Establishing an ECL culture in China

Electronic Communications Ltd. (ECL) had decided to start business in China and to form a relationship of common prosperity with Chinese people. The company knew that there was major progress to be made, but there were also risks and challenges. One of these was the management of cultural differences. An issue the management was whether it should adapt ECL’s management practice to the Chinese culture or to establish ECL’s global management policies in China. Successful cultural alignment is an important element for multinational organizations. Electronic Communications Ltd (ECL), like many other companies entering foreign markets, is faced with how to adequately incorporate their corporate culture with the Chinese national culture.

Situational analysis

Cultural issues were a basic problem to overcome and the must important because it will create the daily operations environment and it is a critical success factor for multinational organizations. Electronic Communications Ltd (ECL), like many other companies entering foreign markets, is faced with this situation. ECL management must determine if it is more prudent to adapt to the Chinese culture or to apply their western-centric management practices to ECL China. ECL’s management must explore if they should adapt or assimilate the culture, they needed to find that they need to develop a reliable management plan to attract, develop and retain leaders within the company.

One of the key issues for ECL is learning how to effectively integrate managers from a different culture. According to Lewiki “people from different cultures appear to negotiate differently.” For this reason cultural relations are also important to be established. Lewiki mentions that “in addition of people behaving differently, people form different cultures may also interpret the fundamental processes of negotiations differently.” This particular issue came up when expatriate managers provided feedback to Chinese employees who saw the feedback as a critic to their culture. Perhaps ECL management should focus on creating tasks that will contribute to building relationships with ECL China associates. It is known that that managing personal relationships is essential for conflict resolution. Lewiki mentions that according to Phatak and Habib the relations developed among the principal negotiating parties before the actual negotiations will also have an important impact on the negotiation process and outcome.”

A personal relation was perceived by the Chinese as it could promote a more “open flank and communication between managers and their subordinates and colleagues.”

The business style presented within ECL is demonstrated as expatriate managers expect associates to be more proactive. The high power orientation within ECL China seems to be contradicted by the Chinese staff style to find short-cuts to solve problems. ECL management has created systems to predict the proper steps to solving problems to a given situation. However, many Chinese staff thought the systems went wrong and delayed the decision making process. This contradiction shows that in some instances Chinese staff did in fact want an opportunity to be proactive. ECL should be create a more flexible solving structure that encourages Chinese staff to be more proactive without forgetting the issues which can rise during conflict resolution.

Also ECL management claims that the Chinese staff “lacked the expected teamwork capability.” This problem was attributed by some expatriates to the education system in China, because e the system encourages a more individualist culture.

The “face issue in the Chinese society was a combination of dignity, self-respect, prestige and social standing, as perceived by others, an example of face is when a manager criticize his employee could cause the person to lose face especially in from of others.” This so called losing, “face” is detrimental to a working relationship in certain cultures. However we can conclude that ECL has a very strong cultural adaptation with its employees.

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ECL had a successful combination of training and systems to form the technical skills in the Chinese workplace. There were doubt as to the replacement of the expatriates could be completed on time and the Chinese employees were given the opportunity to get promoted within the company the senior management positions were still dominated by the expatriates. This represented another challenge for ECL that the expatriates did not have the full respect from their staff. Chinese staff had difficulty accepting that many expatriate managers do not have the same level of technical expertise that is expected of the staff. Further, expatriates were often viewed as not fully committed to China and would relegate decision making responsibility to the home office. This would often cause a delay in productivity. However, China has a very productive and the coaching program that was developed to pair Chinese staff with experienced expatriates was implemented to create a formal mechanism to transfer knowledge and cultural information. This lowered the level of animosity growing towards ECL management; it was a better decision for ECL to promote expatriate managers to China with a high level of technical experience who are able of making decisions in a short amount of time.

An additional challenge that ECL had was attracting and keeping local talent. ECL wanted to replace expatriates in a short period time but they are having a difficult time hiring competent Chinese managers. The demand for competent personnel was growing and more skilled personnel were needed.

A critical issue encountered was the emigration impeding success is that many talented potential hires leave the country. Those that remain receive handsome compensation packages from Chinese owned firms. A lot of well prepared personnel were getting better offers; ECL also has to compete for the remaining individuals amongst other firms that are beginning to enter the Chinese market. ECL must remember when seeking out talent that respect for elders plays a significant role in high power orientation countries and young managers may not receive the respect or support that they need to be effective. An additional issue was the competition added by China entering the World Trade Organization. This caused a lot of investors to China and start investing creates an environment of intense competition. Perhaps, ECL could use current employees to recruit younger family members that can be groomed within the country.

G ECL must assimilate their management practices into Chinese culture. Regardless of how hard ECL works to indoctrinate employees into the ECL culture, their future talent pool will be generated from the Chinese culture. For this reason is important for the management to determine how the cultural issues may be faced within ECL.

The Chinese work force will be a key factor to ECL success. The company needs to get more involved in to how to handle a direct dialogue and completely adapt to the Chinese culture in order to earn their trust respect and be successful.

Another solution for the company’s recruiting effort is recruit family members and groom them into the ECL culture. And finally, the ECL can continue the training from ECL University which will demonstrate the ECL culture while familiarizing it to ECL China.

Summary of Issues

1. The Chinese culture shows a significant degree of collectivism- The Chinese cultures have group oriented vision. Expatriates failed to develop the relations that are prerequisites for creating a harmonious and respectful working environment that would allow the cultural integration. The action to be taken by ECL is that management should focus on creating tasks that will contribute to building relationships with ECL China.
2. Expatriate managers expect associates to be more proactive- ECL should adopt a more flexible problem solving structure that encourages Chinese staff to be more proactive while considering the issues of the conflict resolution process.
3. Expatriate managers want results and Chinese staff wants to build relationships to get to the results. Chinese staff wants to develop a trust based relationship prior to executing a contract while the US approach is to finalize details and clarify. ECL manager should acknowledge that the Chinese work ethics correlates directly to the Chinese national culture and thus must be embraced within ECL practices.
4. Expatriate managers provided feedback to Chinese employees who perceived the feedback to be a direct criticism. Management need to negotiation and regular meetings and encourage the dialogue.
5. Expatriates did not receive the full respect from their staff. For the Chinese staff was hard accepting that expatriates because they were viewed as not fully committed to China because they would relegate decision responsibility the company and that they did not have the same level of expertise. The coaching program was developed to pair Chinese staff with experienced expatriates was implemented to create a formal mechanism to transfer knowledge and culture. A solution could to promote expatriate managers to the China with a high level of technical experience who are comfortable making critical decisions in a short amount of time.
6. ECL is having trouble attracting and securing local talent. The issues impeding success are that many talented potential acquisitions leave the country, the Chinese owned firms offer good compensation packages and more competing firms are beginning to enter the Chinese market.
7. Continue the training from ECL University which will demonstrate the ECL culture while acculturating it to ECL China and is a system that if managed properly it will work and will provide the desired results.

Conclusion

To conclude, ECL must assimilate their management practices into Chinese culture. Regardless of how hard ECL works to involves employees into the ECL culture, their future leaders will be generated from the Chinese culture. Thus, it is important for management to determine how the cultural attributes may be faced, refined and indoctrinated into ECL to achieve success.

References:

• Lewicki, R. J., Barry, B., & Saunders, D. M. (2010). Essentials of negotiation. United States: McGraw-Hill Companies.
• Ho, M. (2001, November 9). Establishing an “ECL” culture in china: organisational difference

  or national difference? Centre for Asian Business Cases , 11.