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Management Consulting: CHINA SPECIAL Part 2

Preconditions for success in China

Shanghai, Bund - 2003

A totally changed pciture on the same spot today

In Europe and USA we can find many preconceptions about China. Living and working in the country (and in my case I did it for more than seven years) shows soon, that many of this preconceptions are totally wrong.

In this "China Special" I will focus on some topics, European companies starting economic activities in China should consider carefully, in order not to tap into pitfalls or which could become reasons for difficulties and problems.

In the part 2 we discuss about managing staff in China, the training of expats for their work in China and some special aspects about the legal system in China to be considered.

Manging Emplyoees in China

"Hungry" for Informations

Employees demand informations

Managing employees in China needs to consider some special cultural topics. Cinese employees have high expectations to their management and top managers.
Especially the areas information, communication, carrier planning and carrier development can become pitfalls.

Firstly the employees observe the economic development of their company carefully and want to be informed about all economic indicators of the company. Not to consider this in many cases is the reason for a sudden staff turnover.
Chinese employees follow in most cases very strict hierarchies and for innovative enterprises this becomes a problem if the companiy's organisation is based on networking and depends on high speed communication beetween departments regardless organisation hierarchies. Special trainings and meassures have to be intruced to empower Chinese employees to adopt this style of communication.

The time frame for carriere development used in Europe - talking about promotions every 4-5 years - is totally insufficient for China. Therefore the carriere planning have to be designed in a much smaller granularity in in shorter cycles. Also the models for compensation and benefit face totally different requirements in Europe and China. Often not considered from western companies are such traditional elements of C&B as the "Hong Bao", which is not a big portion of the salary but not to consider it in a kind of western arrogance or even to oppose against it will have a very negative impact and will demage the image as employeer.

Alltogether Chinese employees, in difference to European employees, expect from their managers also to feel and show responsibility for private situations of the employees, e.g. if sick family members in hospitals have to be supported by the employee. Only someone has understood the diffenent system of medical care in European and Chinese Hospitals, where there is available excellent medical staff but many personal issues the family members and not the medical staff is responible, can act appropriate.

If you have any questions regarding management of employees in China, we will consult you. - Make use of our experience.

Training of Expats

Teambuilding by Sports Activities, XianWu Lake, 20

A must to participate for Expats/Managers

Western managers and leaders of western companies in China face there special challenges. In many cases for such challenges they are not well prepared. Sometimes offered "crash-trainings" cannot solve this deficit.

In most cases the situation becomes worse already when the candidates for jobs as expats are selected and staffed. Such a candidate needs to like the country, the people there and the culture and has to have the willing to get involved with the foreign culture. These skills of candidates can be analyzed and seen already before an outplacement.

In case you are preparing to outplace some of your staff to China, we can offe you our consulting regarding a proper preparation.

Legal and Law System

Agreement with Trade Unions on Word Women's Day

Integrationin the local society as base for collaboration

During the last years some major progress in the development of China's legal and law system could be seen. In the domain of labor law meanwhile we can see nearly the same status as in Germany or Europe. As in 2007 only 40% of all employees in China worked based on a written labor contract, since the introduction of the new labor law in 2008 this law will be enforced very strictly and western companies should follow the Chinese labor law very strict. Violations against it could beside other problems cause also a negative impact by announcements in internet forums etc.

As there is a system of "collective contracts" like in Europe is still not yet in place - in some provinces the discussions about the introduction of such systems started - enterprises faces a "wonderful" situation of market power, causing much effort for the management on individual negotiations about salary increases. The introduction of trade unions and employee representative committees in companies can help a lot to manage labor law related topic and avoiding conflicts.

Based on the changes of the labor law from 2008 it is meanwhile a must to establish such employee representative committees and about all topics related to the legal labor rights the committees have to be informed otherwise the company is in danger to lose any law suit in front of courts due to formal violations of the labor law.

Also the 2009 newly introduced antimonopoly law contains some pitfalls and should be carefully considered.

A big progress also was made during the last years was made regarding the intellectual property rights (IPR)

Independent of the progress to improve the legal situation still the law is one side, the access to the right is another topic.

In case of questions to the related topic we are prepared to consult you. - We have for that in use our network of partners in China and our on-site experience.


These hints or "DO's and DON'T's" should not be understood as simple China critics; during the last decades I could appreciate the country and the people there so much. Nevertheless economy is also a competition and even a fight and competitors are "rivals" also and as we can learn from the excellent Chinese strategist Sunzi: "If you know your rival and yourself well, you don't need to fear about the results of hundreds of battles". This knowledge about the reality and the situation even more can contribute to a "harmonious" economic development. To support that is one of our targets for our consulting work.

Last Change / Update 07.08.2011.