This thesis deals with the characteristics required of the leader of an international European company’s outpost in China. It provides a synthesis of current theories, builds context based on supporting literature, and is complemented by a survey of the different experiences of local managers to identify contemporary issues.
In the past, companies expanded operations to China first and foremost to profit from the cost advantage that China offered. Meanwhile, increasing consumer purchasing power and a developing preference for brand name and luxury goods make the Chinese market a dynamic one that offers international companies substantial potential. This market sales potential has become the main driver.
Different forms of market entry are available for specific company strategies. The most common are the representative office, a joint venture, and the wholly foreign owned entity. In spite of the positive developments in the Chinese market, numerous challenges await companies planning to establish a local business unit. The labour market exhibits weaknesses in the Chinese education system. Job applicants often lack creativity and general communication skills, as well as competent English skills. Although its importance is on a decline, the issue of intellectual property remains a concern whereas the problem of corruption persists. The standards and concepts used to recognize and label corruption are still deeply linked with the local cultures making their reconciliation a challenge that companies need to overcome.
The human resource management strategy has to take cultural differences into consideration. There are two main point of focus. The first originates with Confucian values. Status, money and career perspective are aspirations that any attractive employment opportunity has to address. Western leaders also have to be aware that Chinese social hierarchy dictates that interaction between managers and subordinates can cross the traditional western line between private and professional matters. The second point of focus, the posting of expatriates including preparation, onsite support during the stay abroad as well as reintegration upon repatriation, is integral to the project. Careful and detailed planning and exe-cution are of utmost importance to ensure the successful completion of the Chinese office setup.
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Table of Contents
1. Introduction
1.1. Background
1.2. Problem
1.3. Objective
1.4. Methodology
2. Literature review
2.1. Strategy
2.1.1. Strategy definition
2.1.2. Internationalisation strategies
2.1.3. Organisational management
2.2. Cultural aspects
2.2.1. Definition of culture
2.2.2. Values and behaviour principles in China
2.2.3. Communication
2.3. Chinese market characteristics
2.3.1. China terminology
2.3.2. Development of China
2.3.3. Labour market
2.3.4. Consumer market
2.3.5. Intellectual property
2.3.6. Corruption
2.4. Management and leadership
2.4.1. Skills required for management and leadership
2.4.2. Decision making process description
2.4.3. Strategic human resource management
3. Research design
3.1. Research objectives
3.2. Research methodology
3.3. Underlying philosophical assumption
3.4. Data collection technique
3.5. Development of questionnaire
3.6. Sample population
3.7. Conducting
3.8. Data analysis
3.9. Critical assessment and limitations
4. Analysis and presentation of the data
4.1. Interview statistics
4.2. Market findings
4.2.1. Market characteristics
4.2.2. Education system
4.2.3. Environmental factors
4.2.4. Plagiarism issues
4.2.5. Corruption issues
4.2.6. Conclusion
4.3. Cultural aspects
4.3.1. Comparison of Chinese and German culture
4.3.2. Communication principles
4.3.3. Cultural influences on company
4.3.4. Gender treatment
4.3.5. Open cultural questions
4.3.6. Conclusion
4.4. Company aspects
4.4.1. Companies in China
4.4.2. Company strategy for China
4.4.3. Human resource management aspects
4.4.4. Conclusion
4.5. Decision making
4.5.1. Organisational impact
4.5.2. Share and distribution of positions and power
4.5.3. Role of the manager
4.5.4. Conclusion
5. Conclusion and recommendations
5.1. Summary
5.2. Conclusion
5.3. Outlook
Research Objectives and Key Topics
This Master Thesis investigates the critical factors for the successful delegation of power and leadership within European companies expanding into the Chinese market. It aims to identify the contemporary challenges, opportunities, and risks managers face when bridging the cultural and structural gaps between their European headquarters and local Chinese operations, ultimately providing practical recommendations for effective management in this complex environment.
- Strategic motives for market expansion into China.
- The impact of cultural differences (e.g., Confucianism, face, guanxi) on management practices.
- Challenges in the Chinese labour market, education system, and recruitment.
- The role of the manager in balancing local adaptation with head office requirements.
- Approaches to risk management regarding intellectual property and corruption.
Excerpt from the Book
2.2.2. Values and behaviour principles in China
Confucianism is a teaching by the philosopher Confucius, who lived around 500 BC. The 2,500 year old teaching contains ethical principles without religious content. It provides guidelines for behaviour, the main aspect being the unequal relationship between humans in society. According to the teaching, the stability of society can only be guaranteed through a strong hierarchy and a patriarchal system. Today it still has a major impact on daily life in China (Liang and Kammhuber, 2007, pp. 172–174).
The teaching describes the principle of “Wu lun” which defines the five human relationships. These can be seen in the relationship between father and son, ruler and subordinate, husband and wife, elder brother and younger brother and friend-to-friend. These relationships are also called the five constants (wu ch'ang). Elders and people with a higher rank are also given respect, out of respect for their wisdom and long life experience. Obedience is essentially the doctrine of final piety in the family. In families, the oldest male possesses absolute authority, meaning that all others have to be absolutely obedient and loyal (Chhokar et al., 2007, p. 879).
There are five virtues in Confucianism in regard to humanness: the virtue of benevolence, charity, and humanity; of honesty and uprightness; of knowledge; faithfulness and integrity; as well as correct behaviour, or propriety, good manners, politeness, ceremony, worship (Chhokar et al., 2007, p. 879).
Summary of Chapters
1. Introduction: Outlines the increasing importance of the Chinese market for European companies, defines the core problem of managing cross-cultural operations, and establishes the research objectives and methodology.
2. Literature review: Provides a theoretical foundation regarding internationalization strategies, organizational management, cultural models, market characteristics in China, and principles of management and leadership.
3. Research design: Describes the methodological approach, including the choice of qualitative research, the data collection techniques (semi-structured interviews), and the rationale behind the selected sample population in Shanghai.
4. Analysis and presentation of the data: Documents and analyzes the primary research findings, categorized by market observations, cultural aspects, company organization, and decision-making processes.
5. Conclusion and recommendations: Summarizes the key insights, synthesizes the findings into actionable management recommendations, and provides an outlook on future developments.
Keywords
China, international business, European companies, market expansion, leadership, delegation of power, cultural intelligence, Confucianism, guanxi, human resource management, organizational structure, cross-cultural management, strategy, performance management, expatriate management.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis explores the challenges and required leadership characteristics for European companies operating in China, specifically focusing on the transfer and delegation of decision-making power while navigating cultural and economic differences.
What are the primary thematic areas explored?
The study centers on three major pillars: strategic management and organizational structures, cultural influence (including social and behavioural values like Confucianism and guanxi), and operational challenges related to the Chinese market such as labour, corruption, and intellectual property.
What is the ultimate objective of the research?
The goal is to identify contemporary issues faced by European managers in China and to provide evidence-based recommendations on how to adjust leadership styles and organizational structures to effectively manage and integrate a local Chinese unit.
Which scientific methodology is applied?
The research employs a qualitative methodology based on primary data collected through semi-structured interviews with industry experts and managers in Shanghai and Germany, interpreted through the lens of Grounded Theory.
What does the main body address?
The main body examines existing literature on management and culture, details the research design and findings, and specifically addresses how managers can bridge the gap between European corporate strategies and Chinese market requirements.
Which keywords best characterize this work?
The study is best categorized by terms such as cross-cultural management, China market entry, strategic HR management, guanxi, and corporate delegation.
How does the concept of "Face" (Mianzi) affect business decisions in China?
The thesis explains that "Face" acts as a key motivator and self-regulatory mechanism in Chinese society. Decisions are often influenced by the need to maintain, protect, or give "Face," which dictates interpersonal relationships and conflict resolution strategies in a business environment.
Why are JVs (Joint Ventures) often described as challenging in the research?
The research notes that many JVs struggle due to the lack of proper due diligence regarding the partner's management track record and differences in strategic mindsets, such as the Chinese focus on cost leadership versus the European tendency toward differentiation.
- Arbeit zitieren
- Sebastian Hindelang (Autor:in), Dominik Hedrich (Autor:in), 2013, Expansion of western based companies to China, München, GRIN Verlag, https://www.grin.com/document/274129
