Business
The rapid economic development of China opened up a myriad range of opportunities along with equally numerous challenges for the international firms that were in pursuit of integrating themselves with the banking industry of China. Regardless of being founded upon a vast set of highly conventional and conformist guiding principles, the government of China was pretty successful in attracting considerable amount of foreign direct investment and garnering international interest for itself. However, while several emerging economies adopted several trends that many global banking pioneers had set in the industry, China on the contrary designed its own conformist standards and literally pressurized the banking pioneers to conform to all those norms. Contrary to the mergers and acquisition strategies, which many foreign direct investments followed, China essentially came out with a plan of strategic partnerships that had a maximum accepted limit of 20%, while for any bank, the overall foreign ownership was plugged at 25%.
Many international banks had actually created tailored policies for lending to suit the diverse clientele, and this customization was also extended to the cards that these banks offered, as well as also to the various asset management products with an objective to successfully cater to the gigantic market of retail banking world over. The conglomerate of the foreign partner and the Chinese banks not only required a strategic fit, while being complementary in nature, but it was also required that the association conformed to the culture and value system of China which also had to slowly alter the entire banking system a highly beneficial partnership for the parties involved in the association.
One of the biggest challenges for such a strategic alliance proposed by the Chinese government, stemmed from the integration and collaboration of the key functions of human resource management (HRM) like for instance, “HR planning, staffing, performance appraisal, training and development, employee retention, etc.,” with the culture and value system of China.
The following are the few key challenges, specifically in relation to HRM and cultural differences that foreign direct investment into the Chinese banking sector resulted in:
Several multinational organizations that entered the Chinese market had to handle the myriad challenges which the Chinese economy posed in terms of the labor market scenario, system of employment, and cultural differences among others, which were dramatically different in China when compared to the other global economies. The management style followed by Chinese organizations was based predominantly on relationship building and more importantly the element of trust and there was also a strong correspondence between the personal and professional realm and this was not the case with the countries in the West. Another significant variation was found in the Chinese business organizations was with respect to the employment of female personnel as Chinse businesses usually sacked the female employees first and there were not too many businesses that had female business leaders. This can be attributed more to the orthodox culture of China, which despite liberalization and a dramatic amount of economic development, has not changed much even today.
Family run businesses or entrepreneurship had an increased support in China, contrary to being employed in any big multinational organization. The number of educated and proficient managers and employees was considerably low in China when compared to other parts of the world.
Discussion Question
Works Cited
Chaudhuri, S. "Foreign Investments in China's Banking Sector: HR Challenges." Case Study. 2008.
