Dennis Damer, BBA 2 MCD Term Paper 1/11

“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)
 Dennis Damer, BBA 2 MCD Term Paper 2/11

“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
 Dennis Damer, BBA 2 MCD Term Paper 3/11

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
customers1 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.

Collectivism vs. Individualism5

• Group valued higher than the individual • Individual achievement

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

Femininity vs. Masculinity6

• Quality of life • Achievement/ career orientation

• Family orientation • Personal advancement
• Job satisfaction
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High vs. Low Power Distance7

• Authority based on position/ status • Authority based on professional

• Hardly any disagreement with superiors knowledge
• Top – down decision – making • Subordinates involved in decisions
• 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 stability10.
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.
 Dennis Damer, BBA 2 MCD Term Paper 5/11

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 learning14. 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 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 ethic20.
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.
 Dennis Damer, BBA 2 MCD Term Paper 6/11

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

CVs and school reports are usually vague, difficult to verify and often overly positive24. 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
 Dennis Damer, BBA 2 MCD Term Paper 7/11

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 Europe28. 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.
. The training in Japan aims Japanese employers administer technical education locally but
send a much larger number of employees to Japan at indoctrinating the Chinese employees
with company values and philosophy as well as Japanese work ethic30. One reasons 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 measures31. 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.
 Dennis Damer, BBA 2 MCD Term Paper 8/11

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 employees36. 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%)37. This 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 Y38 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.
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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.

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.
 Dennis Damer, BBA 2 MCD Term Paper 10/11

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.
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:
 Dennis Damer, BBA 2 MCD Term Paper 11/11

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.