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ESRC: Multinationals in emerging China should stick to their own ways of managing

Working TogetherWhen it comes to breaking into the lucrative Chinese market, foreign multinational retailers should keep largely to their own, time-tested management techniques, according to new research funded by the Economic and Social Research Council (ESRC).

Rather than struggle to adapt to the Chinese cultural environment, firms from the UK and elsewhere are better advised to hone and refine existing managerial and technical expertise, argues Dr Jos Gamble, of Royal Holloway, University of London.

A fluent Chinese speaker, he interviewed management and staff in eight Chinese cities, including Beijing, Shanghai and Chengdu, as well as key people in the UK and Japan.

His findings also dispel claims that foreign retailers offer only 'dead-end' jobs in their Chinese subsidiaries. On the contrary, he says, such organisations can provide workers with significant opportunities to prosper and improve their skills.

Rising prosperity and a rapidly commercialising economy have transformed China into the world's most important emerging market. Multinational retailers have rapidly built up their presence since foreign participation was allowed in 1992.

By conducting case studies of UK and Japanese retailers and their off-shoots in China, Dr Gamble set out to examine how these global organisations transfer management practices and retail concepts to their overseas subsidiaries.

In China, the main approach of the Japanese and UK firms was to try to replicate the store procedures, employment relations and customer service standards of their parent company.

For both customer service and people management, this meant that companies often reflected their home country practices, so they were different from each other, as well as from local Chinese norms and practices.

However, the study found that, in some ways, retailers did diverge from practices back at home.

Japanese firms, for instance, took on far more women supervisors in China compared with their stores in Japan. And a UK multinational followed local practice with its use of large numbers of sales staff employed by product suppliers rather than directly by the stores.

Dr Gamble said: "These findings indicate that while it is possible to transfer culturally innovative practices, those that run counter to institutional features - such as the nature of the local labour markets - are much harder to implement."

Japanese companies 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.

Said Dr Gamble: "The Japanese approach to customer service was particularly innovative in the Chinese context. Whilst, initially, local customer response was quite negative, it rapidly achieved acceptance as a form of 'best practice'."

Most employees believed that their jobs would improve their skills level and employability, contradicting widely held concerns about 'de-skilling' of labour in the service sector.

Contrary to expectations, a UK firm examined for the study provided at least as much opportunity in this respect as Japanese companies.

And there were high levels of satisfaction about foreign retailers' human resource techniques. Even people in apparently menial and 'dead-end' jobs, such as checkout staff and warehouse workers, felt that their jobs provided learning opportunities and chances for self-improvement

Dr Gamble said: "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."
For further information, contact:

* Dr Jos Gamble on Tel: 01784 414094; e-mail: j.gamble@rhul.ac.uk
* ESRC Press Office:
o Alexandra Saxon (Tel: 01793 413032, e-mail: alexandra.saxon@esrc.ac.uk)
o Danielle Moore (Tel: 01793 413312; e-mail: danielle.moore@esrc.ac.uk)

Notes for editors:

1. The research project 'Multinational Retailers in the Asia Pacific' was funded by the Economic and Social Research Council as part of the Cultures of Consumption Programme, sponsored with the Arts and Humanities Research Council. Dr Jos Gamble is at the School of Management, Royal Holloway, University of London, Egham, Surrey TW20 0EX.

2. Methodology: The study involved case studies of workplaces in multinational and Chinese domestically-owned retailers. Data was generated through ethnographic research, survey questionnaires, and interviews with local employees, expatriate staff, customers, and government, trade union and business organisations. Core research data comprised more than 400 interviews with store workers and managers in 22 companies and 2,200 survey questionnaires. Most research took place in eight Chinese cities, as well as in the UK and Japan.

3. The Economic and Social Research Council (ESRC) is the UK's largest funding agency for research and postgraduate training relating to social and economic issues. It supports independent, high quality research relevant to business, the public sector and voluntary organisations. The ESRC's planned total expenditure in 2007 - 08 is £181 million. At any one time the ESRC supports over 4,000 researchers and postgraduate students in academic institutions and research policy institutes. More at http://www.esrcsocietytoday.ac.uk

4. ESRC Society Today offers free access to a broad range of social science research and presents it in a way that makes it easy to navigate and saves users valuable time. As well as bringing together all ESRC-funded research and key online resources such as the Social Science Information Gateway and the UK Data Archive, non-ESRC resources are included, for example the Office for National Statistics. The portal provides access to early findings and research summaries, as well as full texts and original datasets through integrated search facilities. More at www.esrcsocietytoday.ac.uk

5. The ESRC confirms the quality of its funded research by evaluating research projects through a process of peer review. This research has been graded as 'Good'.

ESRC Press Team Contacts

* Alexandra Saxon, Deputy Head of Communications (01793 413032 - alexandra.saxon@esrc.ac.uk)
* Danielle Moore, Press Office Support Officer (01793 413122 - danielle.moore@esrc.ac.uk)

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