Fang Lee Cooke, Manchester Business School, UK

1

Globalisation and the role of its HR strategy: Case study of a leading Chinese telecom corporation –

Huawei

Globalisation and the role of its HR strategy: Case study of a leading Chinese telecom corporation –

Huawei

Overview of the session

Motives of Chinese firms investing abroad

Research questions

Case study of a leading Chinese IT MNC – Huawei Technologies Ltd (HW)

Findings and analysis

Conclusions

Overview of the session

Motives of Chinese firms investing abroad

Research questions

Case study of a leading Chinese IT MNC – Huawei Technologies Ltd (HW)

Findings and analysis

Conclusions

Fang Lee Cooke, Manchester Business School, UK

2

Four major motives for FDI (Dunning and Narula, 2004):

Marketing-seeking

Resource-seeking

Asset-seeking

Efficiency-seeking

Exactly where firms can fulfil these motives are often location-specific

Firms engage in FDI not only to transfer their resources to a host country (asset exploitation), but also to learn, or gain access to, the necessary strategic assets available in the host country (asset seeking).

J. Dunning and R. Narula, Multinationals and Industrial Competitiveness: A New Agenda, (Cheltenham: Edward Elgar, 2004)

Four major motives for FDI (Dunning and Narula, 2004):

Marketing-seeking

Resource-seeking

Asset-seeking

Efficiency-seeking

Exactly where firms can fulfil these motives are often location-specific

Firms engage in FDI not only to transfer their resources to a host country (asset exploitation), but also to learn, or gain access to, the necessary strategic assets available in the host country (asset seeking).

J. Dunning and R. Narula, Multinationals and Industrial Competitiveness: A New Agenda, (Cheltenham: Edward Elgar, 2004)

Fang Lee Cooke, Manchester Business School, UK

3

Motives of Chinese firms investing abroadMotives of Chinese firms investing abroad

Pull strategies by foreign governments – tax incentives and other favourite conditions

Push strategy by the Chinese government – ‘Go global’, tax incentives, subsidies, national bank loans with preferential terms

Energy resource seeking – oil, gas, mining

Financial factors – bankrupting firms sold at cheap price, access to international fund (with low interest), to avoid trade quotas, money laundering

Pull strategies by foreign governments – tax incentives and other favourite conditions

Push strategy by the Chinese government – ‘Go global’, tax incentives, subsidies, national bank loans with preferential terms

Energy resource seeking – oil, gas, mining

Financial factors – bankrupting firms sold at cheap price, access to international fund (with low interest), to avoid trade quotas, money laundering

Fang Lee Cooke, Manchester Business School, UK

4

Motives of Chinese firms investing abroad (cont…)Motives of Chinese firms investing abroad (cont…)

Knowledge and know-how seeking – to acquire technology and management know-how through M&As and JVs in R&D centres

Brand name product building – to form strategic alliance (often through acquisitions) with well-known western firms to overcome poor image of Chinese products

Market access – to gain access to well-connected distribution networks (often through partnership with reputable firms in the West)

Knowledge and know-how seeking – to acquire technology and management know-how through M&As and JVs in R&D centres

Brand name product building – to form strategic alliance (often through acquisitions) with well-known western firms to overcome poor image of Chinese products

Market access – to gain access to well-connected distribution networks (often through partnership with reputable firms in the West)

Fang Lee Cooke, Manchester Business School, UK

5

Motives of Chinese firms investing abroad (cont…)Motives of Chinese firms investing abroad (cont…)

Aspiration to be international players, e.g. SAIC, Haier

Increased competition or reduced demands at home – need to seek overseas market (e.g. bicycles, cars, household electronic goods)

Expansion and support of export – setting up branch offices and services centres, establishing a presence in the market

Foreign exchange reserves – if the company makes a profit

Aspiration to be international players, e.g. SAIC, Haier

Increased competition or reduced demands at home – need to seek overseas market (e.g. bicycles, cars, household electronic goods)

Expansion and support of export – setting up branch offices and services centres, establishing a presence in the market

Foreign exchange reserves – if the company makes a profit

Fang Lee Cooke, Manchester Business School, UK

6

Research questionsResearch questions

What type of HR strategy do Chinese MNCs in the high-tech sector adopt to support its global business strategy?

What may be the incentives and pressures for Chinese MNCs to deploy local workforce in different parts of the world?

How do, if at all, Chinese MNCs adopt HR practices strategically to create social capital to enhance organizational competitiveness?

How do Chinese MNCs mobilize political capital to leverage competitive advantage in the international market where their competitiveness is not evident?

What type of HR strategy do Chinese MNCs in the high-tech sector adopt to support its global business strategy?

What may be the incentives and pressures for Chinese MNCs to deploy local workforce in different parts of the world?

How do, if at all, Chinese MNCs adopt HR practices strategically to create social capital to enhance organizational competitiveness?

How do Chinese MNCs mobilize political capital to leverage competitive advantage in the international market where their competitiveness is not evident?

Fang Lee Cooke, Manchester Business School, UK

7

Case study of a leading Chinese IT MNC – Huawei Technologies Ltd

Case study of a leading Chinese IT MNC – Huawei Technologies Ltd

Established in 1988 as an IT product trading firm in Shenzhen

Internationalization drive since 2001, now serving ¾ of the top 50 IT operators in the world

HW has rep offices in over 100 countries and over 1 billion users

Now employing over 60,000 employees, 48% of whom working in R&D

Established in 1988 as an IT product trading firm in Shenzhen

Internationalization drive since 2001, now serving ¾ of the top 50 IT operators in the world

HW has rep offices in over 100 countries and over 1 billion users

Now employing over 60,000 employees, 48% of whom working in R&D

Fang Lee Cooke, Manchester Business School, UK

8

Case study of a leading Chinese IT MNC – Huawei Technologies Ltd (cont…)

Case study of a leading Chinese IT MNC – Huawei Technologies Ltd (cont…)

Business strategy: innovation, high quality, low cost, and excellent customer service

Globalization strategy: less developed countries first, then developed countries; occupy market first (loss-making) then make profit through maintenance and upgrades

Motives of overseas expansion: marketing and asset seeking

Business strategy: innovation, high quality, low cost, and excellent customer service

Globalization strategy: less developed countries first, then developed countries; occupy market first (loss-making) then make profit through maintenance and upgrades

Motives of overseas expansion: marketing and asset seeking

Fang Lee Cooke, Manchester Business School, UK

9

Huawei Headquarters 总部风光

Fang Lee Cooke, Manchester Business School, UK

10

Huawei R&D Centre

Fang Lee Cooke, Manchester Business School, UK

11

Huawei HQ Staff Condominium 员工公寓百草园

Fang Lee Cooke, Manchester Business School, UK

12

HW’s global HR strategy and challenges in people management

HW’s global HR strategy and challenges in people management

HR strategy:

Deployment of Chinese expatriate to set up operations first

Localization to overcome language and cultural problems, also to show commitment to local economy and observation to local labour law – deployment of social capital

HR strategy:

Deployment of Chinese expatriate to set up operations first

Localization to overcome language and cultural problems, also to show commitment to local economy and observation to local labour law – deployment of social capital

Fang Lee Cooke, Manchester Business School, UK

13

HW’s global HR strategy and challenges in people management (cont…)

HW’s global HR strategy and challenges in people management (cont…)

HR challenges:

Retention problem due to lower pay than western MNCs

Low competence of local employees in poor countries (low PC literacy and project management skills)

Cultural differences in work values

Cross-cultural issues between Chinese expat & local employees

Lack of identification of local employees with HW’s corporate culture or HW as their employer

HR challenges:

Retention problem due to lower pay than western MNCs

Low competence of local employees in poor countries (low PC literacy and project management skills)

Cultural differences in work values

Cross-cultural issues between Chinese expat & local employees

Lack of identification of local employees with HW’s corporate culture or HW as their employer

Fang Lee Cooke, Manchester Business School, UK

14

HW’s global HR strategy and challenges in people management (cont…)

HW’s global HR strategy and challenges in people management (cont…)

HR responses:

Promote local employees to ranks which they will not get in western MNCs

Introducing local practices to suit local employees (e.g. bank loan guarantee letters)

Cross-cultural team building through social events

Sending key local employees to HW’s HQ for training and development

HR responses:

Promote local employees to ranks which they will not get in western MNCs

Introducing local practices to suit local employees (e.g. bank loan guarantee letters)

Cross-cultural team building through social events

Sending key local employees to HW’s HQ for training and development

Fang Lee Cooke, Manchester Business School, UK

15

HW’s global HR strategy and challenges in people management (cont…)

HW’s global HR strategy and challenges in people management (cont…)

HR responses:

Deployment of locals as deputy managers to look after personnel issues

Learning by doing in developing HR practices to suit local needs, e.g. borrow western MNCs’ good HR practices

Deployment of emotional intelligence in understanding local employees needs and provide support

HR responses:

Deployment of locals as deputy managers to look after personnel issues

Learning by doing in developing HR practices to suit local needs, e.g. borrow western MNCs’ good HR practices

Deployment of emotional intelligence in understanding local employees needs and provide support

Fang Lee Cooke, Manchester Business School, UK

16

ConclusionsConclusions

HW’s HR strategy is characterised with high-performance work system and paternalism typical of oriental culture

Creation and mobilization of social capital of employees plays an important role in supporting HW’s global business strategy

Mobilizing political capital is crucial for Chinese MNCs to develop international markets, esp. in emerging economies

HW’s HR strategy is characterised with high-performance work system and paternalism typical of oriental culture

Creation and mobilization of social capital of employees plays an important role in supporting HW’s global business strategy

Mobilizing political capital is crucial for Chinese MNCs to develop international markets, esp. in emerging economies

Fang Lee Cooke, Manchester Business School, UK

17

Limitations and research implicationsLimitations and research implications

Limitations:

Snap shot single case study

12 interviews with Chinese managers (8) and employees (4), but no interviews with host country local employees

Research implications:

The role of political capital and social capital in helping Chinese MNCs to develop market and gain competitive advantages

HR initiatives to gain identification and commitment from local employees with Chinese firms, esp. those from developed countries

Limitations:

Snap shot single case study

12 interviews with Chinese managers (8) and employees (4), but no interviews with host country local employees

Research implications:

The role of political capital and social capital in helping Chinese MNCs to develop market and gain competitive advantages

HR initiatives to gain identification and commitment from local employees with Chinese firms, esp. those from developed countries