The Typical Practices Employed by Chinese Companies in Africa

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Table of Contents

Introduction
The Practices of Chinese Companies in Africa
Africa’s Attractiveness to Chinese Companies
Staffing Strategies
Diversity Management Approaches
Culture Shock
Conclusion
References

Introduction

China is one of the fastest growing economies in the world. In the last three decades, China experienced a rapid growth in its gross domestic product (GDP). This growth was characterized by a rapid expansion of both domestic and foreign companies in China. The companies focused on serving all market segments in order to increase their revenues. This has led to the saturation of most industries in China.

Consequently, most Chinese companies have had to look for alternative investment destinations. In this regard, Chinese firms have embarked on overseas investments through acquisitions and foreign direct investments (Mobius 2011). Africa is one of the destinations that have benefited from the Chinese companies’ growth plans.

Even though the Chinese companies that are operating in Africa have contributed to economic growth, their operations have always been associated with malpractices such as poor pay. This paper sheds light on the practices that have been employed by the Chinese companies in Africa.

The Practices of Chinese Companies in Africa

Chinese companies have always been associated with labor malpractices in Africa. Such malpractices include poor pay, long shifts and physical harassment of employees. Workers in Chinese companies often complain of deplorable work environments and exposure to health hazards. These allegations are likely to be true since most of them are based on empirical research findings.

However, the occurrence of these malpractices varies from country to country (Polgreen & French 2007). Chinese companies can be found in nearly all African countries. However, complains about labor malpractices or unethical behavior are common in countries with weak governance systems. For example, Zimbabwe is led by a dictatorial regime that has little regard for its citizens’ welfare.

Consequently, the government has never taken any disciplinary action on the Chinese companies. On the country, Chinese companies in stable countries such as Kenya and South Africa have hardly been accused of any unethical behavior.

Thus, the unethical behaviors of the Chinese companies can be attributed to poor governance in specific countries in Africa. For instance, corruption is one of the factors that prevent most African countries from taking disciplinary action against Chinese companies.

It is apparent that not all Chinese companies usually engage in malpractices in Africa. Generally, cases of unethical behavior are common among companies that are operating in labor intensive industries such as the mining sector (Polgreen & French 2007). For example, in Zimbabwe the complaints were raised against a Chinese construction company.

This can be attributed to the fact that workers in this sector lack adequate education. Thus, they often tolerate the Chinese malpractices in order to protect their jobs. Finally, the malpractices can be attributed to the business culture of the Chinese companies. Long shifts are common in China where the Confucianism philosophy encourages hard work.

Africa’s Attractiveness to Chinese Companies

The factors that have contributed to the increase in the number of Chinese companies in Africa include the following. First, the demand for commodities such as oil, gold and copper is very high in China due to the rapid growth of its economy (Mobius 2011). The rapid growth in the country’s population has also increased the demand for foodstuffs.

Africa has adequate land for food production. Additionally, it is rich in various minerals and raw materials. Consequently, Chinese companies are moving to Africa in order to extract minerals and raw materials. Moreover, they are interested in importing agricultural produce from Africa. Nearly 80% of exports from Africa to China are raw materials and agricultural produce.

The Chinese government has negotiated trade agreements with over 45 African countries in order to facilitate exportation of commodities from Africa to China. Second, most African leaders have focused on establishing close relationships with the Chinese government. African leaders believe that they can learn important lessons from China in regard to development.

The Chinese government has embarked on supporting African states by financing the construction of infrastructure such as roads, ports and railway systems. These facilities are often constructed by the Chinese companies since African firms lack the capacity to construct them. This explains the sharp increase in the number of Chinese construction companies in Africa.

Third, positive economic growth in Africa has presented growth opportunities to Chinese companies. Disposable income in Africa has been rising steadily in the last decade. Moreover, the expansion of the manufacturing and agricultural sectors has increased the demand for machines and equipment in Africa. China has been able to produce cheap machines and consumer goods (Etzkowitz 2011, pp. 76-90).

Hence, most African countries are importing machines and equipment from China. Most Chinese producers are relocating to Africa in order to improve the competitiveness of their products by eliminating exportation costs. Some companies have established retail outlets in Africa in order to maintain full control of their products and services.

Fourth, China is interested in investing its foreign reserves in different economies in order to avoid the risks associated with investing in one economy. The Chinese government has focused on giving credit to African countries at relatively low interest rates. The loans are normally processed by Chinese banks. This has led to an increase in the number of Chinese banks in Africa.

Finally, tourism has attracted several Chinese companies to Africa (WTO 2010, pp. 1-51). The African continent has some of the best tourism destinations in the world. However, African firms lack the capital and the technology to serve the tourism industry.

The Chinese companies have taken advantage of this situation by increasing their investments in Africa’s tourism industry. For instance, Chinese restaurants can be found in nearly all capital cities in Africa. Moreover, Chinese airlines are operating in nearly all major cities in Africa.

Staffing Strategies

Ethnocentric Staffing Strategy

In this strategy, the holders of key positions in an overseas subsidiary of a multinational corporation are recruited from the company’s parent country. This means that the managers of the subsidiary will be expatriates. The local citizens, on the other hand, are expected to fill the non-managerial positions. The advantages of this strategy include the following.

To begin with, it enables managers to transfer the headquarters’ business culture to overseas subsidiaries in order to prevent cultural conflicts. Managers from the parent country are likely to have a better understanding of the headquarters’ organizational structure than local citizens. In this regard, employing expatriates facilitates implementation of the policies that are formulated by the company’s headquarters.

The ethnocentric staffing strategy promotes effective communication between the company’s headquarters and the overseas subsidiaries (Bechet 2008, p. 123). This is because the expatriate managers are likely to have a good command of the language that is used at the headquarters.

For example, most Chinese companies in Africa employ Chinese managers because most Africans have little knowledge of the languages that are used in China. The ethnocentric staffing strategy is important in economies with inadequate supply of talented or skilled employees.

In this case, employing expatriates will enable the company to save the cost of training the locals before employing them. Finally, employing expatriates enables the headquarters to maintain its control of the subsidiaries.

Despite its benefits, the ethnocentric staffing strategy has the following disadvantages. To begin with, it limits the career growth opportunities of local managers because the top positions must be filled by expatriates (Bechet 2008, p. 126). This can cause dissatisfaction and a high turnover rate in the company. The strategy also interferes with the private lives of the expatriates.

For example, they might be separated from their families for a very long time. Finally, expatriates from the parent country are often insensitive to the expectations of the host country employees. This can create tensions and high dissatisfaction among employees.

Polycentric Staffing Strategy

In this strategy, citizens of the host country are employed to manage the overseas subsidiary of a multinational corporation. Expatriates are hardly given the responsibility of managing overseas subsidiaries. The advantages of this approach include the following.

First, it helps in eliminating language barriers that normally occur when expatriates are sent to overseas subsidiaries (Bechet 2008, p. 127). Second, employing the nationals of the host country is less expensive as compared to hiring expatriates. Third, it promotes career growth among the nationals of the host country. This helps in enhancing staff commitment and loyalty.

The disadvantages of this strategy include the following. First, maintaining effective communication between the headquarters and the subsidiary can be difficult due to language barriers.

Second, the headquarters is likely to lose control of the subsidiary if the employees from the host country have weak links with the head-office (Bechet 2008, p. 128). Finally, the polycentric strategy denies the employees the opportunity to gain international experience.

Geocentric Staffing Strategy

The application of this strategy involves filling key positions by promoting the best performing employees in the organization (Glasgow 2001, p. 45). The employees are promoted regardless of their nationality.

The main advantage of this strategy is that it enables the company to create a pool of talented international managers. Its disadvantages include the following. To begin with, implementing the strategy can be difficult because the labor laws in the host country might require the company to hire the locals. It is also associated with high training and relocation costs.

Region-centric Strategy

In this strategy, employees are transferred to subsidiaries in a different country, but within the same region. The main advantage of this strategy is that it enables managers to compete for positions at the regional level. This promotes high productivity (Glasgow 2001, p. 46). However, it can be difficult to implement due to the high relocation costs that are associated with it.

Diversity Management Approaches

Diversity management initiatives facilitate cohesion in a multicultural workforce (Forbes 2012). However, most Chinese corporations that are operating in the African market do not consider diversity management as an important organizational function.

Thus, most of them do not have a diversity management plan or strategy. The diversity management programs in most Chinese companies focus on conflict resolution. The companies normally establish conflict resolution committees whose members are drawn from various departments. These committees are responsible for handling any conflicts that might arise between the African employees and their Chinese counterparts.

Recruiting African workers is one of the methods that the companies are using to promote diversity. They usually allocate a specific number of positions to Africans. The remaining positions are reserved for Chinese workers. Moreover, senior management positions are usually reserved for Chinese expatriates.

In most cases, Chinese companies hire Africans in order to comply with labor laws rather than promoting diversity (Cooke & Saini 2012, pp. 16-32). Generally, language barrier is the main factor that prevents Chinese companies from implementing diversity programs. In a nutshell, Africans and Chinese can not communicate easily since they hardly speak the same language.

Hence, the Chinese companies prefer to employ their nationals. In some companies, diversity training programs are used to teach a common language that can be used by everyone in the company. Companies with effective diversity programs focus on succession planning.

In this case, Africans who are expected to succeed Chinese nationals are usually trained before they assume their positions. The trainings usually focus on the Chinese business culture and the language that is used in the company’s headquarters.

Culture Shock

The Chinese business culture is significantly different from that in Africa. Some of the distinctions between the two cultures and their effects on Chinese employees include the following. First, Africans focus on achieving organizational goals in the short term. The Chinese, on the other hand, focus on achieving the goals in the long term.

The effect of this difference is that the Chinese employees often disagree with their African counterparts on the goals that should be achieved and the methods that must be used to achieve them. Second, Africans believe in a professional management system in which recruitments are based on qualifications (Cooke & Saini 2012, pp. 16-32).

The Chinese, on the other hand, believe that senior managers must be hired from the family that owns the business. In this case, Chinese employees tend to disregard human resource policies that advocate for equal employment opportunity. Finally, most Africans are able to speak international languages such as English.

However, most Chinese can not speak in English. In most African countries, English is the official language that is used to conduct business. Consequently, most Chinese workers find it difficult to give instructions or to understand feedbacks from African workers.

Conclusion

Chinese companies are joining the African market in order to increase their revenues. The factors that are attracting Chinese companies to Africa include availability of raw materials such as minerals and oil. Africa has a high demand for Chinese machines which are often cheap and easy to use. Additionally, the demand for consumer goods in Africa is always increasing.

These factors make Africa an ideal investment destination for the Chinese companies. Even though Chinese companies have contributed to economic growth in Africa, they have also been accused of engaging in unethical business practices (Polgreen & French 2007).

Poor governance in Africa is one of the factors that encourage Chinese companies to engage in malpractices. Most Chinese companies use the ethnocentric staffing strategy. Consequently, they lack effective diversity management programs.

References

Bechet, T 2008, Strategic Staffing, McGraw-Hill, New York.

Cooke, L & Saini, D 2012, ‘Managing Diversity in Chinese and Indian Organizations’, Journal of Chinese Human Resource Management, vol. 3 no. 1, pp. 16-32.

Etzkowitz, H 2012, ‘The Triple Helix: Science, Technology and the Entrepreneurial Spirit’, Journal of Knowledge-Based Innovation in China, vol. 3 no. 2, pp. 76-90.

Forbes 2012, Global Diversity and Inclusion. Web.

Glasgow, K 2001, A Strategic Model of Temporary Staffing, McGraw-Hill, New York.

Mobius 2011, China’s Growing Presence in Africa. Web.

Polgreen, L & French, H 2007, China’s Trade in Africa Carries a Price Tag. Web.

WTO 2010, Study on Chinese Outbound Travel to Africa. Web.

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