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“The Japanese vs. the European (Swiss – German)

Approach to Human Resource Management in
China”

MCD Term Paper

Summer semester 2002

By: Dennis Damer, BBA2
Type: Research Paper
Word Count: 1683 (main text)

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“The Japanese vs. the European (Swiss – German) Approach to Human Resource
Management in China”

Table of Contents

Content Page

Table of Contents 2

Introduction 3

Intercultural Dimensions – Definitions 3

Main Influences on Cultures 4

 Chinese Culture
 Japanese Culture
 German Culture

Issues in HRM in Chian 5

 The Recruitment Process
 Education and Training
 Motivation and Remuneration

Conclusion 6

Bibliography 7

Notes

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Introduction
Venturing into China is a formidable challenge for almost every foreign company. The entry into
the Chinese market offers cheap labour as well as access to 1.3 billion potential customers 1 as China
advances economically.
Nowadays Human Resource Management is of vital importance to the majority of companies.
Even though companies might not shift their core business functions such as R&D to China or only
use it as a cheap manufacturing base, success and failure are to a large extent determined by whether
one is capable of handling the local work force.
As will be shown later, Japanese and European companies widely differ in the ways they manage
their Chinese employees. The Japanese approach is worth an examination as Sino – Japanese
companies operate very successfully and Japanese managers enjoy a reputation for being
interculturally sensitive2. Still, there are voices describing Japanese as overly xenophobic and cautious
in international business only outsourcing functions which allow for a quick recovery of capital3.
It needs to be said that the statements given by the author and the ones referred to should be seen as
vague, general tendencies and not as undisputable facts. They may apply to most members of a culture
to some degree but not to each and every individual.

Intercultural Dimensions
In the following paragraph I will explain the intercultural dimensions occurring in the paper. It
needs to be clarified that not all aspects of the single dimensions will apply a hundred per cent to the
cultures discussed. Especially the Chinese culture is developing dynamically4 and might sometimes
show seemingly contradictory characteristics.

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Collectivism vs. Individualism

 Group valued higher than the individual  Individual achievement

 Group responsibility  Qualifications valued higher than
 Group harmony relationships

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Femininity vs. Masculinity

 Quality of life  Achievement/ career orientation

 Family orientation  Personal advancement
 Job satisfaction
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High vs. Low Power Distance

 Authority based on position/ status  Authority based on professional

 Hardly any disagreement with superiors knowledge
 Top – down decision – making  Subordinates involved in decisions

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 Bottom – up decision making

High vs. Low Uncertainty Avoidance8
 Formal rules  High mobility
 Career security  Willingness to take risks
 Ambiguity felt as threatening  Appreciation of performance related pay

Diffuse vs. Specific Orientation9

 Mixing of job and private life  Working and private life kept separate
 Many casual friends  Few but close friends

Main Cultural Influences in European (Swiss – German), Japanese and

Chinese Culture

Chinese Culture

Chinese Confucianism is one of the main influences on Chinese culture. It stresses theoretical
learning and the importance of unequal relationships for social stability 10. Therefore, a strong sense of
hierarchy exists in the Chinese culture. For the Chinese the family is the most important part of the
society. Collectivistic within their families, the society in general can be described as rather
individualistic and shaped by a materialistic value system11. Still, perceptions vary as to how
materialistically oriented Chinese are, as will be shown later. Communism has only achieved to
artificially surpress these tendencies for a short period of time. Due to the social insecurities prevalent
and changes during communism the trend towards a low – trust society has been reinforced12.
The art of guanxie and the importance of relationships is another important trait which has
developed as a result of legal and political insecurity and arbitrariness over centuries13.

Japanese Culture

The Japanese culture is determined to a large extent by Japanese Confucianism. In contrast to the
Chinese Confucianism it places more emphasis on loyalty, approves of business and trade and is one
reason for the Japanese preference of practical learning 14. Together with peasant values and the will
and tradition to live to work, a unique work ethic has developed. The Japanese culture sees willingness
to learn as a virtue (from books as well as from foreigners) 15. Often, the Japanese society is referred to
as a “block of granite” because of its highly collectivistic nature16.
Both the Chinese and the Japanese culture are rather particularistic and lack systems of absolute
and universally applicable rules. They usually approach each other with caution due to the historical

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difficulties17,18. Their attitude towards foreigners is rather ambivalent and often reflects their mistrust.
Especially the Japanese tend to be cautious in international co-operations19.

Swiss - German Culture

The Swiss-German culture is based upon a rational and logical thinking model. Owing to the
protestant and Calvinist influences the culture enjoys a distinct work ethic 20. The society is
individualistic and materialistically oriented, even though self-actualization has become important at
the work place. Decisions are usually made democratically, though not always taking into account the
will of the minority. Private and public space is usually kept separate showing their specific
orientation21. Universally applicable rules are assumed and a high degree of importance is placed on
written instructions, contracts and rules22.

Issues Important in HRM in China

I will now concentrate on important aspects of Human Resource Management. First I will examine
how firms recruit their employees and their expectations towards these. Often, education is needed to
better integrate Chinese employees into the work place and to enhance their qualification. The second
part will therefore scrutinize education and training concepts. Conclusively, different approaches of
remuneration and motivation will be looked at and their effects compared.

The Recruitment Process

Recruitment is nowadays not usually carried out by guanxie any more as far as European and Japanese
companies are concerned. The most important channels are23:

 Local labour bureaus

 Ads to attract local workers
 Talent fairs
 Firms establish direct contact with university graduates and seek to attract Chinese “high
potentials”

 Co-operations with universities and offering of internship opportunities

 Headhunters
 Though not yet commonplace in China, headhunting is a popular tool to find local candidates for
top management positions

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CVs and school reports are usually vague, difficult to verify and often overly positive 24. Most firms
have therefore opted for a sophisticated application procedure. Written test are conducted to assess a
prospective employee’s general education and English skills. In Japanese companies and joint ventures
in China written tests play a larger role than in European ones and tend to be more extensive in
general25.
European companies conduct multiple interviews with the applicant. Up to three interviews take
place, compared with usually one in Japanese companies. This exemplifies the different priorities in
recruitment. Japanese companies generally care less about an employee’s attitude towards work and
focus more on professional knowledge26.
European companies on the other hand regard the personality of a future local employee as the
main criterion for hiring27.

Education and Training

Especially the Japanese view the education standards in China as highly inferior and as a major
obstacle to business. This contrasts with the view of Robert A: Theleen, chairman of China Vest, the
oldest established venture capital firm in Greater China who praises the Chinese institutions of higher
learning and states that China has already more engineering undergraduates than Western Europe 28.
Even though, his statement might not refer to semi- or unskilled labour.
To improve the managerial and technical record of its workforce European and Japanese
companies take different approaches. The European companies prefer local facilities to train their
workers. They have made the experience that overseas training is costly and that a substantial number
of employees looks for a new employer after having undergone overseas training. The defensive
attitude of older employees towards further education often frustrates European businesses29.
Japanese employers administer technical education locally but send a much larger number of
employees to Japan. The training in Japan aims at indoctrinating the Chinese employees with company
values and philosophy as well as Japanese work ethic 30. One reason might be that Japan is simply
geographically closer to China. Often Japanese companies believe that some competencies cannot be
developed outside their home country. Overseas training in form of cultural indoctrination is carried
out for Chinese employees of those other nationalities as well. Therefore Japanese companies seem to
have a ready – made infrastructure for such measures 31. The number of employees leaving the
company after overseas training is considerably lower than in European companies32.
Concepts popular in Japan such as job rotation or team work are not suited to the majority of
Chinese employees who prefer to specialize and work on an individual basis. The Chinese preference
to work individually exemplifies their individualistic orientation33.

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Motivation and Remuneration

Japanese companies are known for fostering a unique relationship between workforce and
company. Ideally, the worker is rewarded with life – time employment, though this has begun to
change in the 1990s due to economic reasons34. Good human relations and a strong sense of group
responsibility usually serve as the main motivators in Japanese companies. Operating in China,
Japanese often perceive the Chinese as ranking low on Maslow’s pyramid of needs and therefore
concentrate mainly on material incentives to motivate the local workforce35. Differences in payment
are considerably larger, more performance – oriented than in European companies and average at 29%
with similarly qualified employees.
The European companies, mainly motivating its staff through the prospect of financial rewards and
personal achievement, take a different approach. Differences in salary are lower to ensure a
harmonious climate. They offer promotions, status, prestige and good career opportunities including
the possibility of self – actualisation to local employees 36. In the European view, the Chinese have
already begun to move towards a stronger femininity orientation than is perceived by Japanese
companies.
One effect of these different policies is obvious in the composition of the work forces. Japanese
companies in their majority attract mainly younger Chinese and have a higher rate of personnel
turnover than their European counterparts (25 to 35 years and 3 – 5% to 5 – 15%).37This composition
provides evidence of the Japanese preference for employees not heavily influenced by communism
and also indicates that young Chinese employees have a lower uncertainty avoidance than their older
peers.

Conclusion
The most striking difference between these HRM approaches seems to be the reversal of roles
taking place in China. European companies place their bets on self – acutalization and Theory Y 38
management practices. Japanese companies harbour a certain mistrust towards their employees and
therefore are more Theory X oriented. Theory X is applied by managers who mistrust their workers
and place them under constant control. Theory Y implies trust in employees and allows them more
freedom to take own decisions.
The weariness Japanese feel in international business appears to be amplified by the continuing
uncertainties and changes within Chinese society. Also they lack their home society’s rules to offer
guidance and provide a framework for conducting business. This might be a reason for their
concentration on hard, gtangible facts in HRM and reflects their strong uncertainty avoidance.

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Bibliography

Adler, Nancy. 1997. International Dimensions of Organizational Behaviour. Cincinnati, Ohio:

South – Western College Publishing

Brahm, Lawrence J. 2001. China’s Century. Singapore: John Wiley & Sons (Asia) Pte Ltd

Chronik Verlag. 1996. Chronik Handbuch Staaten der Weltgeschichte. Gütersloh/ München:
Bertelsmann Lexikon Verlag GmbH

Gercik, Patricia. 1992. Japan für Geschäftsleute. Frankfurt/ Main: Campus Verlag GmbH.

Hale, Niko. Intercultural Communication.

Landes, David. 1998. The Wealth and Poverty of Nations. London: Abacus.

Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden: Deutscher

Universitäts – Verlag GmbH.

Nishiyama, Kazuo. 2000. Doing Business with Japan. University of Hawai’I Press.

Notes
1. Von Baratta, Dr. Mario. 2001. Der Fischer Weltalmanach 2002. Frankfurt/ Main:
Fischer Taschenbuch Verlag GmbH
2. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden: Deutscher
Universitäts – Verlag GmbH, p. 8 f.
3. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden: Deutscher
Universitäts – Verlag GmbH, p. 207 f.
4. Brahm, Lawrence J. 2001. China’s Century. Singapore: John Wiley & Sons (Asia) Pte Ltd,
p.28 f
5 - 8 Adler, Nancy. 1997. International Dimensions of Organizational Behaviour. Cincinnati,
Ohio: South – Western College Publishing, p. 47 - 58
9. Hofstede, Gert. In: Hale, Niko. Intercultural Communication, p. 61
10. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden: Deutscher
Universitäts – Verlag GmbH, p.28 f.
11. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden: Deutscher
Universitäts – Verlag GmbH, p. 42 f.
12. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden: Deutscher
Universitäts – Verlag GmbH, p. 37
13. Brahm, Lawrence J. 2001. China’s Century. Singapore: John Wiley & Sons (Asia) Pte Ltd,
p. 109 f.
14. Landes, David. 1998. The Wealth and Poverty of Nations. London: Abacus, p.353 f.
15. Landes, David. 1998. The Wealth and Poverty of Nations. London: Abacus, p.375 f.

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16. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden: Deutscher

Universitäts – Verlag GmbH, p.59
17,18. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden:
Deutscher Universität – Verlag GmbH, p. 68 ff.
19. Nishiyama, Kazuo. 2000. Doing Business with Japan. University of Hawai’I Press,
p. 156 f.
20. Landes, David. 1998. The Wealth and Poverty of Nations. London: Abacus, p. 456 ff.
21. Hofstede, Gert. In: Hale, Niko. Intercultural Communication, p. 61
22. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden: Deutscher
Universitäts – Verlag GmbH, p.49 f.
23. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden: Deutscher
Universitäts – Verlag GmbH, p. 271
24, 25. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden:
Deutscher Universitäts – Verlag GmbH, p. 271 ff.
26. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden:
Deutscher Universitäts – Verlag GmbH, p. 214
27. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden:
Deutscher Universitäts – Verlag GmbH, p. 271 ff.
28. Brahm, Lawrence J. 2001. China’s Century. Singapore: John Wiley & Sons (Asia)
Pte Ltd, p. 160 / 61
29. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden:
Deutscher Universitäts – Verlag GmbH, p. 86 f:
30. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden:
Deutscher Universitäts – Verlag GmbH, p. 264 ff
31. Nishiyama, Kazuo. 2000. Doing Business with Japan. University of Hawai’I
Press, p. 157 ff
32. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden:
Deutscher Universitäts – Verlag GmbH, p. 264 ff.
33. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden:
Deutscher Universitäts – Verlag GmbH, p. 137 f.
34. Landes, David. 1998. The Wealth and Poverty of Nations. London: Abacus, p.
487
35. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden:
Deutscher Universitäts – Verlag GmbH, p. 148f.
36. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden:
Deutscher Universitäts – Verlag GmbH, p. 108f.
37. Nikolaus, S. Lang. 1998. Intercultural Management in China. Wiesbaden:
Deutscher Universitäts – Verlag GmbH, p. 274 / 75
38. McGregor, Douglas.1960. The Human Side of Enterprise. New York : McGraw –
Hill. In : Adler, Nancy. 1997. International Dimensions of Organizational Behaviour.
Cincinnati, Ohio: South – Western College Publishing, p.39ff.