Some of the reported incidences entailed
restrictions speech, association, privacy, and workers’ rights among many others. These poor
human rights will affect Xikron’s employees who are being relocated to China to continue the
success of the organization. Most of the employee might have enjoyed protection from various
federal governments the US, an aspect that they might not get in China thus affecting their
productivity.
Political risk -China is regarded as one of the worst states in regards to political risk such
as confiscations, expropriation, and currency inconvertibility and contract repudiation (Noakes
2014). Other political risks arise amid the Chinese’ central government and the provincial and
local governments over numerous applicable laws thus disrupting numerous activities such as
business operations such as Xikron’s thus may end up making losses or closing down depending
on the frequency of the misunderstanding.
Cultural and social factors
China’s population is the largest in the whole world and continues to expand yearly with
about 15 million. The rapid growth rate in China is attributed to the drop in the death rate (Zhu
2018). The large population provides ready market to the Xikron Company’s product, enhancing
high probability of succeeding. The whole population is not based on race rather is based on a
cultural concept; thus all the Xikron company’s employees will be required to speak and behave
like a Chinese by adopting the cultural values. Chinese cultural values tend to be complex since
it is based on the pervasive influence of Confucian philosophy of the Chinese culture; which is
the core identity of the Chinese .The most important values in Chinese culture are based on the:

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family importance, Hierarchical structure of life, hard work and achievement and cultivation of
morality(Chung'ha 2012). The hierarchical structure observation in China is quite different with
that of UK, thus employees will be forced to submit to the authority in the country irrespective of
the country’s power distance index. The five official religions recognized by Chinese
government are Buddhism, Taoism, Catholics, Islam, and Protestantism; thus those that seek to
practice their religion outside the official ones are subject to intimation and harassment. This will
affect the Xikron Company’s employees as most of them are diverse from different parts of the
world with different religion and cultural believes, however, with good cross-cultural training,
the relocating employees will be able to work in the Chinese diverse culture.
Economic Factors
China has become one of the largest recipients of the world’s destination of FDI over the
past few years. China’s FDI now accounts for the 27% of the value added production, 58% of
foreign trade resulting in 4.1% national revenue collection. Over 100 countries now invest in
China as a result of the establishment of the FDI environment by the Chinese National
Development and Reform Commission (NDRC) in 2006. The proposal focused on the
relationship between foreign venture and security investment, thus instructed China to relax
limitations on overseas property enterprises.
Inflation rate refers to the general rise of products and services’ prices computed
alongside a average level of procuring power. The price increase rate of China has always been
dropping; for example, it dropped by 1.5% in 2009 compared to 2008. The falling price of
products tends to encourage consumer’s buying behavior thus spend a lot in purchasing of
products which ultimately affect the organization’s revenue collection (Lei, Yin & Zhao 2012).

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Consequently, the production cost also tends to drop as raw material cost is acquired at a much
lower cost. The dropping inflation rate helps the Chinese economy to recover from the
diminishing exports thus joined the world to become one of the competitive global markets with
a focus on textiles, garments and electronic exportation.
The stability of the economic status and the low inflation rate is a good working
environment for Xikron Company since it is sure of a great number of consumers who have high
purchasing power. The large sales from the Chinese will enable the company to build a strong
base in China.
Technological factors
Along with economic growth, the chines technological level is rapidly growing as a result
of increased scientific research. The technological advancement is focused more on nuclear
energy, next-generation communication, robots, and supercomputers (Li & Lu 2013). These
electronic devices have been exported to other countries thus improving the economic status of
the country. However, the disadvantage of Chinese technological development is the inadequacy
of safe and stable online payment for B2B industries (Coccia 2014). This will affect Xikron’s
operations since it will not have a strong ability to partner with other business to enhance its
market.
The Chinese infrastructures have developed over the past few years as a result of the
liberal economic policies that were strengthened in the 1980s. However, the transportation and
communication system is not that adequate thus forcing China to embark on building world-class
infractions (Zhan 2014). The good roads build key aspects for easy operations for Xikron’s since
it will have an easy time accessing raw material and distributing the products to various

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customers. Additionally Xikron will not spend a lot of money to establish required infrastructure
such as communication system since Chinese’s government is working on that to provide it to all
business entities.
The cultural difference between China and the US, and how the differences affect IHRM
practices
Every country has defined a cultural structure that differs across countries. These cultural
aspects affect business enterprises thus is significant for vapor expatriate to understand the
various culture before going into to manage abroad fully(Liu, Pei & kimwonkyoung 2014). The
cultural difference between China and the US can be extensively understood through the
application of Hofstede’s Geert model that consists: Power Distance, Individualism, Masculinity,
Uncertainty Avoidance, and Long-Term Orientation.
Power Distance Relationship
The power distance relationship measures the level of power exhibited by particular
members of a team who always expect the power to be unevenly distributed. According to the
PDI, the level of power inequality in a team is facilitated by both followers and the leaders. Both
China and the US have a large disparity in terms of culture; for example, China has about 78
while the US has a score of 40. This means that chines are more likely to accept power inequality
than the U.S (Garcia, Velez & Vargas Leon 2012). The difference in power distance index affect
IHRM practices in different ways: supervisory staff level tends to be more in China than in the
U.S. Thus it is quite easy to work with U.S staffs since they require minimum supervision unlike
the counterparts in China. Secondly, in the U.S, most of the decision-making responsibility is

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decentralized and shared among the employers and employees, while in China; the decision-
making responsibility is solely left to the employer.
Uncertainty Avoidance
The uncertainty Avoidance index focuses on the society’s easiness for uncertainty and
points out the level to which a culture programs its fellows to feel uncomfortable in unstructured
situations. China tends to have a lower score of 30 as compared to U.S score of 45; this means
that U.S culture is likely less tolerant to different opinions from they are used to, therefore,
maximize uncertainty by strengthening rules and regulations. The difference in Uncertainty
Index in both countries affects the IHRM differently:
The high in the U.S requires the IHRM to make promotions of an employee concerning
age and seniority. The high level of UAI creates a high level of anxiety and aggressiveness thus
resulting in a team that works harder than a society with low UAI (Collings 2012). Additionally,
it is quite hard to administer organizational change among societies with high UAI since
employee resistance is paramount than in the low UAI societies. Xikron Company thus can
reduce the uncertainty level by strengthening the rules of the relocating employee to China such
as the compensation packages.
Individualism-Collectivism
Individualism-Collectivism refers to the degree to which each person is integrated into
different group and society as a whole. U.S society has high IDV score of about 92 while China
has a score of 21 (Zaharna 2015). The low score means that individual in China are highly
integrated into society by showing loyalty to the members, while the high score means that each
person is more likely to exist on its own (Ge, Lee, H & Wang 2018). The difference in the IDV

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means that it is very easy for the IHRM to create a cohesive workplace team in China than in the
U.S. It is quite difficult for the IHRM to bring different group member into the low IDV culture
since the group member will be shown some rejection and indifference, thus managing diversity
is challenging in China than in U.S. Additionally, employee selection and recruitment procedure
in an individualistic society is based on the personal record while in collectivism culture the
recruitment is based on the group members recommendations. The challenges pose by difference
in the IDV, is solved by Xikron in recruiting the American born chines and Indians who have
traces of all cultures and can fit both in the collectivism and individualistic aspects.
Masculinity and Femininity
The masculinity dimensions of a society are determined by the level to which the
traditional male values such as ambition, achievement, and performance are significant to
society. Therefore, the opposite end of the opinion is labeled as feminists. The feminity society
tends to share most values between men and women. China has high masculinity than the US
(Zhao and Yu 2017). Thus IHRM has tended to have difficulty in recruiting women to take some
roles such as a supervisory position. Unlike in U.S Xikron can achieve this through its plan of
recruiting the chines which are educated in the US, since they will have the capability of mixing
both cultures to lead the subsidiary in China.
Explain how you will manage the institutional effects on the HR practices in the China
subsidiary
Since China is becoming one of the worlds’ emerging markets and has large institutional
indifference, it is imperative for the HR manager to acquire good practices that will ensure the

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success of foreign organizations established in China. I will personally manage the institutional
effects on the HR practices in China subsidiary through the following ways (Wang 2016):
I will strive to reduce the distance between the china subsidiary and internal power in practice
through adopting more humanistic policies thus will help in enhancing the relationship between
the employees and the employer/manager.
Secondly, I will strive to develop a more socializing management style to achieve a
competitive culture. The socializing management style will allow the born chines to feel valued
thus allow them to air their concerns as well as their task contributions and views, unlike their
culture where they just follow orders from the authority who might be wrong sometimes. The
competitive culture thus will allow me to adapt to the chines culture, develop a collegial
leadership style and more improbably break the cultural glass ceilings existing between different
employees at the chines subsidiary.
Conclusion
In conclusion, the cultural difference has a great impact on the predominance of business
especially the foreign origins. Different cultural aspects affect the HRM practices thus requires
managers to have a full understanding of the cultural setting through the Hofstede model. U.S
and China have a great cultural difference, and thus as a manager, I will ensure and implement
the following to address the industrial practices in China: adoption of humanistic policies and
socializing management style.

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List of References
Chung'ha, Z. (2012). Online Shopping Model for Luxury Goods : Empirical Comparing in
between China and the USA. The e-Business Studies, 13(2), pp.241-258.
Coccia, M. (2014). Driving forces of technological change: The relation between population
growth and technological innovation. Technological Forecasting and Social Change, 82, pp.52-
65.
Collings, D. (2012). International Human Resource Management: Policies and Practices for
Multinational Enterprises. The International Journal of Human Resource Management, 23(7),
pp.1509-1511.
Gao, Q. and Banerji, S. (2015). The growth appraisal system for Chinese SMEs. Journal of
Chinese Economic and Business Studies, 13(2), pp.175-193.
Garcia-Murillo, M., Velez-Ospina, J. and Vargas Leon, P. (2012). Where Should Governments
Invest? The Impact Economic, Political, Social and Technological Factors on the Formation of
New Firms. SSRN Electronic Journal.
Ge, X., Lee, H. and Wang, S. (2018). Market Expansion in China: Understanding The Influence
Of Cultural Dimensions And Individual Characteristics In Social Media Usage In China. Global
Fashion Management Conference, 2018, pp.533-533.

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Lei, X., Yin, N. and Zhao, Y. (2012). Socioeconomic status and chronic diseases: The case of
hypertension in China. China Economic Review, 23(1), pp.105-121.
Li, X. (2013). The Weak Link: Diagnosing Political and Social Factors in China’s Environmental
Issue. Chinese Studies, 02(04), pp.178-184.
Li-Hua, R. and Lu, L. (2013). Technology strategy and sustainability of business. Journal of
Technology Management in China, 8(2), pp.62-82.
Liu, Pei Sheng and kimwonkyoung (2014). A Study on the Impact of Culture Differences on
Product Design - Focused on Geert Hofstede's Cultures Dimensions Theory -. Journal of Digital
Design, 14(2), pp.713-723.
Noakes, S. (2014). The Role of Political Science in China: Intellectuals and Authoritarian
Resilience. Political Science Quarterly, 129(2), pp.239-260.
Wang, J. (2016). Hours underemployment and employee turnover: the moderating role of human
resource practices. The International Journal of Human Resource Management, 29(9), pp.1565-
1587.
Zhang, K. (2014). How does foreign direct investment affect industrial competitiveness?
Evidence from China. China Economic Review, 30, pp.530-539.
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Between China and America From the Perspective of Cultural Dimensions. US-China Foreign
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longitudinal study. The International Journal of Human Resource Management, pp.1-20.

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Zaharna, R. (2015). Beyond the Individualism-Collectivism Divide to Relationalism: Explicating
Cultural Assumptions in the Concept of “Relationships”. Communication Theory, 26(2), pp.190-
211.