Management in Chinese Cultures
Until recently, the Pacific rim has shown the most extraordinary growth rate. We’ve come to Hong Kong and China to see what part cultural values play in the way organizations develop there, how have family based conglomerates come to dominate business in South East Asia, the eastern way of doing business, and what lessons might there be in this very eastern way of doing business.
The majority of people in the world are Asian, and the largest cultural group in Asia is of course the Chinese..
The Chinese-based cultures, which include most of the Pacific rim countries, China, Hong Kong, Taiwan, Japan, Korea, and the Chinese populations in the Philippines, Indonesia and Malaisia, all share a confusian value system which stresses hard work, harmonious relationships, and respect for authority.
What is the relationship between these values and the way they do business?
It seems they’ve been very conducive for business. Despite the financial turmoil in the late 1990s, Chinese businesses have been, and continue to be very successful throughout the region.
Though the Hong Kong skyline boasts an array of famous global brands, it’s the smaller, family-owned businesses that have traditionally formed the backbone of the economy.
This small family-owned Hong Kong based companies making watch faces has, like many others, exploited the opportunity to move into mainland China.
« My husband runs the factory in China, I manage the company in Hong Kong, my younger sister assists me in taking orders.
Now, most of the production is in China, and the Hong Kong office is only for taking orders and quality checking.We have more than a hundred people in our factory in China,but we have six people here in Hong Kong.»
The dominant form of organization in China is based round the family. Typically, an owner manager sets up a very lean firm, privately financed by family members and does business with members of his clan.Indeed it'’ just this kind of networking that has enabled Hong Kong and Taiwan to fund much of the enormous expansion we’ve seen in Southern China in recent years.
They do this through a network of contacts in their extended family.And they’re not just local. These networks span all the countries in the Pacific rim.
«When I visit Viet-Nam, my sister has a small business and she said why not come back home and help us to expand the business?In terms of finance, well, when I talk about it with the greater family, my wife’s relatives, my own relatives, the aunts, uncles, everybody checks in a little bit, so it’s basically family financed.»
Is this type of family based entrepreneurship an efficient way of starting up a business?
«I guess it would be quite typical for an Asian way of setting up a business. Very low costs, very efficient in the beginning, because I don’t have to spend a lot of time to do market research, I don’t have to spend a lot of time to find a customer base, I don’t have to spend a lot of time to find a supplier base, I can go straight in, do a connection with an existing business within the family,so I have a market base, and then, all I need to do is find the right suppliers for the right products that we already have., so in that way it’s very quick to set up and very efficient in the beginning.
To build bridges, Chinese people use what they term «gwan shi», a form of relationship that entails mutual obligation.
It will be natural,for a Chinese to believe that when we develop into friends, OK we become friends, then I will expect that one time, if I have some problem, I will go to you, knowing that you are a Chinese, then I will expect that you will give me the favour, in anticipation that when you ask me a favour back, , then, I will return it to you. So «gwan-shi» is really long term, so we value .long term relationship, rather than some type of relationship.
The use of «Gwan-shi» is a common way of setting up businesses in China..
This company is a joint venture company between a Hong Kong company and a Chinese organization.This Chinese organization itself is actually popular in making fashion, textiles.
But through my relatives, Through some you know «gwan-shi» I have made use of networks because my husband’s side has some roots there, when we went there and visited some relatives, because of this relationship we managed to set up the company, and get all the licence and finance within six months, this took us speed.
Danielle hadn’t met these members of her clan before.
In China there are different officials. If you happen to be a relative, of those officials, of course they will look up to your interest.because you know you are a part of them, they will look at it this way.They suggest to us what we can do and then they will build bridges for us.
China is undergoing changes, and many firms are being privatized., like the «Shing-Shell» garment company in Pan-Yu.
«I think it’s a good thing. The change from state-owned enterprise to private ownership means that there is less government intervention and so I can focus on the day-to-day operation and the development of the company, devote more time to pure management matters.the purpose of running a business is to make a profit,and that’s what I’m doing.
Despite these changes, «gwan-shi» is still critical to the way business runs. «In our society,
,no one can manage independantly. You need «gwan-shi» to get along.In order to further a business our most important gwan shi is with government authorities.
Then of course, we also have personal gwan-shi.that’s the way we secure business over our competitors.
Overseas Chinese management is much less bureaucratic than western business.
Top managers adopt a hands on style, that relies on their business instinct.They have fewer corporate staff. Workers are more willing to work together for a common goal.
«MacTagoo clothing, founded twenty years ago by a refugee from China, is typical. Today, this medium-sized company has a turnover of 400 million US dollars a year.
In the last twenty years, we have grown from a small factory to a big company with a dozen and 3 hundred people.Since we noticed the competition, in South East Asia developing countries,is getting tough, we moved some of our production into China in order to cut down the costs and increase our competitiveness.We don’t have too many middle management., because we believe small is beautiful. We expect our top management, directors or managers to be hands on in every issue, always go to the front line, to look at what is happening., find a solution, and get it executed.
I noticed that western communities put a lot of money in research and development and in most cases, like the big companies, they’re used to hiring professional concultancy, to give them some specific reports.in market research or product research.We didn’t do that in Hong Kong.We belive than only the company’s management will understand what will be the best for the company.