Cross Border HRM Challenges of Chinese Companies : An Exploratory Study

With the growing footmark of Chinese MNCs around the globe, the management of the host country employees has been a new challenge on the horizon. The study aims to understand the human resource management and cross-cultural practices and challenges faced by Chinese companies across the border. This cross-sectional and exploratory study used semi-structured interviews and focus groups for the data collection. The respondents were Chinese managers from Chinese companies and Chinese cultural centres working in Pakistan. This study used thematic analysis with triangulation of sources and methods. This study found culture as a key theme affecting all the emerging human resource management themes. Chinese companies working in Pakistan use informal social networks in addition to traditional applicant recruitment methods. Cultural training is common along with technical training in particularly state-owned Chinese enterprises. Although in many Chinese companies, the parent country nationals fill top positions, local employees could be seen working in the top tier management of some Chinese companies. The Chinese companies’ management practices have not been paid much attention to in this region. This study enables us to develop deep insights into Chinese companies’ human resource management practices and challenges. This research also contributes to the literature on international human resource management and cross-cultural management. JEL Classification: Z00 ________________________ *Doctoral Scholar, School of Economics and Management, Beihang University, Beijing, China Email: saadahmed@buaa.edu.cn **Sr. Assistant Professor, Department of Business Studies, Bahria University Karachi Campus University, Karachi, Pakistan. Email: Pakistan.mumtazkhan.bukc@bahria.edu.pk ***Sr. Assistant Professor, Department of Business Studies, Bahria, University Karachi Campus University, Karachi, Pakistan. Email: essakhan.bukc@bahria.edu.pk Cross Border HRM Challenges of Chinese Companies: An Exploratory Study | DOI:https://doi.org/10.22555/pbr.v23i4.630


Introduction
China has seen magnificent economic growth over the last three decades with a startling average of 10% annual GDP growth. It all goes back to 1978 when China set out for the economic reforms leaving the soviet-style economy for the social market economy (Shen, 2006). The data reflects that the performance of Chinese companies has been improving every year. There were only 18 Chinese companies listed in Fortune 500 in 2005, which splendidly increased to 95 in 2014. This year, surpassing the US for the consecutive second time, 143 Chinese companies got listed in Fortune 500 (Xinhua, 2021).
China has rapidly transformed itself from a merely labor-intensive offshore location to a technological giant with the imprint of Chinese companies that could be strongly felt around the globe. In a related vein, China has been working to revive the old silk route with the One Belt One Road (OBOR). CPEC (China Pakistan Economic Corridor) with nearly 62 Billion US$ is considered a flagship project with the aim of regional connectivity and economic development of Pakistan (Javed, 2016).
Pakistan's manufacturing and service industries have been traditionally dominated by Western Multinational companies (MNCs). In recent times, the China-Pakistan Economic Corridor (CPEC) is one of the factors behind the surge of investment as the economy is showing signs of recovery with the increasing GDP growth. However, amidst all these Chinese cultural and financial direct investments, there is less attention paid to the management practices adopted by these companies to run their operations in Pakistan. Moreover, according to Quer et al. (2007) hypotheses based on Western quantitative research with advanced statistics may limit the profound understanding of the Chinese management style. Therefore, researchers need to focus on qualitative studies with an inductive approach to understand the idiosyncrasies of the Chinese management context.
Despite being under the business and research limelight in recent years, the Chinese MNCs' work practices in developing countries have been underexplored (Cooke & Lin, 2012;Haasis & Liefner, 2019). Though, there have been a limited number of studies focusing on the Chinese MNCs from various perspectives (Babu et al., 2020;Bunchapattanasakda & Wong, 2010;Fan et al., 2013;Jackson, 2014;Zhang, 2003). Some studies attempt to examine the Chinese MNEs' HRM practices in the developed part of the world (Jack et al., 2019;Yang & Lin, 2019;Zhu, 2019). However, attention has not been much paid to the HRM and general management practices and challenges faced by Chinese MNCs in this region, except for (Kim, 2020), which broadly shed light on China and India relations including HRM challenges faced by Chinese MNCs in India.
Hence, against the aforementioned backdrop, this study attempts to understand the HRM practices and challenges faced by Chinese MNCs in Pakistan. This study will also add insight to the existing theory and practice by developing better comprehension of the Chinese management style and it also contributes to the cross-cultural management and international human resource management literature. The next section of this paper reviews the past studies that review and discuss the HRM practices and cultural influence of Chinese MNCs abroad. The third section highlights the research methodology. The fourth part exhibits the research findings. The following sections discuss the findings in the light of extant literature. The last part presents the concluding points of this study.

HRM Practices and Challenges
Creating and updating HR systems is a big challenge for the human resource professionals of Chinese Multinational companies (Zheng, 2013). They need to come up with systems that go well with the politics, society, law, and culture of both countries-the parent and host country. Their policies and systems should be flexible enough to hire, train and retain competent employees. Moreover, Tarique and Schuler (2010) emphasize that international managers need to be locally responsive as well as globally integrated while running international HRM affairs' practices of Chinese MNCs vary from organization to organization. In some companies, the parent country employees are only sent when there is a need, mainly for finance or trouble-shooting. The HR manager found that managers from the parent country face challenges to manage host country employees. Hence, the parent company hired local managers to look after employees, and then Host country managers are managed by the top management of the parent country (Shen & Edwards, 2004).
Examining the universally embraced international human resource management practices of ten regions, Von Glinow et al. (2002) found out that although many organizations' primary focus is technical training. However, soft skills training skills are on the rise all over the globe. In a similar vein, Chinese companies send their host country employees to China for training and development. The aim is to cultivate better awareness of the Chinese culture and corporate culture among the host country's employees. Fan et al. (2013) studied many Chinese MNCs working in Australia. One of these MNCs was very successful in the early years of the operation because of decentralizing managerial roles and empowering local managerial employees.
For the successful implementation of the international business strategy, the role of an MNC's HR manager is very crucial as he must have a good understanding of the notion of local responsiveness and global integration (Cooke et al., 2017). Moreover, Shen (2006) also argued that the HR runs all the shows as he is responsible for arranging labor from the host country to the home country or from the parent country to the host country. The international HR manager should coordinate well with management in the home country as well as the host country to run smooth operations. Chinese management style is quite different from the western MNCs and sees a disparity between the Chinese companies' strategic objectives and their practices. Jackson (2014) noted that although many Chinese MNCs are providing jobs to the local employees but not doing enough to enhance their skills. Hence, he advises Chinese companies to make a contribution to the community skill development, enhance community engagement and look for unnoticed areas where their effort could provide locals employment and community development.
In another study, Zheng et al. (2006) empirically examined 72 Chinese enterprises' HRM practices. They found that employee training and performance evaluation had an insignificant relationship with business performance. They found that not even half of the companies they surveyed had a composite training program. They explained that Chinese firms' fear of losing employees after training which they suggested could be improved by working on employee commitment strategies. However, the communication of performance expectations from Chinese MNCs is very important in developing countries as the work environment is not very competitive. The job responsibilities and tasks should be articulated very clearly.
Many Chinese companies adapted the compensation mechanisms conferring to the host country's needs. In the study aimed at many African countries, it was found that Chinese MNCs abandoned their traditional compensation system and customized it to the preference of local employees. Providing long-term incentives was not that fruitful to motivate them. Instead, they would be motivated by short-term incentives. Similarly, it was noticed that local employees would work beyond the office timings to earn overtime pay.
In another case, it was found that local employees were not very loyal to Chinese MNCs and it was very hard to reduce the voluntary turnover. One of the reasons was the lack of understanding between the Chinese managers and local employees. However, some managers reduced the turnover by developing interaction under some peer systems and it also enhanced employee engagement . Some Chinese MNCs working in developing countries send their employees to China. In one case, it was reported that the employees who came back from the training were very punctual in office timing which was very pleasant for top management because they were not sent for the time management courses. More importantly, these employees cultivated awareness among the rest of the local employees which changed the work attitude of many employees gradually (Zheng, 2013).

Organization structure
Studying the strategies of leading Chinese multinational companies, Cooke (2012) found out the Chinese firm commenced its program with a small number of Chinese employees but when the firm grows larger, it would begin to employ more local employees. It was noted that nearly 70% of the employees were host country nationals including the higher managerial post. Many of these host country managers climbed up the hierarchy due to their hard work and competence and are considered more favourably to effectively communicate with local employees. Interestingly, it was found out that key job position in some organization functions like purchasing and finance is likely to be filled by Chinese. However, key technical, marketing and operations positions are staffed by the host country national.
As far as organizational structure is concerned the Chinese state-owned enterprise ensures authority to the Chinese managers. The bosses in China are generally respected as part of the tradition and it also reflects Chinese leaders' authority. This hierarchical structure and system sometimes create problems abroad for Chinese SOEs where people appreciate equality and seek less distance between superior-subordinate relationships. On the other hand, private Chinese MNCs also seek to develop a relationship beyond work with the host employees. For this purpose, they organize events where families of employees are also invited. This helps Chinese companies to build an emotional association with employees which increases employees' morale and contribution to the company (Cooke & Lin, 2012).

National and organizational culture
Hofstede's seminal work of cross-culture management has drawn the attention of scholars (Hofstede, 1984). The cultural dimensions theory attempts to measure the national culture through the dimensions of long-term orientation, uncertainty avoidance, masculinity, individualism, and power distance. In many aspects, there is not much difference in some dimensions score of Pakistan and China. Like on individualism Pakistan and China score 14 and 20 showing the collectivist nature of the society. However, Pakistani society scores high on uncertainty avoidance whereas China scores low. It reflects that Chinese society is more risk-oriented than Pakistani one. Furthermore, China scores very high in long-term orientation in comparison to Pakistan which shows that Chinese society is much more pragmatic than Pakistani society.
Emphasizing the effect of traditional Chinese values on HRM practices,  concludes that Confucian values are observably embedded in human resource management but with a variety of significance. Additionally, the Chinese soft power which is believed to be the soul behind Chinese economic development is largely attributed to the beliefs of the great Chinese philosopher Confucius (Javed, 2014). Moreover, Xing et al. (2016) recognize that Chinese MNCs have been observed to adapt to the local African atmosphere rather than disseminate their indigenous HRM philosophy. The reason was a lack of acquaintance with culture and business. They regarded adaptation to the local culture as paramount in managing host country employees.
The notion of guanxi has been well associated with Chinese business and Human resource management practices. To understand guanxi, we need to see the Chinese social system which bonds one another in a special kind of relationship. In simpler words, if people are in a guanxi relationship, they are completely devoted to each other. Chen and Easterby-Smith (2008) studied guanxi from the perspective of Chinese MNCs operating abroad and concluded that special relationships with employees (guanxi) are very also necessary to manage HR when working abroad.

Research Methodology
Studying Chinese multinationals using quantitative research is hard because they have been not extensively researched to produce ample literature to support quantitative analysis . Saunders et al. (2009) comment that exploratory research attempts to clarify the understanding of the problem. Similarly, this study is exploratory and aims to understand the HRM challenges faced by Chinese MNCs in the socio-economic context of Pakistan. The logical understanding of methodology could be enhanced by using the right kind of research approach. This research follows an inductive approach because it seeks to interpret and understand the social phenomenon in contrast to the deduction approach that inherits its roots from natural sciences.
Semi-structured interviews and focus groups were used for data collection. According to Blumberg et al. (2014), if the research is exploratory then it is likely to use qualitative research interviews. The semi-structured interview generally covers several themes and questions. This type of interview provides flexibility to exclude some questions after considering the context of the organization. The sample size consisted of 16 Chinese managers and a Chinese director of a cultural institute working in Pakistan. The focus group was conducted with the five respondents and eleven interviews were conducted for data collection. Interview protocols were ensured during the process, such as information being collected with consent, salient features of the study were shared, and open-ended questions were placed before respondents. Furthermore, Marshall (1996) comments that the qualitative study does not have the issue of sampling if the research objectives are appropriately met.
This study uses Hycner for the thematic analysis. Some themes were identified during the process of reviewing the literature and some got finalized during analysis (Hycner, 1985). The thematic analysis of this study is grounded on phenomenology. Phenomenology as a research approach seeks to understand the phenomena from the point of view of those who have experienced them (Neubauer et al., 2019). The researcher could develop a better insight into the meaning of -what and how it was-experienced. Triangulation of methods was done through the semi-structured interviews and focus groups and triangulation of sources i.e. Chinese managers of companies and a Chinese director of the cultural institute.

Findings
After the interviews and focus group, the data were transcribed and analyzed. Following are the key themes that emerged from the data analysis.

Staffing
Chinese companies would use multiple methods to attract Pakistani applicants for the open position. This includes traditional methods of giving advertisements in the newspaper, posting jobs on prominent national job websites, and using social media. Interestingly, many Chinese companies use informal networks to hire employees. One of the Chinese managers from a large Chinese bank remarked, "Chinese expatriate network facilitates greatly in recruiting Pakistani employees". Additionally, these companies primarily recruit managerial employees through the internet and social media and rely on informal networks and newspaper advertisements for non-managerial employees.
Chinese companies find it very difficult to hire highly skilled people in Pakistan. The manager of a large Chinese mobile company said, "Most of the applications we receive are comprised of overqualified applicants. We receive a good number of job applicants with 16 years of education. However, for non-managerial positions, Chinese companies don't require highly educated but highly skilled individuals". As one of the respondents told that customer service skills and appearance are sine qua non for a good salesperson. If we are going to hire a salesperson, we ensure they have got required skills to perform the job. Moreover, a Chinese manager advised a Pakistani applicant to carefully read the job description before applying for the job. As another manager from Chinese Automobile company comments, "overqualified hiring has created a mismatch between job and person, and it resulted in employee turnover".
According to another Chinese manager, their company prefers young and fresh employees for certain job roles over experienced employees. The selection process consists of written tests and interviews. It was found out that all of the Chinese companies would not conduct more than two interviews. One of the Chinese managers strongly believed that having more than two interviews is waste of time.

Performance management
The performance of the employee is being managed differently by different Chinese companies. Even in one company, we may find different kinds of appraisal types and periods. The performance appraisal is generally conducted annually in most Chinese organizations. However, a couple of companies working on multiple projects in Pakistan evaluate their employees on the completion of their project which varies it could be 4 months, 8 months, or even more than a year. In the words of one of the focus group participants from a renowned Chinese mobile company, "our company has got a monthly target for their sales staff. This not only helps them to closely track their performance but also helps them to work out their performance gap. According to another Chinese manager from a Chinese automobile company, "we have an annual performance appraisal system, the development areas of the employees are identified during the process, and action plans are made in light of appraisal feedback. This process also enables us to identify the pay raise for the employees".

Employee Training and Development
Chinese companies consider successful training indispensable for good performance. There are different practices in different companies. The focus group participant from the Chinese mobile phone company informs, "The training program duration depends upon the position one has hired for. The salesperson working on the shop floor will get one week of training. The Pakistani sales officer will go one month of training and the Pakistani manager training program goes up to 6 months. The hallmark of our training program is Pen Feng (mandarin) which is translated as more than responsibility in English". Generally, the training is classified into two parts, technical training, and culture training. The technical training cantered on product knowledge and culture training gives an insight into the Chinese and corporate culture.
Many Chinese companies use coaching and mentoring to train Pakistani employees. It helps them to develop and refine their specific skills according to the requirement of the company. In the words of a Chinese manager from a large Chinese bank, "the language was the key barrier between the Chinese trainer and local employees".

Organization structure
Most Chinese companies had top managers from their parent countries. In some companies, only the regional heads are from China, the rest of the entire workforce is Pakistani. The focus group participant told us that in the future, there will be more Pakistani managers at the top level. We will be very happy to see Pakistani managers running the corporation. According to one of the Chinese managers from an automobile company, at our organization, only highly technical staff is Chinese with a Chinese head, all other employees are from Pakistan". Moreover, it was found out that the mobile company and automobile company from china have only Pakistanis in the sales and marketing department as they believe the locals understand the language and market. Moreover, one of the respondents told, "We had a training manager from China at the start of our operations here. But now we have a Pakistani Training manager and this employee was hired as a sales associate because of his commitment to work. He got double promotions in two years to earn this designation".

Culture
Culture has emerged as one of the themes affecting all the human resource domains. All of the respondents consider cultural differences between the two countries are an issue that impedes efficiency in the beginning but with time the knowledge enhances the cultural comprehension and the working relationship gets natural. The language problem is one of the key issues faced by Chinese companies and businesses in Pakistan because many Chinese cannot speak English or Urdu fluently also according to the director of the cultural center Professor Li, "language is the key to culture. I also believe that the knowledge of China and the Chinese language immensely increase the job prospects of Pakistani applicants to Chinese companies. But, I also believe that Chinese managers also need to develop a cultural understanding of Pakistani people".
Organizational culture also varies from company to company. In one of the companies, the Chinese managers were having a formal and informal relationship with Pakistani employees at the same time. When they are at work, the managers would be formal but outside work they enjoy the informal relationship as occasionally they would also go out for the dinner. Additionally, one of the respondents told that Pakistani people tend to procrastinate which undermines productivity.
The interviews reflected that many private Chinese companies have adapted to the culture of Pakistan. One of the Chinese claimed that without conforming to the local culture, it is hard for us to do business as many of the big markets in the business hub of Karachi would start work 10. However, in China people are used to starting work early, he also claimed that even in China you don't find any single person saying good morning after 9 am.
Moreover, it was found during the focus group that the targets and practices vary between the host country and parent country. The work culture in china is more competitive than in Pakistan. The company has set a flexible target in Pakistan whereas in China the employees have comparatively tougher targets.

Discussion
The study started with the intent to understand the HRM practices and challenges faced by the Chinese firms in a new county like Pakistan. As it is with the qualitative study, the iterative nature blossomed into a study covering more than what was initially envisaged. Therefore, with the start of the data collection in the form of interviews, it was evident that Chinese companies consider culture as affecting human resource management practices in every way. Hence culture emerged as a key theme in this research. The establishment of the Confucius institute and Chinese language centers are facilitating the acquisition of cultural knowledge. The teachers mainly come from mainland China. They also arrange a cultural tour of China and take Pakistani students around the various Chinese universities and cities. Many Chinese companies also contact these cultural and language centers for fulfilling staffing purposes. Moreover, Pakistani job applicants even with a basic knowledge of the Chinese language are preferred for the opening.
Interestingly, this research shows that the Chinese managers have conformed to Pakistan culture and they also enjoy informal ties with Pakistani employees after work. Similarly, Xing et al. (2016) found that Chinese managers' development of social ties with the local employees also helped them to understand the culture and recognize local employees' good qualities.
This research shows that Chinese companies have been using various recruitment methods. It ranges from the commonly used method of newspaper advertisement to the informal method like using networking to develop a candidates pool. Using the social network is a commonly used Chinese method in Pakistan that is also being practiced by Chinese companies in Mainland China. For managerial posts, most Chinese companies use internet job portals, this makes sense as internet usage tendency for job search is primarily found among the graduates of higher education institutions in Pakistan. In China also recruitment through the informal network has common practice, particularly among small and medium-sized organizations.
Chinese companies are facing problems when it comes to hiring highly skilled Pakistani employees. In a similar vein, Zhu et al. (2013) found out that it is difficult to find good host country managers in developing countries. However, Jing and McDermott's (2013) claim of Chinese companies use only parent country nationals for the top management position was not verified. This study argues that Chinese companies have also hired Pakistani managers at the top-level management. China developed rapidly in the last three decades, and it is one of the reasons that have led to an increase in emphasis on certain key skills. In Pakistan, the institutions need to focus on the refinement of the students' skills. It was also evident from this study that many Chinese companies demand punctuality, hardworking, good interpersonal skills, and loyalty. Besides, this study shows that Chinese managers don't like to see their employees leaving and highly regard loyalty. This is also consistent with the findings of (Jackson, 2014). He found out that during the staffing process for the expatriates, loyalty is one of the key traits that are sought after by the Chinese MNCs. Furthermore, this research showed that Chinese companies don't conduct more than two interviews. On the other hand, more than two interviews in Pakistan are not very common for all the job openings but for many jobs, the applicant will go through more than two interviews and the number of interviews also varies from company to company. However, this interviewing system for Chinese companies is saving them money and time.
This research reflects that Chinese companies highly regard employee performance management. The appraisal period is generally one year for most the companies but it varies for different job positions and companies. Particularly, the sales target is closely monitored and reviewed on monthly basis. On the contrary, Zheng et al. (2006) asserted that the performance evaluation has not got a significant relationship with the firm performance. Moreover, Xing et al. (2016) argue that the communication of performance expectations is indispensable for Chinese companies working in developing countries as the work culture is not very competitive.
Chinese companies' training program varies from company to company. The notion of Pen Feng (more than a responsibility) is firmly embedded in the cultural training program of Chinese private enterprises in Pakistan. It enhances the understanding of Chinese work culture among Pakistani employees and enhances their performance. The concept of Pen Feng is quite similar to the good research notion of Guanxi. Guanxi has been popular in Chinese management research and after the rise of China as an economic power, it has also drawn significant attention from western scholars (Anderson & Yiu-chung Lee, 2008;Chen & Easterby-Smith, 2008;Guo & Miller, 2010;Su & Sohn, 2015). Many Chinese companies are using mentoring to train an employee which is a common method in Pakistan. Furthermore, the Chinese companies could commence cultural training programs for their managers who are going to be posted in Pakistan. A better understanding of the culture could enhance their managerial effectiveness.
This research shows that even though many companies had Chinese top managers. But, Pakistani employees can work hard and move up the ladder through promotion. Moreover, the highly technical staff is primarily from China but Chinese companies had employed Pakistani staff in the Sales and Marketing department for the reason that they had better knowledge of the local market.

Conclusion
The effective management of host country employees is indispensable for the business success of MNCs. This study portrays the current human resource management and cross-cultural practices and challenges faced by Chinese companies from the perspective of Chinese managers. Chinese companies are using various staffing methods. Usage of the informal network is one of the commonly used Chinese recruitment methods in Pakistan. Many companies turn to Chinese cultural centres for finding the right candidates. Additionally, no Chinese companies ever conduct more than two interviews as they consider it tantamount to time-wasting.
Culture is firmly ingrained in every Chinese company's practices. A major part of the training program of Chinese companies comprises cultural training in addition to technical training. The Chinese companies mainly employ Parent country nationals for the top post but they also substitute as they find a suitable replacement which also helps them financially.
The localization of Chinese practices and learning from them with time will enable Chinese companies to refine and upgrade their HRM policies and procedures. From another perspective, this study also concludes that knowing Mandarin, good communication, and time management skills increase the job prospects in Chinese companies.

Managerial Implications
A rising number of Chinese companies have been investing across the border. In the case of Pakistan, Chinese companies have created a large number of jobs for the Pakistani people. Stakeholder theory suggests organizations take care of all stakeholders to create more value. The Chinese companies could contribute to the skill development of their employees and community in this regard. Moreover, the Pakistani and Chinese are not too far apart in many cultural dimensions. However, the cultural training of Chinese managers could endow them with a better understanding of idiosyncrasies associated with Pakistan culture. This could also result in the better compatibility of Chinese and Pakistani values and subsequently, improve and streamline their managerial performance.

Limitations and Future Research
It is important to highlight the research limitations of the study. First, this study primarily focused on the Chinese managers and relied only on their experiences to understand issues. The perspective of employees working in Chinese companies could further enrich our understanding of Chinese management practices in future research. Second, this study is cross-sectional, future studies could adopt a longitudinal design to examine Chinese management practices. Third, our world is highly interconnected now, and the influence of Chinese organizations is increasing with every passing day, Chinese enterprises and their management practices have received scant attention around the world, particularly in South Asia. The Chinese trade volume has also been rapidly rising with the respective countries. Subsequently, the number of Chinese companies and their operation has been on the rise. Future Studies could look into the Chinese management practices and also study their link to Confucius's philosophy and Chinese cultural values. Lastly, the Chinese grand project 'Belt and road initiative' has been endorsed by almost 70 countries of the world. The roll-out of CPEC as a massive bilateral project is also part of Chinese premier Xi Jinping's belt and road initiative. In this perspective, future studies could look into the role of the Chinese government to influence their companies to invest in their preferred countries and, in such cases, also the preferential treatment of host countries like Pakistan to Chinese companies.