Management frontiers the expansion to China


Executive Summary

The report encompasses the HR plan to facilitate the expansion of Management Frontiers to china. The HR functions including recruitment and selection, training and development, employee health and safety, employee compensation and performance management are discussed in the report. Special attention is given to challenges that would confront in China in order to ensure Management Frontiers will be successful in overcoming them.

There were few reasons for choosing China as our first overseas branch. First is that China has the fastest economic growth rate. With China entering into WTO and 2010 world fair held in China there will be great opportunities for business around the world to start operations in China. The emerging market will in turn provide opportunity for Management Frontiers.

Understanding Chinese culture is very important for Sri Lankans who is going to work in Management Frontiers new branch in China. Hofstedes' cultural dimensions are taken in to account when analysing the Chinese culture in order to effectively come up with strategies.

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The recruitment policy is aimed at find candidates who will be able to effectively contribute to the business goals of the organization. Management Frontiers would recruit parent country nationals for the managerial operations within the Chinese Subsidiary while host country nationals are hired as consultants who directly deal with Chinese.

Management Frontiers hope to be successful and bring in returns to the organization with its expansion to China.

1. Introduction

The report comprises of an HR plan to facilitate the expansion of Management Frontiers to China. It addresses the important HR considerations that need to be taken in to account when expanding to another country. Also it attempts to identify HR challenges which will confront when operating in China and how to manage those challenges in order to be successful in Chinese consultancy services industry.

Company overview

Management Frontiers Is a management consultancy firm offering a wide range of consultancy services to public and private sector business enterprises for over a decade. The firm has gained reputation as an effective change agent through careful reengineering of business enterprises. With the achievement of excellence in the field of business consultancy Management Frontiers decide to open its first overseas branch in China.

China has been selected as our host country because it has had the fastest growing major economy for the past 30 years with an average annual GDP growth rate above 10%. ( The other main reason was, with China's entry into the WTO China is becoming the world's manufacturing factory and the 2010 world fair will provide growth opportunities for many businesses.

1.1. Business Objective

Management Frontiers hope to be the bridge to the new emerging market in china by assisting its customers achieve their goals. Our goal is to assist business managers both Chinese and non- Chinese, who do business directly or indirectly with Chinese counterparts. We hope to establish our position in the Chinese market as a reputed consultancy service provider.

1.2. HR Objective

Our core activity is solving complex business problems which require people with strong analytical skills and innovative synthesizing skills. The entry requirement for a consultancy career at Management Frontiers is strongly analytical skills. We believe by providing training our employees will be able to develop themselves. Employee motivation is achieved by attractive remuneration, fringe benefits and through career development. Management Frontiers strongly believes in fair treatments towards its employees by monitoring the distribution of organizational resources and opportunities.

2. China

  • The people's republic of China, commonly known as 'China' is the largest country in East Asia.
  • Population: 1.3 billion (July 2008 est.)
  • Capital : Beijing
  • Religions : Buddhism, Christianity and Muslims
  • Official Language : Mandarin - Chinese
  • Climate: bitter cold in winter to unbearable heat in summer.

2.1. Cultural Analysis

China is apparent to be a high context culture. This is characterized by long lasting relationships, implicit and indirect communication, authority based on loyalty to superiors. Agreements take the verbal form than the legal form. Greater weight is placed on the groups that support and protect individuals. There is high distinction between insiders and outsiders. External environment is considered important and hidden meanings are provided in indirect communication. (Richards, 2001)

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Hofstedes' cultural dimensions are considered as a yardstick to determine the cultural diversity. Analyzing the Hofstede ranking indicate that china is a Collectivist society with emphasis on groups, with high power distance and feminine traits and has a low rate of uncertainty avoidance. Hence china can be generalized as a nation that welcomes range of opinions and taking calculated risks. The workplace relationship in china tends to be bureaucratic and hierarchical with top-down communication and authority flows. Chinese tend to exhibit loyalty and confirm to groups and group norms, forming a rule based work culture. Chinese place emphasis on achievement and material success (Hofstede: 2003: np)

China is an ethnically and culturally diverse country. Its dominant cultural tradition has been heavily influenced by Confucianism and Taoism, but within that tradition are many different subcultures. The spoken language also varies greatly from region to region.

Chinese people attach great importance to cultivating, maintaining, and developing connections (Guanxi) and are highly sensitive, and are culturally strong. (China Business Review: 2004).

E.g.: In 1992, McDonald opened it s restaurant in Beijing, after a decade of market research. The largest McDonald in the world was located just two blocks away from Tiananmen Square, in Beijing. Within two years the sales at the restaurant was surpassing all expectations.

Government informed McDonald that it would have to vacate the location. At that time McDonald had 18 years to run on its twenty year lease. McDonald took the Government to the courts. The courts refused to enforce the Lease, and McDonald had to move.

Chinese observers had a simple explanation. McDonald they said lacked the guanxi. In China a company could not expect to prevail if they do not have the guanxi (Hill: 2005:89).

According to the above information our company staff should be trained in order to meet these challenges and conduct the HR plan in an efficient and effective manner by altering where the challenges are needed. Also the McDonalds example is an eye opener for our company, as to realize regardless of the culture how Guanxi (Relationships) plays a major role in striking the Chinese industry.

2.2. Leadership & Organization

The stern socialistic way of governance in China is slowly shifting allowing new entrepreneurs and business to accept market oriented policies in their business structures. However, this does not mean doing away with the traditions and values of China, which are thousands of years old. The leadership styles followed in international business is seen to be predominantly influenced by ethnocentric management approach, where all key managerial positions are filled by senior members of the organization (Hill: 2003: 609-610). It applies to all subsidiaries internationally due to the fact that the Chinese belief of non-Chinese are inferior and lack of knowledge to perform a quality piece of work and this would be the best way to observe and maintain their way of business. This entire occurrence boils down to the trust and confidence that takes centre stage in business dealing with the Chinese counterpart. Therefore, Chinese deliberately spend considerable time to understand non-nationals.

It should also be noted that China nurtures a hierarchical leadership structure, to be precise an autocracy governing system. This stems down from the old imperial and the communist governing systems. This can be seen in state owned enterprises and even in the private sector when attending business meetings. The most senior member of the group will always head and lead the meeting and it can be related to Hofstede's power distance dimension which gives 80.This would mean that Chinese expect due seniority representation from business partners during critical communication (Davidmann: 1995: np)

Considering the above factors our company should execute a strong hierarchical management structure in order to carry on the operations in China, also not forgetting to blend the top management with senior Chinese employees to practice ethnocentric management approach. This will help our employees to conduct business with creating trust and confidence.

2.3. Some Business Etiquettes in China

Gift giving is considered as a very prominent behaviour among the Chinese business people. Therefore it is important for our staff to have a better understanding about this issue. The gift is offered using both hands and must be gift-wrapped; though it won't be opened it front of you. It will be set aside and opened later. This tradition eliminates any concern that the recipient's face might show any disappointment with the gift.

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Also it is more acceptable to give gifts either in private or to a group as a whole to avoid embarrassment. Some of the suitable and acceptable gifts would be fine wine, quality whisky and cigarettes but the best gift to be given is a banquet.

Business cards need to be hold using both hands with the writing facing the recipient. Cards should always be exchanged individually (one-on-one). Never toss or "deal" your business card across the table, as this is considered extremely rude. Furthermore Business card should be printed in both English and Chinese letters. Receive a business card with both hands and scan it immediately for vital information. Then lay the card in front of you on the table. It is demeaning to put someone's card directly into your pocket without looking at it first.

2.4. Taxation in China

If anyone live and work in China for more than 183 days will be liable to pay Chinese taxes on all income received whilst residing in the country. Personal Income Tax is charged on a sliding scale, ranging from 5 to 45%. If a person also receives income from overseas, they will be taxed in China on their worldwide income, with a tax credit given against any tax already paid in other countries.

Taxable pay is calculated by reducing monthly income by the permitted tax free earnings of 4800 RMB per month for foreigners (1600 RMB for Chinese).

3. Human Resource Plan

3.1. Recruitment and selection

As suggested by Rioux and Bernthal enhanced methods of recruiting and selection of employees always result in improved organizational outcomes. The more effectively organizations recruit and select candidates, more likely they are to hire and retain satisfied employees. Therefore Recruitment could be defined as, an organization searching for the potential job candidate with sufficient quality to fill its job needs. Selection on the other hand is the process of collecting information in regard to decide who should be employed in the particular job vacancy. (Dowling and Welch, 2004)

According to the Chinese labour laws, the organization can decide to themselves the timing and means of recruiting staff as well as the relevant requirement and number. This law would help the Management Frontiers in China, as the recruitment policy that would be adopted is set to be known as "Strategic recruitment policy". The primary concern is to find a candidate, who will be able to effectively contribute to the business goals of the organization, thus fitment of the candidate psychologically with other team members. The major characteristic involved in the strategic recruitment is that requirement of the fulfilment of the position is decided by the business need. Moreover this policy would ensure that the company is getting the best out of the recruitment, by keeping the recruitment projected on the basis of the manpower plan and HR Budget.

Even though the power distance in China is very high scoring 80 in Hofstede's scale, Management Frontiers would make sure to maintain a somewhat centralized system of governance at all times in its operations in China.

Staffing Policy

Management Frontiers would deploy Sri Lankan's or rather PCN's in each of the key consultative areas and at the top level of management, while locals would be hired to work under the specific team leaders with the intention of developing these HCN's for the next generation of leaders within the operations in China.

Management Frontiers is hoping to use the following ways of recruitment as these are the major methods which is being used in China.

  • Employment Agency
  • At present, the majority of employment agencies in China are organizations under labour and social security departments as well as personnel departments. Therefore Management Frontiers would use human resource databases to meet the requirements of the company to hire staff.

  • Mass Media
  • With the prior approval of the local labour and social security department, Management Frontiers may place recruitment ads in the mass media such as newspapers, magazines, and radio/TV stations.

  • Human Resources Fairs

Currently, human resources fairs are a popular way to recruit employees in China. These events are specifically organized for enterprises to recruit staff; therefore Management Frontiers could make use of this opportunity to hire a better workforce.


Equal Employee Opportunity (EEO)

EEO involves taking increasingly conflicting national laws on employment into consideration. Basically dealing with the discrimination of existing and potential employees based on demographic factors such as age, gender etc. (Dowling and Welch, 2004) For ensuring the equal job opportunities of disabled people, Labour Law of the People's Republic of China provide that companies should not discriminate the disabled people in the recruitment of staff also the Chinese government has made consistent efforts to prohibit gender discrimination in the workplace by creating constitutional provisions and legislation that promote gender equality. Management Frontiers would obey the relevant laws strictly and would actively take various actions providing equal job opportunities to the entire workforce.

Recruitment and Selection of PCN's

Recruiting of PCN's might seem as an easy task but selecting the best candidate without disturbing the existing workforce would not be that much easy. Management Frontiers would recruit parent country nationals for the managerial operations within the Chinese Subsidiary. Therefore the company would have a fair assessment system in order to select the best candidate from the similar level of employees.

Moreover we would focus on factors that we should take into consideration when sending a parent country national to the foreign subsidiary such as family issues, cultural issues etc. in order to combat with mentioned issues we would form small groups of individuals who could lead the fellow members in regard. Management Frontiers would also make sure that all those PCN's who are selected will be promoted from the positions held in Sri Lanka as otherwise it will affect the Sri Lankan Operations in terms of employee grievance and de motivation.

Recruitment and selection of HCN's

Management Frontiers would focus mainly on skills when selecting host country nationals. Also the company could evaluate the quality of the potential hires total experience rather than whether or how long a candidate has worked at a foreign firm. Sometimes the most effective Chinese hires speak little English therefore a range of language abilities would be also considered. As many juniors and seniors and graduate students in Chinese universities have light course loads. These people would be ideal candidates who could provide their full time employment to the company.

All the recruitment of HCN's would be carried out by enlisting the services of a reputed recruitment agency stationed in china named as "china international contractors association (CHINCA)".


3.2. Training and Development

Training and development adds value to the process of managing human resources as it can yield significant returns and become a key driver in organizations competitive advantage. Therefore training and development expatriates in order to integrate with the host country nationals are important as one should never underestimate the cultural backgrounds that they have to operate in.

In relation to the Chinese culture recent surveys indicate that a better work environment or career opportunities are heavily factored into a Chinese employee's decision to switch jobs or, conversely to stay in a current one. Therefore the following part explains some specific strategies to be used by Management Frontiers to train and retain their employees.

Cultural Training

Expatriates would be forced with factors such as culture shock where symptoms of culture shock would be homesickness, Depression and negative feelings towards the local culture. Management Frontiers would have training seminars which would help the employee to build skills.

Offer Job Rotation

Job rotation can keep employees interested in their work and expose them to all aspects of the company's operation.

Preventive Measures

Management Frontiers would minimize the programmes that require employees to move to another city within china for long periods of time as Chinese employees often have close ties to their hometowns and is unwilling to relocate.

In relation to expatriates in order to prevent unnecessary incidents they would be trained prior to arrival along with supporting their family members.

Retention Methods

The company would establish a career development path that is integrated with a track of merit based promotion. Also awarding certificates and holding acknowledgment ceremonies are an important tool in China therefore certification classes would be held in house in order to increase the retention level of the employees.

3.3. Employee Compensation

Employee compensation primarily refers to the direct and indirect monetary and non-monetary rewards, which is given to employees based on the value of the job performed, personal contributions, and the performance in the work place (Dowling & Welch, 2004). The fundamental aspects that underpin Management Frontiers' compensation policy are as follows:

  • Our compensation policy supports the overall business objective of establishing our position as a reputed consultancy service provider in the Chinese market.
  • We offer competitive compensation packages to attract motivate and retain the best HCNs and PCNs so that we could deliver sustained high levels of performance.
  • We have a consistent approach to compensation, but allow flexibility in the features of the compensation package to recognise the complexity of the Chinese market.
  • We will be in total compliance with China's statutory regulations.
  • Our compensation packages are simple so that employees understand them and their administration is easy

Our Approach

Our approach to compensation management is as follows:

  • We will be following the host-country payment approach which assigns the expatriate pay according to host country basic salary structure, delivering pay in local currency, so that PCNs and HCNs who do similar work receive comparable salaries. This approach simplifies administration and pays all nationalities under the same program.
  • We will ensure competitiveness by maintaining compensation levels that reflect market pay levels of China. Market will be surveyed once a year using external service providers (salary survey conductors). We will compare ourselves with the major management consulting companies who are competitors in our types of business; multinationals and other companies who are competing for the type of skills we need. We aim to benchmark our compensation levels at the median of our key comparators.

Compensation Components

Basic Salary and Cash Allowances

These constitute the rate of pay for the job and reflect market pay levels.


Two types of bonuses are adopted:

  • Guaranteed Bonus - In order to address the strong uncertainty avoidance that prevails in China, a guaranteed bonus of a month salary is paid to all employees. It is common practice in china that a bonus of 1 month salary is paid to employees annually.
  • Performance Bonus - As a tool in reinforcing our performance culture, a performance bonus is paid to high performers. Those with highest performance ratings can earn up to four months salary as performance bonus.

Team Incentives

As China is a collective society with high emphasis on groups and our business is mostly driven by teams, we will introduce team incentives which reward groups of employees who display excellence in performance. Team incentive is shared equally amongst the team members.

Social Security Payments

Employers are obligated to pay social security payments to employees and the rates will be varied depending on the location of employment (Sy, 2008). Employee and employer jointly contribute to basic old age insurance, unemployment insurance and medical insurance whereas the employer contributes alone to maternity insurance and work related injury insurance.

PCN Compensation

The following allowances apply only to the PCNs:

  • Foreign service inducement/hardship premium - this is an inducement for foreign assignments and compensates the hardships caused by the transfer
  • Housing allowance - this covers housing as well as utility bills to ensure PCN receives home country living standards
  • Home leave allowance - this covers the expense of trips back to Sri Lanka such as a return air ticket, to visit family and friends once a year.
  • Children's education allowance - this covers items such as tuition, language class tuition, enrolment fees, books and supplies, transportation and uniforms (Dowling & Welch, 2005).


A person who lives and works in China for more than 183 days will be liable to pay Chinese taxes on all income received whilst residing in the country. Personal Income Tax is charged on a sliding scale, ranging from 5 to 45%. If a person also receives income from overseas, he will be taxed in China on his worldwide income, with a tax credit given against any tax already paid in other countries.

Taxable pay is calculated by reducing monthly income by the permitted tax free earnings of 4800 RMB per month for foreigners and 1600 RMB for the Chinese.

3.4. Performance Management

"Performance management, in its broadest context, is a managerial process that links corporate objectives, performance standards and evaluation, to which the performance review often applied" (Pickett, 2003). As Management Frontiers consultants expand its operations to China, performance appraisal of the employees is a vital aspect to address since performance appraisal determines how efficient employees are performing their jobs.

"Performance appraisal techniques vary from relatively simple techniques, such as ranking and traits rating, to the more complex method of behaviourally anchored scales" (Tyson & York, 2000). These techniques also vary with regard to temporal emphasis, either focusing on the past through rating and ranking, or using management by objectives to provide a future focus.

Western organisations has used performance appraisal to determine employee compensation, merit pay and other organisational rewards (Armstrong, 2001) where the process can equally facilitate other human resource management functions (Torrington, 1994) as well. Performance appraisal can, for example, provide information on the effectiveness of the organisation's selection and placement programmes, or help identify training and development needs.

Out of different types of performance appraisal techniques that an organization can use Management Frontiers consultants will be using the Management by Objectives (MBO) method where objectives based on standards will be set company across each layer where motivated employees require high level of effectiveness and efficiency to fulfil the expected objectives of the firm.

The main reason for selecting this method is the fact that it is an unbiased method which aligns with HR objectives of the organization with employee's motivational level to improve their effectiveness. Moreover, the Chinese culture is such that the level of turn over rate is high if the appraisal system existing in the organization does not provide the employee with opportunities for further development. It is apparent that within the nature of Chinese culture, appraisee's perception supports to a positive relationship between fairness and satisfaction with the performance appraisal process. That is, the higher an appraisees rates the process as fair, the more satisfied they are with the performance appraisal.

As key factor in China's developing economy, effective workforce provides a strong source of competitive advantage (Barney, 1995). Unfair of treatment of employees can impact on job performance (Vigoda, 2000) and affect employee satisfaction (Taylor et al, 1995), so it is important that satisfaction with performance appraisal systems remains high. The MBO method will align the employee's carrier goals with the organizational goals and would eliminate the problems such as high turn over rate in the Chinese work environment. Therefore HR plans to appraise performance of its employees annually by top management. The results will be used to make bonuses, salary increments promotions and transfer of the employees.

Performance appraisal for the PCN's

The management by objectives (MBO) method is used as performance appraisal of the PCN's as Management Frontiers consultants aims to enhance organizational performance by aligning goals and subordinate objectives throughout the organization. Therefore, employees could gain high level of motivation to increase they capacity to operate effectively while identifying their objectives and time lines for completion of tasks. MBO includes ongoing tracking and feedback in the process to reach objectives. The top management of the organization will determine the overall objectives of the company, and then distribute these objectives to teams and individuals. After that evaluate the performance of how well teams and individuals achieve these objectives.

Performance appraisal for the HCN's

Cultural dilemmas plays a vital role when appraising the performance for the HCN's, Culture of China is more towards collectivism and high in power distant country. Since performance appraisal process can affect the individual performance the organization will focus their attention more towards MBO to cultivate a equal employee opportunity attitude to enhance cohesiveness among work groups. Regardless PCN's or the HCN's, the feedback from top level is essential to enhance better performance of the firm since Management Frontiers consultants will be appraising the performance by team appraisals and supervisor evaluation. So that employees would know their faults, limitations and improve themselves to overcome their drawbacks.

4. Other HR Aspects

4.1. Health and Safety

Most expatriates would be exposed to sicknesses due to the change of the climate and weather. Also another important factor is the food. The change in diet would lead to sicknesses during the first few months prior to the arrival at the host country. China is generally not considered to be a safe country when it comes to health issues because there are a many vaccinations to be taken before entering the country such as Hepatitis A, Malaria, Typhoid and also Diphtheria (Word Travel Guide). These vaccines are important to be taken before leaving to China. All necessary vaccinations will be provided by the organizations during the pre departure program. All large cities consist of excellent medical facilities with internationally trained staff therefore the language used at these hospitals will not be a problem because they consist of English speaking doctors as well as nurses (Sta Travel). It is also important that all Expatriates get there medical insurance after arriving in the host country as a precautionary measure. This will also be provided by the organization.

  • Food and drinks
  • Unlike in Sri Lanka it is very important to know that water used for all purposes such as drinking, brushing teeth etc. should be boiled or sterilized before using. It's advised that expatriates to be careful when eating at small street-side stalls or restaurants where standards of hygiene may not be up to standard. Food such as pork, salad, scallops, snails and mayonnaise may carry increased risk in sicknesses. Vegetables should be cooked and fruits peeled so that expatriates would not be affected by any diseases (Word Travel Guide).

  • Other Risks
  • All departing employees are advised to avoid swimming and paddling in fresh water. This is because Hepatitis E is prevalent in north eastern and north western of China and hepatitis B is highly endemic (Word Travel Guide). Intermittent outbreaks of avian influenza also known as bird flu have resulted in a small number of human deaths. Therefore precautionary measures are advised. Another medical problem expatriates would have to be careful of is dogs. This is because the existence of Rabies. If bitten, medical advice should be sought immediately. The other danger they might face is the mosquitoes due to the occasional outbreaks of dengue fever. There are also confirmed cases of H1N1 virus which is also known as Swine flu. Another issue most expatriates face is diseases such as AIDS. Therefore they should be enlightened on safety measures and also the consequences, because the safety measures could not be guaranteed hundred percent.

  • Safety

Like most countries China also has an underlining threat of terrorism. Therefore there could be possible terrorist attacks by groups that are opposed to the Chinese government. As a result there could be attacks at areas with high expatriate movement. More than the terrorist attacks expatriates should be careful of domestic unrest. There could be frequent riots taking place in China and most of the time there are serious rioting eruptions. Therefore expatriates are advised to be away from large gatherings (Travel & Living abroad). Serious crimes on expatriates are rare but it is advisable to be taking extra care when visiting popular expatriate bars and visit bar areas with company.

However China is a safe place for expatriates to be working, but should be alert about your belongings at all times and specially your passport in public places.

4.2. Standardization

The culture of Management frontiers has been established as an organisation that maintains a good friendly relationship with its clients and at the same time delivering its best so that the clients would benefit when making change in their organizations. This unique culture will be maintained by the company even after moving to China. The organization will also encourage the positive cultural factors of the host country to influence the organizational culture so that the host country national employees will not feel like they are working in another country as well as avoid negative aspects such as feeling like they are left out. This would also create a positive image in the minds of the host country nationals, employees as well as new clients.

Language Standardization

The main language used in within China is the Chinese language which is also known as Sinitic language. The use of English language is limited only to the cities of the country. But English language is also used for cooperate purposes. Therefore the principal language used within the organization or the company would be English. Even though English would be the main language used in the organization when it comes to serving the clients both Chinese and the English language will be utilized depending on the client's request, therefore when recruiting host country national the capability of reading and writing in English will be one of the main requirements that the company will concentrate on.

When recruiting from the parent country or when selected to be sent to China all selected employees will be given Chinese language training. This would be carried out in the pre-departure training program which will be carried out for 5-6 months.

Other HR issues relate to expansion

When carrying out business operations it is important to consternate on external factors that affect the recruitment and people factor. Preparing and implementing strategies would not be accurate with the host country situation if management does not consider those external factors very carefully.

Industrial relations

Industrial relations involve employees and their unions, employers and their associations and governments and the industrial tribunals that make regulations governing the employment relationships (Stone, 2005). In China which comprises of 1.3 billion of population, 43.62 million belongs to working crowd. Like most of other Asian countries China is also allow workers to get together and form unions within their company or industries. And workers in China display a greater degree of spontaneous unity in forming well planned and coordinated 'wildcat strikes', which are accommodated by the government and the official trade unions at top level.

Therefore our company has to aware on labour laws of China as our host country in order to establish a good business relationship where China equally treats inhabitants and migrants. Otherwise employees may encourage going for collective actions which are common in China for the betterment or welfare employees. That type of collective actions on the other hand may hinder the ability to attract skill workers and retain them in host country.

Working conditions

Proper working conditions are essential in any company. Being in the management consultancy business the importance is even enhanced. According to general labour law of China employees have to obey certain rules and regulations.

Work Times & Shift Work - According to Chinese labor law the maximum working period is 40 hours which is consist of 8 hours per day, 5 days per week and 2 rest days (Saturday and Sunday) (Sy,2008). In addition the regular days off (Sat day and Sunday), Chinese citizens also enjoy the holidays such as Spring Festival, Dragon Boat Day, Mid-Autumn Day, and New Year's Day. For an instance according to the Government policies Chinese people can take three days off, for the Spring Festival including the December 30th, January 1st, 2nd of the Chinese lunar calendar. In China night work is legally permitted only under some strict preconditions, if needed to work longer hours they they have provide transport for the employees and they allow taking leave on the following day. Also female workers who pregnant for seven months or more shall not be arranged to extend their working hours to work night shifts.

Social Security Payments- Employers are obligated to pay below social security payments to employees and the rates will be varied depending on the location of employment (Sy, 2008). Employee and employer jointly contribute for Basic old age Insurance, Unemployment Insurance, Medical Insurance. And Employer contributes only for Maternity Insurance and work related injury insurance.

Other allowances- Company will be providing housing and transportation facilities to the HCNs at the middle level management. Apart from this, the HCNs will also be given in house accommodation and transportation allowances for those who live far from home.


Other major factor that Sri Lankan managers need to avoid is discrimination. Because discrimination is considered as a simple matter or in most cases neglected in Sri Lanka. But like most other Asian countries, in China also discrimination is considered as a major issue. And any discrimination based on sex, race, nationality, handicap, religion, and political opinion is prohibited in China. Harassments are also considered as a factor which demolishes good working conditions in an organization heavily in China. Therefore managers strictly should mindful about those issues when working both with host country and home country nationals.

5. Conclusion

Management Frontiers is a Sri Lankan Consultancy firm with experience on providing business consultancy for over a decade. On the completion of its 12th year as a reputed business in Sri Lanka Management Frontiers hope to start its first overseas branch in China.

China being the fastest growing economy in the world, member of WTO and the host country for 2010 world fair Management Frontiers has a good opportunity for success. China has a high context culture. It is important to understand Chinese culture to HCNs who is going to work there because their culture is different to ours. Language barriers ...... are the challenges that will confront Management Frontiers when expanding to China.


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