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DOCUMENT DE TRAVAIL 1998-024 SUCCESSFUL MANAGERS IN INTERNATIONAL JOINTVENTURES IN CHINA Zhan Su
Centre de Service, d’Orientation et de Recherche sur la Compétitivité Internationale et l’Ingénierie de l’Entreprise Réseau (SORCIIER)
Version originale : Original manuscript : Version original :
ISBN – 2-89524-055-8 ISBN ISBN -
Série électronique mise à jour : One-line publication updated : Seria electrónica, puesta al dia
09-1998
SUCCESSFUL MANAGERS IN INTERNATIONAL JOINT-VENTURES IN CHINA
Zhan Su Laval University, Quebec, Canada
Abstract Based on an analysis of sixteen case studies, this research identified the specific professional and personal qualities and educational criteria required for Western managers to succeed in sinoforeign joint-ventures in China.
Introduction Since 1979, when China officially opened itself and started reforming its system, a great number of sino-foreign joint-ventures have taken place. Nevertheless, an international joint-venture (IJV) is extremely difficult to manage. Deceptions are numerous among Western managers working in this kind of partnership in China. In fact, the complexities of the Chinese national context reinforce the inherent difficulties in managing an IJV (Su, 1994).
Currently China, like many other countries, is in transition, which is characterized as a dynamic of reconstruction throughout which disorder is an integral part of the society. This consists of an absence or lack of effective laws, increasing problems of business ethics, bureaucracy, and the government’s ambiguous role in the economy with respect to enterprises. With regard to joint ventures, the Chinese local authorities, too often tend to intervene in management and consider the IJV's as state companies and therefore under state control.
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Also, the cultural and behavioral differences between Chinese managers and Western managers are notable. In fact, three main tendencies are observed in Chinese central values: avoidance of uncertainty, collectivism, and acceptance of hierarchy and authority. Western managers are not used to such values and therefore have difficulty dealing with them. The hierarchical structure and conservative nature of interpersonal relationships imposes an authority gap between superiors and subordinates. The latter are supposed to be submissive and passive while at work, which explains why the Chinese do not understand the concept of delegation. In China, even the smallest decisions are made by directors. Hung (1994) observes that no one is entitled to inform anyone else without consulting someone higher in the hierarchy, who will then consult someone else, and so on. This implies that you may have to wait a very long time for a decision to actually be made. Moreover, the Chinese are used to making decisions among themselves and not with foreigners. This is why conflict resolution among Western and Chinese people is very problematic.
Moreover, the Chinese partners and Western Managers often have different interests and objectives. The Chinese government needs foreign investment to, above all, increase exports, transfer modern technologies and modernize Chinese industry. On the contrary, their Western partners use IJV’s to remain competitive in international markets, make as much money as possible and reduce the risk of entering China's difficult market while establishing a presence in a country with huge potential.
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Therefore, the IJV manager faces constraints that originate from the IJV itself, the operating environment, and expatriation. In this research, we try to determine the recruitment process and criteria of parent companies and to define what kind of people IJV's should expatriate in order to contribute to the success of the alliance.
Given the exploratory nature of our research, it was conducted on the basis of case studies. We interviewed in 1996 and in 1997 a total of twenty two people: thirteen IJV managers and nine people in charge of recruiting, who represented sixteen different Western firms (six Canadian companies and ten European firms). The IJVs were located in China and were involved in the same field as their parent, ranging from the transformation industry to the fashion industry. From the perspective of the parent companies, the IJVs and their Western managers were performing well.
Particularities of IJVs An IJV is one of the various forms of strategic alliances, but in more specific terms it is a legal entity created jointly by two or more legally distinct organizations (often named parents), where at least one parent has its headquarters outside of the country of operation. In other words, this implies an association with a foreign partner as well as the sharing of capital and risk. It is in theory a "marriage" that gives equal access to the decision making process with the principal of equality prevailing against majority rules. In fact, an IJV is, above all, a "marriage of reason" which, due to some inherent difficulties, will often take the form of a partnership that oscillates between competition and co-operation. Competition appears through exclusion, rivalry, hostility,
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conflict and disengagement. Co-operation is realized through engagement, co-ordination, confidence, mutual support, implication, comprehension, connivance, and commitment (Su, 1994).
Compared to a traditional organization, an IJV presents many particularities. In an IJV, each partner needs the other but preserves its strategic autonomy and keeps on pursuing its own goals, which may prevail over those of the other partner and/or those of the IJV itself. Therefore, very often, the different interests generate conflicts among parent companies on one hand, and between them and the IJV managers on the other hand. Partners cooperate in order to create value within the alliance (i.e.: achieve economies of scale, rationalize, lower costs and risks, expand market shares) and compete to share this value. This is one fact which contributes to the complexity of the managerial task.
IJV's are highly complex organizations because they require the creation of a single new organizational culture originating from at least two different cultures in hard-to-define proportions. Major cultural differences exist within an IJV partnership distinguishing it from a JV. In an IJV organization, individuals are gathered from different nationalities, cultural values, and social norms, implying different political, economical and social systems. Each parent has its own goals, unique structure, and mode of operation. Each employee group has its own characteristics (formed by its nationality), its parent company, its position at work or in the hierarchy, its legal rights, and its promotion possibilities (Shenkar and Zeira, 1990). However each partner is naturally interested by the representation of its own culture and by the formal means of control (typical Westerner behavior). Thus, as we will demonstrate later, this important cultural distance may increase conflict and ambiguity in the managerial role. The balance, which is difficult to find,
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is very often neglected during the creation of the JV. Instead, more care should be taken to establish a means to build a relationship. This will enable the partners to find out how to reach the goals of both sides while taking cultural differences into consideration.
IJV's are particular with regard to power sharing. In traditional organizations, power is distributed in proportion to equity holdings (Tomlinson, 1970; Friedman et Beguin, 1971). This is not always the case in an IJV where the equality principle prevails over the majority principle and gives equal access to the decision-making process. In these multicultural contexts, it is more efficient to use informal as well as legal formal methods (Geringer & Woodcock, 1989). This is why parent companies should try to create a win/win situation and carefully choose the manager they are going to send abroad to defend their interests, rather than counting on power through equity shares.
In fact, from an organizational point of view, an IJV can be seen as a semi-open system in constant interaction with its environment. It imports energy (input), transforms it, and exports a complex end-product (output). The input has two functions : meeting the organization's objectives (energy of effectiveness) and keeping the organization functioning (energy of maintenance) (Katz & Khan, 1966). The firm's effectiveness can be represented in terms of the proportion of energy used effectively in relation to the total energy consumed. Therefore, it is maintenance energy that needs to be minimized. IJV's are special in their more than ordinary need for maintenance energy.
Therefore, when a company enters a foreign market, especially in a Third World country, the increase in differences between the original environment of the firm and that in which it is now
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operating, translates into an increase in the firm's need for maintenance energy. There's a need to compensate for what is lacking in the new environment. In the case of a Chinese-foreign jointventure, one can presume that the specific nature of the Chinese environment will be considered to be quite hostile by the foreign partner who will in turn, lose a great deal of effectiveness. Moreover, maintenance energy also strives to ensure that there is internal cohesion within an organization. IJVs, particularly those conducted in China, are evidently very complex organizations, because they must build "ab initio" a new organizational culture from two or more different founding cultures in difficult to define proportions (see figure 1). Each partner is naturally inclined to concern itself exclusively with the interface linked to its respective firm and therefore, to its own culture. This will reduce the effectiveness of the organization, due to a neglect of equilibrium. Therefore, in order to obtain a joint-ventures' objectives, a great deal of attention must be given to the understanding of how partnership relations should be managed.
(FIGURE 1)
In summary, if management is inadequate, the IJV is going to consume much more energy than it should. Therefore, it is suitable for each partner of an IJV to consider its management according to two approaches : instrumental and behavioral. The instrumental approach of IJV management states that the manager must be able to set up some control instruments in order to impose limits in the co-operation between partners. Various instruments have been developed such as the implementation of detailed clauses in contracts (Young & Bradford, 1977; Dobkin et al., 1986; Dymsza, 1979; Killing, 1982; Schaan, 1987), the composition of the Board of Directors (Schaan, 1987), assignment of expatriate personnel (Schaan, 1987), and changes in the company
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structure. However, according to the behavioral approach, the manager can favor much more informal means. For example, visits to the partners in the JV helps to reduce the gap between the reality observed and the reports received. Staff training (Perlaki, 1993) enables IJV's to overcome intercultural differences by sensitizing members to the local conditions. Trust among partners (Luhman, 1973; Van Wijk, 1985; Wolff, 1994) is essential since it enables the development of a good relationship among partners and of a mutual engagement. These two approaches must be combined in order to insure success of the IJV. This is why the expatriate manager is in a key position.
Key Role of Managers in IJVs Due to the complexity of the IJV organization, it is a difficult assignment to be an IJV manager. Additionally, managers have to face problems arising from the fact that they are expatriates : allegiance to the parent company versus the local entity (Black and Gregersen, 1992), cultural shocks (Adler, 1981; Borg, 1988; Mendenhall et al., 1987), family constraints (Edstrom et al., 1984; Ondrack, 1985), etc.
Schaan and Beamish (1988), in a comparative study of the role of a manager in a subsidiary and in an IJV, concluded that the IJV manager's role is more complicated from an interpersonal and decisional aspect. The general manager is given ‘two directions and two kinds of expectations’ and must ‘at the same time meet the interests of both partners.’ This makes his assignment more complicated than that of a subsidiary manager. Due to the different expectations of the parents and of the local firm, managers suffer from a conflictual role and must be able to balance these expectations. Several authors (Rizzo, House and Lirtzman, 1970; Katz and Kahn,
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1978; Shenkar and Zeira, 1992) talk about role conflict and ambiguity. Shenkar and Zeira (1992) proposed four different kinds of potential conflict in the manager's assignment: intra-sender conflict (conflictual requirements coming from one party); inter-role conflict (conflictual pressure coming from several groups at the same time) ; inter-sender conflict (contradictory pressure coming from different people); and personal role conflict (conflict between the values and the role of the person). The greater the conflict, the more managers feel linked to one side (local firm or foreign parent) in particular. On the contrary, the greater the cohesion among partners, the more attached they feel towards the organization (Black and Gregersen, 1992). In order to avoid conflicts among partners, it would be ideal for the manager to negotiate a compromise between the two parties individually or find a solution that could please both. The IJV manager role is essential : he must be careful to consider the partner's expectations, find a consensus, and then transform the different goals into a common strategy.
Moreover, the manager is implicitly supposed to build and keep a good working relationship among parent companies. Engagement, trust and communication within the JV and among partners are key elements to make the JV succeed. Managers must avoid relations that may endanger confidence because, once lost, it is very difficult to rebuild, and it is essential to solve conflicts. This is true for IJV's in developing countries where quality in interpersonal relations may be a better predictor of success in conflict resolution than legal and contractual considerations. It is therefore crucial to understand the local economy, politics and customs, as well as local managerial practices, in order to convince the local partners of one's willingness to integrate.
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Additionally, the IJV manager determines questions of co-ordination, integration, and control that parent companies face. He/she is the centre of interaction between the parents and the IJV (Fayweather, 1969) and has several roles: he/she manages the local entity, represents the parent company, and is a bridge and co-ordinator between them (Robinson, 1978; Torbiörn, 1985). At the same time, he/she may occupy personal roles in the local community, be the head of a family (Robinson, 1978), etc. He/she has numerous responsibilities and is a very important person not only to the parent companies but also to his/her subordinates. Finally, the IJV manager must deal not only with its partners but also with the members of the local government. Without the co-operation of local government, nothing can be accomplished. The IJV manager must be able to operate in and out of different frames of reference and groups of values and succeed in managing his parents' idiosyncrasies. (See figure 2).
(FIGURE 2)
Managing an IJV is a real professional challenge, that includes a lot of stress, and requires high motivation and a challenging spirit. The IJV manager must be able to pave his/her way among various and numerous people, structures and roles. This is why he/she has certain qualities that are essential to the successful fulfillment of his role. The challenge is even greater with Chinese ventures due to the environment and moreover the culture gap.
IJV Management in China : Western Manager’s Opinion Based on insight gained from the literature on particularities of the IJV, the managerial role, and the difficulty of the assignment, we constructed an analytical framework which considered the
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qualities of the IJV manager (including the profile of the international manager and more specifically that of the IJV manager in China), as the variable determining the IJV performance. Other factors however may influence the success of the IJV. The Chinese environment is a cultural and political factor which influences the manager's motivation and decision making. Parent company characteristics are parameters which, of course, are important and influence management (see figure 3).
(FIGURE 3)
The information obtained from this research have permitted us to better understand the particularities involved in an IJV with regards to both recruiters and expatriates. Consequently, we can now focus precisely on each of the key variables which determine the performance of the IJV.
In the different responses obtained from the question pertaining to the role of an IJV manager, there appeared a slight divergence of opinion among the respondents: the recruiters saw the efficiency side of the role (realizing objectives, transferring technology, increasing sales, etc.) while among the managers, relational aspects of their mission dominated (see table 1). Nevertheless to summarize the tasks of the manager : he/she must organize, direct (this includes training the local personnel) and control the local operations, as well as be the link between the different participants of the IJV.
All together, the manager has a lot of liberty in his/her daily management of the IJV since thirteen companies out of sixteen said they did not intervene in this aspect. In this case, the
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important decisions are taken by the manager with the authorization of the parent company. For the firm which acknowledged intervening often during the first five years of the IJV in the areas of transfer of know-how and technology, it was the Administration Council which made all the important decisions. The manager was simply supposed to execute these decisions. However, all confirm that the role of the manager in a IJV is more difficult than that of the subsidiary director.
(TABLEAU 1)
In this regard, it appears that the role that the parent company expects of the manager depends often on the organizational structure in place and the phase of the IJV. Thus, in the case where the IJV is completely governed by the Administration Council, the role of the manager is to uniquely attain the objectives assigned to him/her. Nevertheless, he/she is free to organize him/her self according. In another case, the administration council takes just the most important decisions and leaves the others to the director, who should know how to please the partners upon making these decisions. Elsewhere, the role of the manager evolves parallel to the development of the IJV. The director of human resources interviewed during this research, declared that an IJV, in the beginning, needs above all a promoter for the start up.
As with the responses received on the subject of the performance indicators of an IJV manager, all had many indicators with which to evaluate the manager, some quantitative but the most important were qualitative. They are : - obtaining objectives - market share or penetration
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- profitability - the number of contracts won versus lost - experience and learning - product quality - the organization of the JV (structure, cohesion of the team) - the positive impact on the local community
Taking into account the complexity of the Chinese operations environment, we looked to see if the sharing of management is beneficial to the IJV. From the side of the parent companies, seven recruiters out of nine had not had any major problems to present as a result of the division of power in their IJVs. Four companies thought that the sharing of power with the Chinese partner was very useful in the administrative, banking, and social aspects of the business. Four others qualified it necessary. Only one company , from its experience, believed that a 50-50 division of power is difficult because in each case of an impasse, no decisions could be made. As for the managers, they unanimously agreed that the division of power is not as much of a problem now as it was at the beginning of the JV. They were convinced that a division of power is beneficial to a JV, but they remember how difficult it was at the start of their mandate.
At the heart of the IJV in China, the causes of conflict identified by the two types of respondents were essentially the contradictory objectives between the parent companies and the Administration Council, the disagreement between stockholders, and the lack of understanding between the partners. The managers also added ; contradictory decisions among the parent companies, limitations on their own decision making, constraints placed on the growth of the IJV
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by certain requirements (mandatory dividends payments, etc.), and a management style completely foreign to them.
Among the obstacles encountered in China, the respondents recognized to have had problems adopting the foreign style of management, especially when faced with a wide divergence of perception and priorities (westerners are geared towards productivity and efficiency of the enterprise where as the Chinese wanted to find methods to employ everybody). Also, the respondents responded negatively to having had to deal with political pressures. Some respondents said to have had difficulty to really understand the real reasons or meanings hidden beneath the ton of excuses when discussing matters with the locals. Listening to their thoughts and then trying to discover how to make them meet their goals proved to be a difficult task. Others met with a strong attitude of mistrust towards Westerners, which came from the fear of being exploited. In only half the cases, the manager had known how to inspire confidence in his/her local partner.
Finally, other pitfalls which the managers encountered during the management of the IJV were the cultural differences (language, lifestyle, ...), and the drastic changes in business practices in China. The managers were not sufficiently prepared for these differences which was reflected in their decision making, often being unsure. However, the hurdles met at the beginning were resolved by consensus (realizing that there were common objectives and a optimal way to work together), by continuous negotiations and by teamwork. The managers insist that during a conflict, it is necessary to listen attentively, consecrate more time to explain and justify decisions which should be fair, and establish mutually understanding relations. This confirms the saying that managers should be, above all, excellent diplomats.
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Recruitment Practices and Key Criteria for IJV Manager Selection With respect to the recruitment practices of the Western parent companies, we wanted to find out where candidates originated from prior to searching for selection criteria.
The human resources people we questioned preferred if possible, to recruit internally. Nevertheless, this depended on corporate culture or availability of candidates. Thus, they initially examined the internal spontaneous candidatures. Some of the human resource staff had employee profiles that they consulted. When they decided to recruit externally, attention was paid to people who had formerly applied to the company and to people referred by employees of the firm. Seven recruiters sometimes called head-hunters specialized in the recruitment of international managers.
Upon review of the respondents background we noticed that surprisingly, there was no previous expatriation experience in IJV management. This does not mean however that previous experience was not preferred. This is however not a sine qua none condition. Given equal qualifications, the experienced candidate would have been selected. Candidates are however required to have been a Chief Executive Officer or at least a senior executive in the past. Specific requirements depended upon the job offered and the level of development of the IJV.
As expected, 62.5% of the companies in the sample did not provide their managers with adequate intercultural training prior to sending them to China. Three companies placed an emphasis on cultural adaptation and on the psychological preparation and evaluation of the candidate and his family. For those who were not familiar with the country and did not receive
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training, the culture shock was huge. As a result, half of them experienced problems such as uncertainty in their decision making. Those who had already been to Asia stated that they did not experience major problems with the Chinese IJV. This reinforces the importance of cultural and managerial training tailored to the expatriation country. This problem is compounded when a real gap exists between the two cultures, as is the case with Western countries and China. Education and training are fundamental conditions for a solid professional and personal start for the manager in his new environment. The relative importance of such training is proven by the opening of several centers specialized in intercultural training for expatriate managers.
Five companies in the sample felt that previous experience in Asia had no influence on the candidacy, whereas the others were convinced that a previous stay in China was suitable. With former experience the manager has a better idea of what to expect. Most managers who had former experience were fascinated and surprised by the pollution, crowds, noise, and fast development of the country, as well as by the lack of work experience and conservatism of the Chinese.
With regard to professional training, the compulsory language for a IJV manager was English. Nine companies out of sixteen also required Mandarin. In our sample, we observed that all of the managers who spoke Mandarin learned it before considering expatriation, displaying their interest in China and its culture. Therefore, the ability to speak Mandarin could have made a difference among several applicants. It also surfaced that the Chinese language (be it Mandarin or Cantonese) was quite difficult for Westerners to acquire and required years of daily practice in
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order to achieve a basic oral level. Therefore, it is beneficial for the person to have already taken courses.
Upon questioning the key criteria for IJV manager selection, the recruiters answered that both personal and professional qualities determined the final choice. Important qualities included: - management attitude, - knowledge of the company and its products, - capacity of adaptation to a new environment, - patience, - tenacity, - flexibility, - interpersonal skills, - health, - desire of having a major change in his life and career.
Surprisingly, when we asked the same question to the managers, they attributed the following factors as important to their current position: - previous position, - education, - linguistic skills in Chinese.
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Consequently, recruiters paid more attention to personal skills than the manager may have believed. The managers thought that their professional skills were the most important.
Profile of a Successful Expatriate IJV Manager Despite a certain divergence between IJV managers and the recruiters, a consensus existed with regard to the following points :
1). Education With regard to education, training, and professional experience of the applicant, the only compulsory language one needed to master was English. Nevertheless, most managers were required to speak Mandarin fluently in order to aid integration with local culture. Very often, they learned Mandarin before expatriation, which showed their interest in the Chinese culture and the country. All managers had graduated from a business school or had received an MBA. Concerning their professional background, they were all at the Chief Executive Officer or senior executive level. This implied a certain amount of charisma and personal leadership qualities which made them respected and listened to by colleagues and subordinates. The managers need to manage human and material resources and to try to satisfy everyone while achieving their objectives. Interestingly, no previous experience, neither of expatriation nor of IJV management was required.
2). Professional Abilities Concerning professional qualities, those interviewed and questioned agreed that an IJV manager needs the skills common to every manager: he must be able to generate sales, transfer technology, direct the company, train and motivate the staff, etc. He must be able to make decisions on his
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own without always reporting to the parent company, and at the same time, respect the assigned objectives. A good international manager is also supposed to take measured risks in order to encourage evolution of the company. Future planning and an anticipation of tendencies are very important. This will help him to react promptly in the face of a rapidly changing and highly competitive business environment.
As previously mentioned, negotiation and diplomacy are important qualities due to shared management and the divergence in parent objectives. The IJV manager must try to please both parents, the Chinese government, administrative requirements, etc. In order to receive assistance in the mission, the manager needs to know who to choose as subordinates and needs to listen to others in order to achieve a consensus. An IJV needs a long term strategic plan. Finally, the manager must be able to endure the ambiguity and the conflict inherent in his/her role.
3). Personal Skills From a personal point of view, several points of the behavioral approach were identified and must be used by the manager at both a conscious and unconscious level. It is obvious that the manager must be good at communicating with employees, partners, and local administrations, sourcing information and earning his/her partner’s trust. Above all, from the outset, the manager needs a high level of motivation. If the IJV manager is highly motivated both individually and by the parent company, he/she will put more effort towards the development of local relationships outside of the venture thereby adding value to the IJV. Otherwise, he/she will do the minimum, which in China is insufficient. Confronted by conflict and ambiguity, he/she must be morally strong and willing to meet challenges. This is why the applicant must also be very patient and have good self-control.
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These qualities will help him/her listen to his/her colleagues and reach a consensus. Since the manager may be confronted with conflicting allegiances, he/she needs to remain neutral and objective.
Another obvious quality required is adaptability to the foreign environment and new lifestyle. For an expatriate this implies huge changes that are sometimes difficult and overwhelming. The expatriate must like changing habits, food, and friends. This requires the manager to be open-minded and curious. He/she must keep himself informed of the political, economic, and social situation of the country; learn the local protocol (how to behave in public, the habits when eating, things to avoid, etc.); and demonstrate his/her adaptation to the culture; in order to receive the trust and the respect of his partners. He/she must be willing to learn the foreign language, local customs, rituals, principles, and norms rapidly. He/she must then apply them without referring to his/her self-reference criteria in order to minimize the cultural shock. The final point concerns health. The manager needs to be in excellent health in order to support such a high stress situation. The Table 2 summarizes our findings.
(Tableau 2)
Conclusions and Recommendations The research that we conducted presents the particularities of an IJV and the complexity of the managerial role. This complexity is magnified by the cultural and managerial differences of the Chinese environment. Therefore, in particular, the manager is the key element for the successful integration of the IJV in this country.
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We have outlined the major characteristics required of an IJV manager to achieve success in China, in order to aid Western parent companies in making the right choice. These companies must adopt appropriate recruitment process and use the correct criteria. Recruiting an IJV manager is different from recruiting a national one. In the case of an IJV, parent companies should train and prepare the candidate for the culture shock he/she will face. He/she must be prepared and understand the basic aspects of life in China. More importantly, parent companies should recruit him/her from a neutral field, and should explain his/her role to him/her in detail.
Concerning the politics of recruitment of IJV managers in China, we have put forward the following recommendations. Firstly, expatriate managers are often confronted by a double problem of allegiance often being confronted with situations testing his/her allegiance towards the foreign parent versus the IJV, as well as towards the foreign parent versus the Chinese partner. As a result, the question of who should be in charge of recruiting this manager and where should they find him/her is important. As we can see in this study, Western partners have a tendency to try to keep the most formal and/or informal control as possible over the foreign operation. Since China needs investment as well as technical and managerial know-how, Western partners usually send their most experienced and skilled people. This gives the Western partner an advantage in the balance of power during negotiations with the Chinese. The immediate consequences is that Western managers are granted trust from their own headquarters but rarely from the Chinese partner, thus generating conflicts in the IJV. Therefore, it would be ideal to systematically recruit managers from the international employment market instead of from the headquarters of just one partner in order to eliminate potential conflicts and mistrust. For example, each side can propose
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potential candidates provided that these candidates have never worked for either of the parent companies.
Our second recommendation refers to the different perception observed in our research between managers and recruiters with regard to the recruitment criteria. Managers thought that their professional skills were the determinants of selection whereas recruiters paid more attention to personal skills. This divergence may reveal that recruiters at headquarters do not sufficiently inform their potential managers of the role requirements for an IJV. Therefore, recruiters must realize the importance of explaining at the outset, the dimensions of IJV management in China. Managers must be aware of these dimensions before going abroad; for example, a manager should evaluate the potential culture shock and its repercussions on his personality and work performance. Thus, it is pertinent to explain the role of an IJV manager in detail, prior to going on assignment in order to allow the manager to better prepare himself.
The third point concerns the obvious lack of information and training faced by IJV managers in China. Parent companies need to be aware of the need to train managers before sending them abroad in order to minimize culture shock and thereby minimize risks for the IJV. In the case where the manager has been recruited externally, a seminar on the culture of the company would be necessary. We also strongly recommend review courses of managerial skills which concentrates on the particular demands of managing an IJV in China, since a lack of exposure to the new culture and language could provoke a culture shock to the IJV manager and thus constitute a risk for the company during the process of expatriation. It would be advisable that the human resource department of a company allocate a budget to this discipline.
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A final point to consider is that expatriate management and the recruitment process are designed to evolve alongside the IJV. Certain characteristics are essential for a manager to possess who is in charge of a new IJV, but as the IJV evolves, other skills become necessary. However, as we have found in our research, the successful IJV managers in China all possessed a strong international background. As Shaan (1985) points out, experienced managers tend to adopt a more positive attitude towards their partner, compared to less experienced managers who are afraid of what to expect and how to behave.
Finally, we want to point out that, the manager's behavior, his role perception, and especially his ability to manage the partnership relations in a formal but more importantly informal way are the central elements to succeed in a complex organization such as an IJV in China. In fact, in the Chinese context, whether or not instrumental mechanisms are used, they will be inefficient unless the two partners have been able to establish a successful relationship of trust. Therefore, in addition to the skills required of an international manager, a successful Western expatriate manager in China is one who possesses diplomatic skills.
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FIGURE 1. The interface of the IJV with its parents
Foreign firm
Interface of the IJV with the foreign partners
IJV
Chinese firm
Interface of the IJV with the Chinese partners
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FIGURE 2. IJV manager : a role essential to the IJV.
Parent company
Local government
Western Manager
Local partner
Joint-venture
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FIGURE 3. Variables determining the IJV performance
Quality of : International Manager - personal - professional IJV Manager in China
Characteristics of parents : - objectives - strategies - profile
Managerial potential
Performance of the sino-foreign JV
- personal - professional Specificities of the Chinese context
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TABLE 1 : Role of the IJV manager perceived by the respondent Recruiters
Expatriates
- reach the objectives defined by the administration council - establish the company - increase sales and transfer the technology efficiently - organize and direct the activities of the JV - encourage and form the local personnel - control the situation of the JV - be the principal negotiator with the local partner - direct the JV
- organization, direction et control of operations = general management duties - negotiate and manage the relations with the Chinese partners - be the bridge between the different participants during the development phase of the JV - care of government relations in the foreign country
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TABLE 2 : Profile of a successful Western expatriate IJV manager Education
- Languages : fluent English , Mandarin. - Education : university (Master in Business) or equivalent. - Professional experience : must have been a senior executive or Chief Executive Officer, preferably but not conditional, during an expatriation and/or in a joint-venture. Must have a certain amount of charisma and leadership qualities. - Stay abroad : preferred, especially in China. - Training on the Chinese culture : very highly recommended before leaving abroad, if not done previously. Professional qualities
- Skills common to any manager : know how to develop business (sales), transfer technology, organize and manage activities within the company, motivate and train local staff, etc. - Be an independent decision-maker while meeting the assigned objectives. - Be willing and like to take risks. - Be able to react promptly. - Be a good negotiator (due to the differences in the foreign and Chinese parent objectives). - Be a diplomat in order to manage the conflictual relations between partners and be a link between the different actors of the IJV (government, administrations, partners, etc.). - Be able to choose the right subordinates. - Be able to listen to others. - Be able to think in the long term. - Be able to handle the uncertainty and ambiguity of the role. Personal skills
- Have strong human relation qualities, allowing him to locally develop a good network. - Be good at communicating with others. - Be optimistic and keep a positive attitude in the face of failure. - Be patient in order to: reach a consensus (versus imposing a decision); justify decisions, and transfer know-how to people lacking training. - Have good self-control. - Be able to remain objective to avoid favoring own parent company to the detriment of the Chinese partner, which is often the source of serious conflicts. This does not prevent him from promoting his headquarters’ culture and values. - Adapt easily to a different life and work environment. - Be able to integrate common local rituals. - Be pragmatic and flexible with regulations, principles and norms. - Be in good health in order to bear a high level of stress.
