By Frank Mulligan

When a company sets up operations in China they appear to be faced with two distinct choices: ‘going local’, or imposing the dominant business culture of their organization.

It’s not an easy choice, and there are no clear cut answers as to which route will bring you the best results. In the absence of a definite conclusion it can become a battle of wills to see which culture will win.

Choose the local culture and you will be in a position to motivate local staff more effectively, but much of the operations of the business will become opaque to non-locals. Things will get done but not necessarily the way the Headquarters wants them to. What you gain in effectiveness, as defined locally, you lose in visibility.

Many companies, on the other hand, take the approach that there is a perfectly good culture within their organization, one that has served them well for many years in many countries, and that China is no different. These companies attempt to bring everybody in line with this culture. They can find that surface level reportage gets better, and the data that they get is now in a format that the HQ understands, but it just might not be the right data.

Or at least the commonly held stereotypes lead us to these two scenarios.

In the real world there exists a blended corporate culture that combines the subtlety of the local culture with the performance orientation of the more traditional multinational company. Finding that blend is an eternal quest, and nobody I know thinks that they have achieved it. Many of these people are aiming for the sun but getting to the moon is good enough.

Retail Research

Then along comes Dr Jos Gamble of Royal Holloway, University of London. He has just conducted research on the retail industry in China, in conjunction with the ERSA. His conclusions are not the usual bromides about thinking globally, and acting locally. There is a welcome depth, and a plain-speaking tone.

He essentially says that China is much like any other market, and that adjustments should really only be made for institutional features, like the labor market. Other than that it is business as usual. You operate as you do overseas, except when there is a specific reason why you can’t, like a law or a deeply ingrained practice.

It’s a bit of a relief when someone just says it out like that.

In the retail sector, this approach equates to replicating exactly the store procedures, employment relations and customer service standards of the parent company. Dr. Gamble studied both Japanese and UK firms and found that they used the same processes, and looked for the same outcomes, in almost all cases. But for some issues, like better customer service, they used a different approach to achieve the same outcome.

Japanese companies operating in China were more prescriptive and detailed in their way of dealing with customers than the UK-owned stores, which encouraged workers to adapt behaviour they used in everyday life. Either approach seems like a good idea to reduce staff turnover. Control over the working environment is a major motivating factor in China.

Dr. Gamble concludes that: “Most of the world’s major global retail firms are desperate to grab a slice of the largest and most rapidly growing emerging market. All the evidence suggests that, whilst it may be necessary to adapt to some extent to local conditions, time-tested management practices actually translate well across cultures.” 

His research was based on interviews with management and staff in eight Chinese cities, including Beijing, Shanghai and Chengdu, as well as key players in the UK and Japan. He was interested in how global organisations transfer management practices and retail concepts to their overseas subsidiaries.

The retail environment is different from most others, for sure, but you could probably make the same conclusions for any industry in China. It may well be that Dr. Gamble’s advice is applicable only to stores and malls.

If it is not then it tells us that overseas companies operating in China should make all attempts to introduce their own culture to their operations here, except when there are specific barriers that cannot be overcome, such as law or a custom.

Now, that’s cleared things up a bit.

Frank Mulligan, Talent Software