question archive Establishing a branch of a family business in China A family-owned carbon steel company from Germany has extended its business to Hong Kong
Establishing a branch of a family business in China A family-owned carbon steel company from Germany has extended its business to Hong Kong
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Establishing a branch of a family business in China
A family-owned carbon steel company from Germany has extended its business to Hong Kong. The owners bought a small traditional Chinese firm and decided to copy the successful structure they had developed at home. This structure was headed by three general managers who equally shared the responsibilities for the business activities of the firm. The consequences were as follows.
1. Now the Chinese employees were assigned tasks by people they have never seen before and whom they did not understand. Many understandings occurred, some were quite costly.
2. The employees back in Europe were only concerned with whether the assigned tasks were completed and did not consider any other obligations to the Chinese employees, such as taking care of the relationships with the Chinese government, banks, etc.
3. Eventually, the local employees became frustrated and were ready to leave the company.
The result was that the management model was changed again, and a single managing director of the subsidiary was accountable for all business activities in Hong Kong.
TASK
Answer these questions.
Relate the described situation to one of the cultural dimensions identified by Hofstede. How can you explain it? How does this situation compare to comparable situations in your home country?
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Answer:
This case relates to cultural dimensions explained by Hofstede in that they show some of the categories defining culture and which can enable the German company to operate successfully in the Chinese country.
First, the category is index of power distance has been illustrated in the case. The company illustrates this in how it manages its employees in Chinese. Three general managers are appointed to take care of activities here but these local employees do not embrace this kind of management structure but prefer a flat management.
Secondly, the individualism and collectivism category is also illustrated in the case. The foreign company aims at achieving goals without taking into consideration the employees well being and forming relationships and this discourages the local Chinese employees.
Thirdly, is index of uncertainty avoidance. The company does not consider the uncertainty tolerance of the Chinese employees. They did not understand that the Chinese employees would not prefer working with people they had not comprehended and known.
This situation compares to a situation in my home country where a certain foreign company has set up a branch and they continue applying the foreign culture in guiding performance instead of changing it to suit the culture in country of operation.
