Overview of Chinese Economic Development - Essay Example

Table of Contents Introduction2 Overview of Chinese Economic development...2 Chinese Interest in Africa4 HRM Chinese Multinationals in African countries4 CHINALCO in Congo6 Staffing Strategy in Multinationals.8 Ethnocentric Strategy.8 Polycentric approach.9 Regiocentric9 Geocentric approach10 Conclusion...10 References11 Introduction The presence of Chinese firms in African countries has been on the rise in the recent past. The presence of Chinese firms in Sudan, Zambia, South Africa and Zimbabwe has been felt. Congo is one of the countries that is well endowed with natural resources. Due to this, many countries with interest in manufacturing have been targeting the country. China is the most influential foreign investor in the mining industry in the country. The business relationship between China and Congo has been there for a long time. However, the relationship has been interrupted by the political instability in the country. However, in the recent years, the relationship has improved. The mining deals between Congo and China are based on a win-win strategy whereby China assists the country to develop its infrastructure as China gains in terms of raw materials. Despite this, there have been controversies over the deals with some people seeing the deals as only beneficial to China alone. Investment in Congo by China through the state supported CHINALCO has been faced with controversies. The major issue is on the employment and management of human resources. Overview of Chinese Economic development In the recent years, China has grown to be a very ecumenically influential country. The economy of China has developed to one of the highest in the world. Its influence in manufacturing and technology is felt everywhere (Alden, Large, 2008, 67). Chinese products are found in every country. The economic development in China has come with challenges to the Chinese. To sustain the development, a lot of raw materials are required. The manufacturing industry in the country requires a lot of fuel in terms of oil. Unfortunately, China does not have enough raw materials. Thus, China opts to import the raw materials from other countries. Africa has been the best option for importing the raw materials from. Most of the African countries also have resources that have not been exploited. In addition, most of the African countries are underdeveloped, faced with poverty and without capital to develop their natural resources. Due to this situation, most African countries welcome foreign investment from Chinese firms. Chinese foreign investment is aimed at acquiring control over mining industries. The manufacturing industry in China requires a lot of minerals which amount to thousands of tonnes. These minerals are not available in the country and China has to source for minerals from foreign countries. The prices of minerals and other resources in most developed countries are high (Alden, Large, 2008, 78). Most Chinese companies that deal in the mining industry deal with minerals that are required in the manufacturing companies in the country. Thus, most of the foreign investors receive government support to invest in other countries. Most of the Chinese government's support to their foreign investors comes in form of subsidies. The government also invests in infrastructure in the host countries to make the environment for business to be better (BBC, 2008, 1). In addition, the Chinese government makes deals with the host country to make the business environment favourable. The minerals which China has been interested with include: Oil, Cobalt, Cooper, Diamond and other minerals. The success of China in the mining industries of other countries has been contributed to by their different acquisition approaches. The deals between Chinese companies and the host countries allow the Chinese companies to exploit the natural resources while the Chinese government assists in the development of the countries' infrastructures. The growth of the Chinese economy has led to the development of Chinese multinationals that invest in foreign countries. Chinese multinationals are relatively new in the world. Their growth is a result of the economical development in the country. Being new, most of the Chinese multinationals are faced with management problems. The main challenge faced by the multinationals is the management of its human resources. Chinese Interest in Africa Most Chinese multinationals have ventured their interest in African countries. Most of the interests have been in the mining industry. The entry of Chinese companies in African countries is promoted by the Chinese government and has been promoted as a win-win approach. The deal allows the companies to invest in natural resources while the Chinese government assists in the development of infrastructure. Africa also has undeveloped naturals resources (BBC, 2008, 1). In most cases, the natural resources are not exploited due to lack of capital, unstable governments and lack of technology. In most countries, availability of natural resources has not been explored. Thus, the offer by China to invest in the exploration and mining industry in exchange to economic development in the country is welcomed (Ezine, 2009, 1). The poverty level in African countries that leads to low investment in infrastructure and low employment makes Chinese deals to be attractive to the host countries. Human resource Management of Chinese Multinationals in African countries Investment by Chinese multinationals in African countries is wide. Management of human resources in Chinese multinationals is faced with controversy. The compositions of the workers in Chinese multinational have not been impressive in most of the African countries whereby China has ventured its interests. The multinationals are seen as a source of employment for the Chinese and not for the local people. The People Republic of China promoted its locals to work in foreign ventures. The Chinese who work in foreign countries earn more than three times what other Chinese who work in China earn (Africafiles, 2009, 1). This and other incentives encourage most Chinese to prefer working in foreign ventures. The few locals that work for Chinese multinationals earn less than their Chinese counterparts doing the same kind of work. There have also been accusations on the working conditions on which African workers working for Chinese multinationals work in. Some workers work in dangerous mines without necessary safety gears. There have also been accusations that some of the workers are exposed to dangerous chemicals and waves. In Sudan, Chinese multinationals have invested heavily in the oil industry. There have been management issues in multinationals in Sudan (Ezine, 2009, 1). The Chinese multinationals have been accused of supplying rebel groups with ammunitions. The companies are also accused of discrimination in their employments. Revenues from the oil mines in the country are not equally used in the country. The support of the Chinese government to Sudanese supported rebels in Sudan is supported by finding Chinese arms in the region. Chinese multinationals in Zambia have been accused of failing to provide benefits to the locals. Zambian locals accuse the multinationals of failing to offer equitable employment opportunities to the country's citizens. In addition, the multinationals are accused of failing to offer employment to the country's professionals (Dowling, Schuler, 1999, 123). Also, the multinationals fail to offer training to the locals. Despite the long term investment in the copper industry in Zambia, there is no single Zambian engineer that has been trained by the multinationals. The character of Chinese workers in the multinationals is not pleasing to the locals working with them. Most of the workers isolate themselves with the locals. In consequence, the Chinese have poor relationships with the locals. In Zimbabwe, China has signed business deals with the government. The deal allows the Chinese multinationals to invest in nickel and other minerals while the Zimbabwe government benefits in terms of infrastructure development. CHINALCO in Congo China's investment in the mining industry in the Democratic Republic of Congo has been increasing with time. The recent nine billion dollar deal with the government is one of the largest deals in the region. From the deal, Chinese multinationals are allowed to invest in Cobalt and other minerals in the country (Corp Watch, 2009, 1). On the other hand, the Democratic republic of Congo benefits from the development of its rail and road. Despite the mutual benefits anticipated from the deal, the deal is seen to be unfair to the locals. A report from the BBC terms the deal as a new form of colonialism. It is alleged that the deal will lead Congo to loose its minerals while no tangible benefits will be obtained. This allegation could be supported by other Chinese deals in the country. Human resource management in CHINALCO have led to controversy both in Congo and other neighbouring countries. In Congo, the Chinese workers working for the multinational are accused of isolating themselves from the locals. Thus, there is little benefit that can be obtained from the deal (BBC, 2008, 1). The use of Chinese workers in the ventures does not go well with the local people. In the rail and road construction, Chinese workers are used even in Jobs which can be done by the locals. The Congolese workers working for the company feel undervalued. Also, the locals are poorly remunerated in comparison to the Chinese workers. From this, there have been frequent protests from the locals (Right & Accountability in Development, 2008, 2). Most of the locals feel isolated and undervalued by the Chinese firms, which they view as economic invaders (Africafiles, 2009, 1). Management in the Chinese firms are usually held by Chinese. The local people see this as discriminative as there are equally qualified people in the country. The protests from the locals have led to lobbying to the locals authority and inconsequence, the local government pressuring the central government to ensure that the foreign investors employ local workers and in addition, local management. A report on Chinese companies in Katanga, Congo shows evidence of poor working conditions for the Congolese people working for the firms. This report made by Rights and Accountability in Development (RAID) showed that Chinese firms have been violating the workers' rights of the local people. The report shows that some of the workers are exposed to harmful dust due to lack of safety clothes. Some of the workers who sustain injuries fail to be offered adequate medical care. The report also shows that Congolese workers are discriminated by being given menials jobs (Right & Accountability in Development, 2008, 3). Grievances from Congolese workers are also not taken as serious as grievances from Chinese workers. Career progress by Congolese workers is also not guaranteed. In the report, most Congolese workers in the firms work on a casual basis and they do not have guarantees of their jobs. In additions, the Congolese workers are not treated with respect by their Chinese co-workers. Staffing Strategy in Multinationals Management of human resources in multinationals needs a lot of care. The management should ensure that the goals and objectives of the company are reached (Adler, Ghadar, 1990). It should also make sure that the relationship of the multinationals with the host country is good. There are various staffing strategies on multinationals that include: ethnocentric, polycentric, geocentric and region centric approaches (Bird A, Mukada M, 1989). Each of the approaches has its benefits and disadvantages and is appropriate in different scenarios. Ethnocentric Strategy The term as used in contemporary ways implies the belief that one culture is better that other people's cultures. In relation to the staffing of multinational companies, the term means that the workers or the management team in the multinationals originate from the country where the multinational belong (Helen D, 2006, 121). Thus, the key positions in subsidiaries are staffed with expatriates of the parent company. This is the approach used by most Chinese multinationals. This approach has a benefit in that it centralizes decision making in the company. The method is common in start-ups and in companies where technical knowledge is needed but it cannot be found in the labour force of the host country (Helen D, 2006, 122). The approach is also appropriate where business secrets need to be covered and where severe language barrier tends to impeded good working conditions with the local professionals. The expatriates in an ethnocentric staffing approach are expected to transfer the culture and philosophy of the parent company to the subsidiaries. The values philosophies and goals of the parent company are protected from influence by the local subsidiaries. Polycentric approach This approach of staffing treats each subsidiary as a separate national identity. Thus, the subsidiary allows the subsidiary to make independent decisions from the parent company. Thus, the subsidiaries are allowed to recruit host-country nationals as managers. The approach is based on the assumption that the locals are better placed in making decision in the local subsidiaries (Dowling, Schuler, 1999, 235). The host nationals coordinate with the expatriates in managing the company. The expatiates are rarely used in this approach but local professionals are used. Thus, there is no possibility of the host nationals to be socialized with the parent countries' nationals. On the other hand, the host nationals are socialized to the parent organization's culture. Regiocentric This is an approach in staffing that aims at satisfying the multinationals' needs in a certain region. The staffing is made in a way that will support the operations of the company in a certain region (Torbiorn I, 2002, 234). This approach thus allows the interaction of the executives in a certain region to be easy. The decisions made by the executives in the region are sensitive to the needs of the region. Thus, in this approach, host-country nationals and third-country nationals are recruited, selected and developed on a regional basis (Peter. Dorwling, Marion, Allen D. Engle, 2008, 67). This approach is close to the polycentric approach since most regions fall within geographic borders. This approach allows the career development of the people in a certain region. As in the Polycentric approach, this approach leads to satisfaction of the host nation and the host nation associates closer with the firm. Geocentric approach This approach recruits people in positions regardless of their nationality. This approach to staffing in multinationals integrates all subsidiaries and aims at forming a worldwide corporate culture. The position in the multinationals are not defined in terms of the nationality or regions. The culture of the multinational is unified and is assumed to be one (Lee, Larwood, 1998). The entire subsidiaries to the multinational view themselves as unified or a part of parent company (Svchuler, MacMillan, 2001, 78). The employee to a multinational using this approach learns and internalises the philosophies and values of the parent company. This approach has the advantage of unity but it has a complex structure of management. Conclusion Management of multinationals is challenging. The goals and objectives of the multinationals have to be integrated with the values and expectations of the host nation. Managing human resources in multinationals is one of the challenges. Ethnocentric, polycentric, regiocentric and geocentric approaches can be used. Most Chinese multinationals use the ethnocentric approach to their staffing. The use of the ethnocentric staffing approach in CHINALCO has led to conflicts with the nationals of the host countries. In Congo, CHINALCO's approach to staffing has led to protests from the locals. Multinationals should weigh the benefits and repercussions of each of the approaches in order to determine the best one to use; for the approach used, determines the type of relationship that will be cemented; a good or bad relationship. 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