CASE STUDY APPLICATION IMPLEMENTING THE GLOBAL STRATEGY: CHANGING THE CULTURE OF

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CASE STUDY APPLICATION

IMPLEMENTING THE GLOBAL STRATEGY: CHANGING THE CULTURE OF WORK IN WESTERN CHINA

China has a strong culture, but one that allows it, paradoxically, to assimilate other ideas and philosophies. For example, Buddhism was added to Confucianism dur- ing the heydays of the Silk Road, and China has adapted to globalization quickly since it began market reforms in the early 1990s. For many firms entering China, the question is, “Will China assimilate Western cultural ways from the multinational corporations that enter, or will they insist on a Chinese cultural process of doing business?” This application describes the process one American technology com- pany utilizing a global worldwide strategy used in opening a manufacturing plant in a western Chinese province. The story is told from the perspective of the internal OD consul- tant who was charged with plant start-up support.

In 2003, a major U.S. multinational broke ground for a new set of factories in the “sec- ond tier” Chinese city of Chengdu. A city of more than ten million people in Western China, Chengdu is correctly considered the heartland of Chinese culture with a strong tra- dition of Taoism and a relaxed, friendly culture. In contrast, the multinational technology com- pany came to western China with a strong business-centered, “just get results,” U.S. cul- ture. While the organization had facilities all over the world, and several in China, it had not started-up a true greenfield plant as the first MNC in a city in more than ten years. In keep- ing with the firm’s global strategy, the corpo- rate headquarters expected each plant to integrate seamlessly with other plants in the supply chain. Low costs and meeting the tech- nical specifications of the product were the key measures of performance.

The first time I saw the factory site in Chengdu it was bare dirt with the wind blowing dust over what had been a farmer’s field. Even as the buildings came out of the ground—an office building, one factory and then another, a large warehouse, and a training center—the local culture of Chengdu was being challenged

in the way it thought about safety. In China, construction projects have a traditional algo- rithm for safety: the millions of Yuan (the local currency) spent in construction was pro- portionate to the number of deaths resulting from it. This project was different. There was a clear expectation that no deaths would occur, and that no injuries more serious than cut fin- gers were going to be tolerated. Subcontrac- tors were required to wear hard hats, steel- toed shoes, goggles, and the like, and not everyone liked it. One subcontractor walked off the job believing the safety equipment was too burdensome.

About 30 expatriates were brought in to manage the site. They were experienced com- pany employees from four different cultures: Malaysia, Philippines, Costa Rica, and the United States. Most were Malaysian; very few were American. The first local employees hired were support personnel in human resources, accounting, and purchasing. They were trained in their jobs in the way that the company expected them to work. The first Chinese factory workers were part of the Early Involvement Team (EIT), and they were sent to another of the company’s factories to learn the correct processes and behaviors nec- essary to run the production lines. When the EIT returned, they were to teach the next gen- eration of employees. While this training could be considered just learning the job, it was also a culture change for people who had never worked in a Western high-tech factory. Ramp- ing up this factory to production required that we hire and integrate 100 to 200 people per month; 70% of those hired were recent col- lege graduates.

As the OD manager, my job was to set up systems to transmit the culture and develop leaders, managers, and teams. I began with the site’s Vision, Mission, and Guiding Princi- ples. To help the team begin the process, I defined the Vision as “the best we could be,” the Mission as “our marching orders—what the corporation expected of us” and Guiding principles as “how we make decisions and treat each other.” We utilized two off-site sessions with the “whole system in the room.” Inclusive processes employing exercises and conversations about what was important to people were used to formulate beginning statements. After we had a set of draft statements, I formed small teams of Chinese leaders who debated the elements of Vision, Mission, and Guiding Principles. The teams came to consensus for each statement to ensure that both the English and Chinese words we used reflected Chinese culture and spoke in a way that fit the Chinese thought processes. We unpacked each statement using Chinese metaphors to provide depth of meaning. Essentially, we were defining the site’s specific culture, which while congruent with the corporation, was specific to this site and its chosen values. When completed, these statements went back to the site leadership for ratification. To disseminate the Vision, Mission, and Guiding Principles, each leader, whether expa- triate or local Chinese, took responsibility to water- fall the message to their team using dialogues to explore the meaning of the statements for the team. It was not enough to have posters on the wall, or simply tell people what they were. People needed to talk through the meaning and come to some conclusion for themselves as to their own belief. Additionally, people needed to see that lead- ership practiced what they espoused. So, when an important site decision was made, its fit with the Guiding Principles was publicly communicated. When certain initiatives were begun, such as man- agement training, it was tied to the site Vision. Only because people could see the Vision, Mis- sion, and Guiding Principles in practice did they become real.

Before the first building was under construction, I came to Chengdu to do the initial cultural research for the site. I interviewed university students, busi- ness leaders, and Chinese cultural experts in Chengdu. I found a disparity between how the mid- dle managers viewed management and leadership and what the young, university students wanted in a manager. As this was the first multinational organi- zation in Chengdu, most of the middle managers we hired were from state-owned enterprises with a very top-down, hierarchical culture. The university students expected Western-style, consensual decision making—a clear mismatch even within

the Chinese culture. Management training and coaching would be required to help middle man- agers learn to work in a consensual way.

To accomplish that, we engaged the expatriate site leaders as teachers and mentors in a nine- month management development program that included two outdoor “adventure-style” sessions. The first program placed the initial outdoor session after four months of activities. I found that in the classroom, Chinese managers could “talk the talk,” but when we put them in the team decision-making situations of the outdoor ses- sions, they were unable to make productive deci- sions. In the second management development program, I placed the outdoor session earlier so that the Chinese managers would understand the required managerial behaviors right away. We eventually graduated more than 50 managers with two-thirds of them receiving promotions within a year of completion.

The corporation had a number of key espoused values in its culture, including quality, safety, and business practice excellence. These were primary and nonnegotiable values. While that may seem the arbitrary hubris of a foreign multinational, I found that the Chinese employ- ees appreciated these three values, especially safety. As mentioned above, China has a poor record of workplace safety. When asked about this value, many people responded that “the company cares for my life.” Rather than seeing it as an imposition of a foreign cultural value, they found it fit the Chinese value of renqing or human heartedness.

The company also employed six values as basic to its culture. However, these values were really expected behaviors, such as discipline, risk taking, and being open and direct. In my work in Chengdu, I designed and implemented a process to develop those values as part of the expected behaviors of the site. I had learned that “telling- teaching,” or putting posters on the wall, was not very effective in this culture, so I engaged a cadre of volunteer “ambassadors” for each value. They used a positive approach of catching people “doing it right” and rewarding them in a public ceremony with a “Star of Chengdu Culture” award. To create a common understanding of each value, we again used an interactive and participative process. We provided materials that allowed and encouraged every manager to have a conversation with their team as to the meaning of that particular value. We endeavored to make the materials relevant to a Chinese audience using Chinese stories and situations to illustrate the meaning of the value.

However, not all these values fit within Chinese culture, and this created cultural dilemmas for Chinese employees. Being open and direct was one example of a value that did not fit. Generally, the organization talked about being open and direct in terms of “constructive confrontation,” which the Chinese employees shortened to “con con.” In my interviews, I found that this value was both the most difficult and the least practiced. The Chinese employees related con con to a lack of harmony rather than a method of solving problems directly and easily. It was antithetical to Chinese culture. Chinese employees who learned to practice con con in the workplace found themselves out of step when those behaviors were used with their family and friends outside of the factory. Essen- tially they had to bifurcate their life, learning to be one way inside the organization and another way outside. When I asked people what they lost by coming to work at the factory, employees often noted that they had lost some friends because they were now different from the Chinese culture at large. Practicing con con was a big part of that. They also told me of many instances in which they appeared to the expatriates as though they were practicing con con, when in fact they were practic- ing harmony. They felt that harmony was a better long-term solution to the problem at hand than cre- ating a situation in which fellow workers lost

“face.” They talked about finding a “middle way” to do business that allowed problem solving while still maintaining harmonious relationships.

If real cultural differences can keep people from assimilating into an organization, the ques- tion becomes, “Did these skilled Chinese workers actually assimilate into the factory culture, or did they simply appear to apply the organization’s value system while maintaining traditional Chinese values?” While much of the work on Values, Mission, and Guiding Principles was well accepted and understood, the Chinese workers in this situation had difficulty placing con con into a usable framework that worked in their social set- ting because it did not align with the Chinese value of harmony. Since con con was a founda- tional behavior/value for the company, such a mis- fit reveals a lack of real assimilation into the corporate culture.

Some Chinese lament that China is losing her cultural traditions as the country becomes part of the global economy. At least in Chengdu, I did not find that to be true. People described themselves as traditional Chinese who practiced their own cul- ture and struggled with those organizational pro- cesses that did not fit Chinese culture. They continued to look for the middle way that allows them to maintain their Chinese cultural values while moving into a capitalistic future. Just as China assimilated Buddhism into their Confucian practices millenniums ago, they see the value of assimilating some Western practices into their way of doing business, but it will still be capitalism with a Chinese face—a middle way.

    Study the case deeply and write about it.It should be in following steps

Introduction’

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Introduction

A major U.S. multinational is planning to setup a factory in the “second tier” Chinese city of Chengdu in the western China. Before doing so, it has to overcome a series of cultural barriers that exists in the success of the plant. An Organizational Development official has been deployes to the Chinese city of Chengdu to understand the culture and work pattern of the locals. His job is to bridge the gap so as to ensure emminent Supply chain management.

Background

Chinese city of Chengdu is considered the heartland of Chinese culture with a strong tradition of Taoism and a relaxed, friendly culture. Factory site in Chengdu was bare dirt with the wind blowing dust over what had been a farmer’s field. Even as the buildings came out of the ground—an office building, one factory and then another, a large warehouse, and a training center—the local culture of Chengdu was being challenged. The work culture of China was very different from that of USA.

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