Managing business in Asia pacific. Management Essay

CROSS-CULTURAL MANAGEMENT ISSUES OF FOREIGN COMPANIES IN CHINA
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Introduction
Doing business in another country is not an easy task. Large companies often take a lot of consideration when aiming for a specific location. China is popular with foreign investors because of the great developmental potential of businesses in China (Froese et al. 2019). However, many international corporations that seek glory in the Chinese market often fail because of the rise of unique problems. The problem with business expansion in unfamiliar countries is that cultural differences influence cross-cultural management, which can be detrimental in the operations of a company (Song 2018). According to Froese et al. (2019), there are two key challenges that international companies often face when expanding their territory in China: the business environment and management challenges.
In the challenges within the business environment, a foreign company is faced with cultural and regulatory issues that cripple the operations of a company (Froese et al. 2019). In the regulatory issues, foreign companies need support from locals of the country such as establishing local supply chain and related government procedures for smooth business operations (Froese et al. 2019). But establishing local partners is harder to achieve, especially if there is negligence in the country's culture (Froese et al. 2019). In the cultural challenges, failure to address the role of culture in establishing a business environment can create conflicts between the company and Chinese local suppliers that hinders the development of the company (Huang & Jia 2015). China does not have a homogenous culture unlike other Asian countries like Japan and South Korea, Chinese culture under the influence of varying faiths such as Confucianism, Taoism, and Buddhism that generates the majority of the Chinese market's values, norms and beliefs (Kwon 2012). Depending on the location, culture can vary where systematic assumptions of the Chinese market will change including employee labor preferences (Kwon 2012).
In the management challenges, international business expansions need to address underlying issues of cross-cultural human resource management. Although many problems flood human resources management, an international company should focus on attracting and retaining qualified employees in its China branch (Froese et al. 2019). Specifically, companies should address problems in recruiting employees, personal training problems, performance appraisal, and the issues with the compensation system (Huang & Jia 2015; Song 2018). It must be emphasized that the challenge of foreign companies is recruiting those who are qualified, especially in the managerial position. There are many undergraduates and newly graduate applicants in China that may be inexperienced in developing an international company (Froese et al. 2019). On solution in this problem is an employee or managerial training by an experienced foreign manager; however, foreign expatriates specifically qualified Western managers, are not willing to be transferred in China to train or manage the business (Dewhurst et al. 2012). This further decreases the chances of attracting and retaining qualified personnel (Dewhurst et al. 2012). As a result, there is a massive employee turnover rate and management-labor conflict within the foreign company (Huang & Jia 2015). This is costly for the foreign company since the unstable workforce disrupts the stability of the business (Froese et al. 2019). Additionally, local Chinese businesses are better at attracting employees making it more difficult to create loyalty of Chinese employees to the foreign company (Pak et al. 2019).
The cultural diversity of the Chinese market blocks the growth of foreign businesses. Foreign companies struggle in cross-cultural management of Chinese employees and establishing support from local partners. Understanding the underlying effect of culture in the business environment and management issues are important in making the proper solutions in addressing these problems.
Cross-Cultural Problem: Case of Wal-Mart China
Wal-Mart is an international retail business founded by Sam Walton in the US. The company is one of the highest-ranking businesses in retail chain enterprises around the world; however, unlike in the US and other western countries, Wal-Mart is not recognized in China as a retail superpower (Huang & Jia 2015).
Wal-Mart China's Business Environment Challenges
Wal-Mart delivers the lowest prices to its customers compared to other retail stores. They market their brand to local suppliers and offer them the lowest price possible for their products (Verma, Potluri and Maher 2019). So, there is a need for a long-term relationship between local suppliers and Wal-Mart to maintain its competitive advantage.
In China, however, the supply chain management is not as effective as in the US. Wal-Mart China management requires Chinese suppliers to follow US standards in establishing their supply chain and distribution system (Huang & Jia 2015). This sparked the conflict between Wal-Mart China and Chinese suppliers. China has other problems, which include infrastructure deficiency, local protectionism, and higher traffic congestions that limits the capacity of Chinese suppliers to meet American standards (Verma, Potluri and Maher 2019). Added by Verma, Potluri and Maher (2019), Wal-Mart punishes Chinese suppliers that do not conform with American standards. Wal-Mart fine the suppliers with high chargeback fees from late deliveries and neglects the cultural business viewpoints of Chinese systems. This lowers the net income of local suppliers. Chinese suppliers find different ways to delay the supply of Wal-Mart that cripples its daily operation (Huang & Jia 2015).
One advantage of the supply chain in Wal-Mart is that it created a network of electronic data interchange systems to monitor, coordinate, synchronize and share the supply chain information to its suppliers (Xu, Xu, and Liu 2014). This system also decreases late deliveries. This technology also allows Wal-Mart management to help the suppliers in their production plan and quality control (Xu, Xu, and Liu 2014) However, Wal-Mart forces their suppliers to invest in the latest technologies for the improvement of supply chain interchange system where each IT update cost a lot (Verma, Potluri and Maher 2019).
Wal-Mart China's Management Challenges
In the recruitment process, Wal-Mart failed to assess the work ethic and work style preference of ordinary employees. Cultural differences still apply in HR that Wal-Mart did not consider (Huang & Jia 2015). One problem with Wal-Mart's management is that they applied Wal-Mart's US management culture to its employees and local partners that do not fit China. Wal-Mart assumed that US standards of retail management are better than the Chinese management style (Chaung et al. 2011; Huang & Jia 2015). As a result, there is a massive employee turnover rate, management-labor conflict, and friction with Chinese suppliers (Huang & Jia 2015). Wal-Mart always use evaluation psychometric test to see who among the applicants are qualified to work (Song 2018). They hire based on the measures of IQ and competency levels. Although these evaluation tools are necessary for understanding the needs of the company, Chinese citizens always prefer positive instructional support when dealing with their productive performance regardless of IQ and other psychometric results (Song 2018).
Wal-Mart, in particular, had employees that have low levels of satisfaction in their works because of manag...