Comparisons Of Leadership Between China And India Business Essay

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When analyzing labor relations and Leadership styles in different countries, it is important to set a common understanding of both concepts in order to outline the differences and similarities of both subjects and their relation to the nation's culture and business proceedings. We have identified many definitions for leadership but one common understanding and that is: "art that can motivate a group of people to act towards achieving a common goal."1. Similarly, in terms of Labor relations, a common understanding of this term depicts the communication linkage between top-level management and the stakeholders of an organization.

These topics have often become controversial when third parties either determine the outcome of leadership or directly affect the process of labor relations. In most cases, labor relations are often noticed by the experts in the fields of law, political science, economics, public relations and history.2In the following report, labor relations and leadership styles will be analyzed in China and India. The examination will begin with the current status of both subjects in each country, a comparison of both countries in each individual topic, the historical and cultural factors that support their current position and the implications for local and foreign managers when doing business in both countries.

II. Current Status of Labor Relations and Leadership in China

Nowadays, China has been widely recognized as a giant manufacturing country, where by advantage of the loopholes of labor law and cheap labor, local and international companies can maximize profit by lowering costs. For example; Apple signed an assembling contract with Foxconn, which is a Chines company known for its poor working conditions in order to reduce manufacturing costs. This deal caused Apple a wide-range negative attention from its worldwide customers. Although there is one labor union in China, called the All-China Federation of Trade Unions (ACFTU), it is in fact a tool for the government to continue manipulating labor regulations, instead allowing independent groups to organize in order to defend worker's rights.

The lack of true and effective representation of workers has caused the increase of abuses including; child labor exploitation, income inequality, job insecurity, and excessive hours of work, dangerous working conditions and insufficient social security. Some companies have even put workers' lives in danger, which has led to many deaths and injuries in the mining industry in Shanxi Province.3

China's growing economy has provided many opportunities for managers to develop and refine their skills in management. Also, many organizations have financed the leadership development of their employees. Many successful entrepreneurs have emerged from china including multiple business women. In 2011, the composition of the management workforce showed; 34 percent of the senior management positions, in state-owned enterprises management are made up by elders in their 50s and early 60s. These senior managers, make decisions in a bureaucratic way and dislike to take risks or learn new skills.4

There are many shortfalls of leaders in China, such as lack of experience, high turnover, insufficient knowledge of leadership and poor hiring skills.5

III. Current status of Labor Relations and Leadership in India

Another example of a growing economy that is greatly influenced by leadership and labor relations is India. India has observed an economic development in farming, manufacturing and expansion in imports and exports. However, the changes in working conditions are not remarkable and the amount of industrial workers has reduced. The rising rate for organized divisions by the government of India resulted in 0.36% instead of the expected rate of 2.6%. In India, companies give higher priority to hiring new skilled workers than training their current workers. A lot of companies have had to go out of business because contracts, subcontracts and outsourcing work have become more popular in the market.6

In February of 2012, millions of employees from various services and sectors including banking and transportations across India went on strike to show their frustration against rising prices and demanding, better conditions for workers. In August 2012, the Indian government proposed a complete ban over the employment of children under the age of 14 and the employment of children under the age of 18 in hazardous industries and related punishment policies.7

According to some key findings identified by the TLG Index, self-confident Indians place seven local seats in the Top 10 brands. Many business leaders have successfully penetrated into Western markets, such as Infosys and Tata with significant investments in US and UK. The IT giant Apple fails to dominate Indian market, ranked simply 40th in India.8

The World Economic Forum Gender Gap Index shows that only five per cent of working women in India have made it to senior leadership positions. But there is no doubt that the situation is becoming better than ever before, especially when more and more role models are emerging.9

IV. Comparisons of Labor Relations between China and India

As leading developing countries, India and China have a lot in common in the sense of labor relations. Both countries have trade unions which are supposed to support and look after workers interest and help enforce labor recitations laws. In both cases, such regulations and rights are poorly enforced the common issues in relation to labor relations are: poor working conditions, job security, health security and very low wages. In addition, the two countries have been condemned by public organizations for the prevalent abuse of child labor.

The following table depicts some key differences for labor relations between the two nations:



Minimum Wages

Government has a strong will to regulate the ground level minimum wages, rising the amount every one or two years.10

No nationwide standard, it differs within cities. Local government sets these regulations.11

Gender discrimination

Women are widely discriminated or even excluded from labor market. Their access to different level of jobs depends on the jobs that male members in the families undertake.12

Women are slightly discriminated.

strong favors in light of age, height, and beauty of the worker instead skills level.13


Frequent strikes occurred in many sectors, including public hospital and public organizations. Employees are willing to form unions and go on strikes in order to negotiate wages and benefits.14

Strikes are scarce in China. Many people when mistreated would prefer to quit and job-hop. In South China, the conflicts between workers and employers are becoming so intense that some strikes have taken place in past few years. The most significant one was probably the nationwide 2010 Strike in a Honda plant.15

Rule of labor union

Founded in 1918, it represents the rights and voice of workers.16

The one trade union is in fact the tool of government to manipulate labor laws and disregard worker's rights.17

Unemployment rate

Higher due to employer's higher demand of labor skills and the advancement of technologies.18

Lower, but high turnover rate.

Achievements of Labor law recently

Many strict regulations exist which focus on labor rights, but there is poor enforcement. The latest attainment is the thorough ban of hiring child labor under 14 and some specific industries available for those aging 14 to 18.19

Used to put stress on employer currently provisions are being added in the interests of employees. An example is the protection of temporary workers, who would sign contracts with employers and enjoy the same benefits as full-time employees.20

V. Historical facts that Supported Labor Relations in China and India

India and China have both undergone many changes in the past 100 years. In China, the concept of labor relations or labor contract system was completely new mid-1980s under the planned economy system. In early 1990s, China carried out the nationwide market-oriented economic reform, which motivated many farmers to migrate into urban cities and work as employees. Many young adults that were well educated joined the migration and became more conscious of protecting their rights, which contributed to more collective bargaining power of workers. Eventually, China passed and implemented its Labor Contract Law in 2008. The trade union in China, called All-China Federation of Trade Unions, was officially founded in 1925 but went through lots of fluctuations due to many milestones in history, such as "the Cultural Revolution", "the Foundation of China" and "Economic Reform".21

While India was colonized by the British Government, there was no interest on labor relations between ventures and their workers. At the end WWII, India became independent in 1947 and the first five year plan of the Indian Industrial Dispute Act of 1947 came into effect. Any industry with more than 100 workers was required to comply with good working conditions and the government also supported freedom of association through trade unions, labor unions for public agencies. In 1956, the Industrial Policy Resolution kept a large amount of industries in the government's control to generate more job opportunities and encourage justice.22

During 1991, industrial and trade policy reform triggered India's economic growth and more open market, including the development of labor market.23

VI. Comparisons of Leadership between China and India

The economic global growth has triggered the emergence of successful leaders China and India, including more women leaders in all sectors. The leading trend that is shared between the two countries is leading by example. In this style, leaders tend to act as role models for their subordinates and create followers through their own example. In addition, both the educational systems in both countries are supporting the growth of leaders. In addition, a lot of organizations are financing also, many firms training and leadership programs for their bottom-line employees and mid-level managers.24

In spite of these similarities, there are remarkable differences of leadership features such as:



Women leaders

Expanding in numbers, still relatively less

Numerous women as senior leaders and billionaires in the whole population

Invest in employees

Invest in the training and development for both new employees and experienced workers.

Leaders are more aware of the importance of this, but usually inconsistent.


Mid-level managers are more loyal to companies

Higher turnover due to promotion or better financial opportunities

Business models

Based on strengths and market. Usually starting from hiring smart, motivated staff. Later engaging them and investing in their development.

Focus on opportunities and profits. Try to speculate and make quick money. Less innovation, more imitation.

Leaders exposure

More exposure and public speaking. Leaders teach by example, and they set personal role models for their employees.

"Not being seen", prefer to keep a low profile, except for many IT leaders who are much more active compared to others

Social responsibilities/purpose

Leaders have high community responsibilities, improving healthcare to offering cell phones to those in need

The importance of social responsibilities is strengthened by many leaders but with less practical continuous actions.

VII. Historical facts that Supported Leadership models in China and India

Due to its colonial history, Indian leaders tend to stand up for people and they are more patriotic, which is similar to China before China's foundation. After China's official foundation, Chair Mao initiated many reforms that influenced China's economy and leadership model greatly. Unfortunately, those reforms resulted in economic depression and prevalent poverty. The following two leaders were trying to stand for people's interests and support lower classes as well.27

On the other hand, the Indian history has a diverse range of leaders. For instance, Akbar, who had a very good understanding of compound Indian culture, eliminated the religion preference system and encouraged inter-cast marriages by setting his own example, Gandhi another who is one of the most important leaders of the 20th century, had an exceptional leadership style consisting of non-violence, which converted weaknesses into strengths.28

VIII. Differences and similarities in Leadership and Labor Relations based on Culture

The lens of Hofstede 5-D Model between Chinese and Indian culture: 29

Source: The Hofstede Centre, "What about China and India"23

Power distance

China and India have a relative high power distance in their culture. The leadership and labor relations are hierarchical and top-down structure in their society and organizations30. Both of them rely on leader's path and paternalistic leaderships31. Most of the elders have authority to express their ideas, young people owe respect for them and honor in public place.


China is a socialist state and the government insists that citizen should rally under the banner of socialism32. Chinese have a highly collectivist culture which means one-party system can work very well in the leadership. Chinese truly believe that union is strength. This is why more provisions are being added in the interests of employees to maintenance the cohesive force in enterprise.

In India, the score is 48 for India individualism. Most companies look for smart, motivated staff, engaging them and investing in them to empower imagination and leadership. Employers expect their employees to contribute in the growth of the organization. However, the collectivistic character of India when they hire employee and make promotion decision based on relationships.33

Masculinity/ Feminity

India and China both have highly masculinity character. Their citizens are paying more attention at success and achievements34. Competition for recognitions and leadership votes are intense. At the same time, both of them have the view of "son preference" in their history. When females look for a job or apply for leadership election, they will suffer discrimination.

Uncertainty Avoidance

The graph shows medium low level of avoiding uncertainty in china and Indian. Chinese like to follow the rules. They will follow the leader and their employers, they are afraid of ambiguous or unknown situation.35 Indian's have a "bypass the system", they have adjusted it in to a "nothing is impossible". 36 They are flexible when having to adjust situations to new environment.

Long-term Orientation

Chinese always search for virtue in their long history. China has a long-term oriented culture. They like to invest in long-term project, such as house and land. Chinese believe that change leadership frequently can avoid autocracy so that they have high leadership turnover. On the other hand, India is more of a pragmatic culture37. Most of the Indians have religious and philosophical belief. When selecting leaders, they consider the religious belief.

Implications for managers in China:

For Local Managers:

China has its own culture which also varies within its different regions; one should be flexible and adaptable when encountering the new cultures38. Also, manager should be modest and should not over estimate their leadership skills39. In addition, Motivating worker to share related information and voice their opinion is a significant factor for locals40. Willingness to train and upgrade worker's skills will support better production and relations41. Lastly, Elder play an important part in Chinese culture, so one should respect them and their opinions.

For Foreign Managers:

Foreigners cannot start a business in China without any domestic partnership. It is necessary to understand the rules and find a partner with experience in the related industry. Chinese people prefer to maintain to their culture and expect everybody to respect it. Establishing good relations with higher authorities, key members in the industry, workers and worker unions can be a benefit for new foreign managers. It is advisable to design professional training for employees to guarantee product quality and lower labor turnover.42

IX. Implications for Managers in India:

For Local Managers:

India has 29 different states and various labor unions; it is necessary to understand the diversity and ability to get work done through relation building skills43. Hostede's analysis shows that India has a paternalism system, organization's leader gives charge to his kids or relatives and in some cases labor union leader give charge to their close friends.44 Good understanding of the labor relations, its policies and regulations is one of the requirements to be successful in the Indian market.

For Foreign Managers:

Foreigners investing in India need to have enough capital to because local banks do not provide any financial support. At times money means everything in India and the use of bribery is a practice in the country in order to get support from authorities. Good relationship with correct people also can be very helpful to get your work done and for business growth.45

It is also very important for foreign investors to understand the union structure, policies and regulations of the Indian labor laws. Good business relations with labor union leader and other important members of social organizations can support a smooth flow of business process 46.

X. Conclusion

Evidently historical and cultural factors play a very significant role in the development of business relations in China and India and the execution of leadership in both countries. Characteristics such as women roles and workers willingness to unionize are some of these many differences which will certainly have implications when starting new businesses or managing existing organizations. However, there are some common factors that managers could rely on when entering these markets. Hierarchical authority, cultural pride and respect for elders are some of the most common features that China and India share in the way they conduct business and their daily lives.


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