Title: Factors involved in hiring a Chinese expatriate to work at SOOGL

Assignment topic:

Select any two countries of your choice with different and contrasting cultures (for example,
China and the USA). Imagine you are a human resource manager from one of the above
mentioned countries (for example, the USA or vice versa) employing an expatriate in another
country (for example, China or vice versa). Discuss the following:

 Briefly discuss the national cultural differences between an MNE (parent-company

organisation) and their international subsidiary businesses (host-country organisation)
that may impact on the organisation’s international HRM practices using any one
relevant IHRM model.
 Select any two of the topics ‘recruitment, selection, training, development or reward
management’ to address the challenges that the parent company may encounter and
provide recommendations for improvements including ethical implications.
Executive Summary

Globalisation has a significant influence on many businesses and therefore International Human
Resource Management (IHRM) is critical to any multinational enterprises (MNEs) for managing
not only MNEs but also home based companies by implementing best practice approaches.

Cultural variances play a significant role in IHRM and this paper focused on the differences and
similarities between the culture of China Petrochemical Corporation, the Parent company and
SOOGL Antilles Trinidad Limited its subsidiary based in Trinidad and Tobago.

Secondly, a PESTLE of the Host country was examined in the context of the oil and gas industry
to use in the analysis with the IHRM open systems model. Next, cultural challenges
encountered in hiring a Chinese expatriate were given indicating ethical factors and lastly,
recommendations and conclusion were stated.
Contents
1. IHRM concept..........................................................................................................................1
2. Contrasting companies and countries selected ........................................................................1
2.1 Companies backgrounds ....................................................................................................2
2.1.1 Sinopec Group overview .............................................................................................2
2.1.2 SOOGL overview .........................................................................................................2
2.2 Position vacant ..................................................................................................................2
3. Hofstede's cultural dimensions theory ....................................................................................2
3.1 Cultural differences between China and T&T .....................................................................3
3.2. Impact of cultural differences on IHRM practices .................................................................4
4. Host country Pestle .................................................................................................................4
4.1 Political factors ..................................................................................................................5
4.2 Economic factors ...............................................................................................................5
4.3 Social risk factors ...............................................................................................................5
4.4 Technological factors .........................................................................................................5
4.5 Legal Risk Factors ..............................................................................................................5
4.6 Environmental Risk Factors ................................................................................................5
5. IHRM Open systems model .....................................................................................................5
6. Vacancy filled ..........................................................................................................................6
6.1 Challenges to resolve for Chinese expatriate .....................................................................6
6.1.1 Training ......................................................................................................................6
6.1.2 Reward management .................................................................................................7
7. Recommendation ....................................................................................................................7
8. Conclusion ...............................................................................................................................8
Reference list ..............................................................................................................................9
Appendices ...............................................................................................................................11
1. IHRM concept
International Human Resource Management (IHRM) entails the global management of human
resources at Multinational Companies (MNC) through understanding, researching, applying
and revising all human resource activities in their internal and external environments, as these
processes influence the methods of managing human resources in businesses in the global
setting to improve the experience of multiple stakeholders and achieve a competitive
advantage over rivals at national and international level (Crawley, Swailes, & Walsh 2013).

IHRM includes standard Human Resource Management (HRM) functions of a corporation's

work systems and its employment applications such as recruitment, selection, matching
available human resources to jobs, performance management and appraisal, training and
development and employee concerns such as compensation, safety, benefits and
administration. In the international arena IHRM is somewhat more complexed as additional
activities include managing a wide range of employees with varying cultural backgrounds,
global skills management and expatriate management.

IHRM is involves managing employees in three categories:

1. Host Country Nationals (HCNs) are indigenous employed people in the overseas
subsidiaries of an MNE. Usually, HCNs are managed locally, with little intervention from
the home office.
2. Parent Country Nationals (PCNs) or expatriates are employees from the home country
of the firm where the MNE is head quartered.
3. Third Country National (TCN) is the worker who is neither from the home nor host
countries but is employed at either location.

Although there are three categories, IHRM focuses mainly on PCNs to enhance the expatriate’s
experience and solve any personal and professional issues encountered.

2. Contrasting companies and countries selected

The two companies chosen are Sinopec International Petroleum Exploration and Production
Corporation (Sinopec Group) a Chinese State Petrochemical Corporation, and SOOGL Antilles
(Trinidad) Limited; a subsidiary of the company established in order to conduct business in
Trinidad and Tobago (T&T).

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2.1 Companies backgrounds

2.1.1 Sinopec Group overview

China Petrochemical Corporation (Sinopec Group) is a state-owned company solely invested by
the state involve in petroleum and petrochemical multinational enterprise. Established in July
1998 Sinopec is headquartered in Beijing, and executes the investor rights over related state
assets owned by its full subsidiaries, controlled companies and share-holding companies. These
rights include receiving returns on assets, making major decisions and appointing management
teams. Sinopec’s business activities include but are not limited to exploration, production,
storage, transportation and comprehensive utilization of oil and natural gas, petrochemicals
and natural gas chemicals. They also install petroleum and petrochemical engineering projects;
the overhaul and maintenance of petroleum and petrochemical equipment; the import and
export of self-support and agent commodity and technology; foreign project contracting and
labour export.

2.1.2 SOOGL overview

SOOGL Antilles Trinidad Limited was established in October, 2008 in Trinidad and focuses on
core business activities such as exploration and expansion within the oil and gas industry. On
December 22, 2014 the T&T Ministry of Energy and Energy Affairs signed a 6 year public
petroleum rights licence to expand SOOGL’s exploration acreage to include the East Brighton
Block which is situated off the south west coast of Trinidad and covers an area of 107 km2 (See
Appendices figure 1) giving the company 45.5% interest in the offshore East Brighton Block,
making SOOGLE the largest shareholder and designated operator (Ministry Of Energy And
Energy Affairs 2014).

2.2 Position vacant

This author, a Trinidadian, is the HR manager for SOOGL and the company requires a Health &
Hygiene Inspector for the balance of public petroleum rights licence. This individual must be
multi lingual with the ability to speak Cantonese, Mandarin and English in order to interact with
the Chinese employees as well as the locals. Advertisements have been placed locally however
no suitable candidates applied.

Therefore, the parent company was notified and a request made for a suitable PCN to fill the
position. From this request cultural differences between China and T&T had to be looked at in
order to make the transition smooth.

3. Hofstede's cultural dimensions theory

Cultures have a significant influence on methods to managing people therefore; cultural
differences call for a variety of management practices (Newman, Nollen; Trompenaars, &

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Hampden-Turner, cited in Milikić 2009). The model used to show the cultural differences
between the two countries is Hofstede's cultural dimensions theory. This framework for cross-
cultural communication was developed by Psychologist Dr Geert Hofstede. It defines the effects
of a society's culture on the practices of its members relating to behaviour, derived from a 6
factor analysis; using two extremes (Hofstede n.d.):

1. Power distance index (PDI) – ranging from high to low.

2. Individualism versus collectivism (IDV).
3. Masculinity versus femininity (MAS).
4. Uncertainty avoidance index – ranging from high to low (UAI).
5. Long-term versus short-term orientation .
6. Indulgence versus restraint

The cultural differences between China and T&T are vast as shown in Geert Hofstede’s six
dimensions cultural comparison chart, with only individualism and masculinity having close
scores (see appendices figure 2).

3.1 Cultural differences between China and T&T

Drivers of Chinese culture according to Hofstede’s 6 dimension model shows China is high on
the power distance index revealing that the people believe that disparities amongst the
population is acceptable. Therefore, people should not have ambitions beyond their status or
rank.

Conversely, T&T scores in the medium range for power distance with a score of 47
characterising the people as being independent, hierarchical , having equal rights and
accessibility to superiors. Power is dispersed as team member experience is valuable and
employees believe they should be consulted for decision making. Communication is direct and
participative and managers are addressed casually and on first name basis.

In China individualism scores 20, which suggests that people act in the interests of groups
rather than themselves and there is a high degree of interdependence among its members.

Similarly, T&T is a collective society against the individualism ranking. Although the society has
strong relationships among family and groups in this writer’s opinion, the country is moving
towards individualism particularly in the professional arena.

China’s high masculinity score of 66 point toward society being driven by competition,
achievement and success. Success is defined by the best in field, which is a value system
ingrained from young and endures during ones professional life. Chinese will therefore sacrifice
leisure and family activities instead of work thereby, having no work-life balance.

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Likewise, T&T has a high masculinity and most Trinidadians expect men to behave assertively.

Uncertainty avoidance in China is low since society does not try to control the future.
Observance of laws and rules are viewed as flexible and can be adapted to the actual situation
and logicality is a fact of life. Risk-taking is regarded as a usual means for gaining more in all
areas of life, particularly business endeavours. This depicts an ethical relativism viewpoint.

T&T has a midway score in the uncertainty avoidance dimension hence; the society has mixed
views on how threatened they feel by unclear or unfamiliar situations.

The highest of all the scores, China has 87 in long term orientation being a very practical
culture. There is high persistence and perseverance and they will commit whatever time is
required to achieve their goals as the focus is on long term results rather than short term goals.

In contrast, T&T only scores 13 in long term orientation making it a normative society that
prefers to maintain traditions and norms and focuses on achieving quick results.

The indulgence level is low in China, as the society is restrained and does not put emphasis on
leisure. Restrained societies subdue gratification of wants and control it by means of strict
social norms creating the idea that indulgence is wrong.

However, the indulgence dimension carries the highest score of 80 for T&T. Revealing that the
people tend to be optimistic, have a positive attitude, enjoy a lot of leisure time and spends
unwarranted monies (Hofstede n.d.).

3.2. Impact of cultural differences on IHRM practices

The major cultural differences that will impact the IHRM practices of SOOGL are power
distance, uncertainty avoidance, long term orientation and indulgence. To rectify issues
pertaining to these factors firstly the PESTLE for T&T must be analysed. After which the open
systems approach will be used to respond to these issues.

4. Host country Pestle

PESTEL is a mnemonic which incorporates Political, Economic, Social, Technological,
Environmental and Legal segments that influence a market (PESTLE 2007). Analysing these
sectors gives an overview of the entire external environment in which an organisation is
functioning and what may impact upon it.

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4.1 Political factors
The current political climate of T&T is somewhat stable as the government is trying to take the
country out of a recession due to the slump in oil prices, with the implementation of new
policies and changes in legislature, such as the implementation of property taxes.

4.2 Economic factors

Economically the country attracts significant foreign direct investment from international
businesses, particularly in energy, producing approximately nine times more natural gas than
crude oil on an energy comparable scale (Ministry of Energy and Energy Industries n.d.).
However, the country is in a recession as the price for crude oil and natural gas has dropped.
Furthermore, experts such as consultants, Project Managers and Quantity Surveyors from
which to select appropriate candidates are in short supply. Unfortunately, other factors such as
low labour output and government corruption have hampered economic development.

4.3 Social risk factors

Work stoppages on sites resulting in project delays and cost overruns, the unavailability of
skilled workers and resistance from the local staff to conform to foreign management.

4.4 Technological factors

Technology plays a fundamental role with the increasing use of online shopping, gaming and
social media, where more than USD 1 billion has been spent two years prior to December 2014
(trinidadexpress.com). However, the lack of vital knowledge of critical Project Planning
software, results in inefficient project implementation on small projects.

4.5 Legal Risk Factors

Challenges in meeting the requirements set by The Ministry of Energy and Energy Affairs, which
determines regulatory policies governing production, transmission, distribution and supply of
natural gas and crude oil. This challenges results in delays in project completion.

4.6 Environmental Risk Factors

Ensuring that equipment is up to standard to ensure there are no oil spills or gas leakages.

5. IHRM Open systems model

The open systems model combines the external and internal types of environment and consists
of three levels: mega environment, host-country environment and operating environment
(Crawley, Swailes & Walsh 2013).

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The first level is the ‘mega environment’ which includes international competitors, global
trends and international forces in the marketplace.

The ‘host country environment’, is the second level and the following factors must be
contemplated; the political, ethnic groups, cultural groups, social groups, local competition,
economic and technological changes. This is where the significance of the PESTLE analysis is
observed, as all these impact on the company.

Lastly, the ‘operating environment’ of the organization is the core level. Here both the mega
and host country environmental factors are exerted upon the organisation. Additionally, there
are operating constraints within the internal environment inclusive of; regulations, culture,
skills, financial, technological, physical resources and social responsibility.

Each level influences the other in emphatically. Such that an MNE may have to adjust policies
subjective to local guidelines and host companies may have to integrate parent company
policies.

6. Vacancy filled
Sinopec Group has agreed to send a Chinese national to fill the vacant position and informs the
author that the individual is a qualified Health and Safety Officer, who meets the requirements.
However, he has never left China previously and has a wife and 1 child who will be staying
behind in China. The family remaining in China came as no surprise to the author as China rates
high in masculinity and work takes precedence over family life.

6.1 Challenges to resolve for Chinese expatriate

The main challenges the author will encounter are training for adaptation to the culture as
expatriates should be debriefed if they are to avoid culture shock and reward management
issues.

6.1.1 Training
The expatriate will have to be educated about Trinidadian culture particularly the three
dimensions; power distance, uncertainty avoidance and indulgence. Since the Health & Hygiene
Inspector is a part of the management team and Chinese people believe that everyone is not
equal; this may be problematic as Trinidadian employees expect to be treated as equals and
consulted for decisions. Once on the team, the expatriates should work in a supportive setting
where colleagues and managers assist in the new location and work style adjustment. Chinese
may also view Trinidadians to be very upfront in the way they speak, mannerism and local
colloquialisms, which can cause misunderstanding as the Chinese are not accustomed to this.
Additionally HR’s should foster an atmosphere of information sharing in the diverse work
environment where locals and foreigners can learn from each other.

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Secondly, uncertainty avoidance is low with the Chinese people as pragmatism is a part of life
and rules are bent as an end to a means, this is termed utilitarian ethics. However, Trinidadians
have mixed views on this dimension due in part to the diversity of the people and what is
engrained from a young age. In order to address this issue HR must define clear and concise
rules and guidelines for the expatriate to adhere to. Particularly in line with the Host Company’s
policies, codes of ethics and corporate social responsibilities.

Thirdly, the Chinese put high importance on building social networks, referring to this as guanxi
[relationship]. They conduct business by socialising and getting to know their customers before
finalising deals (Rochelle & Chan 2015). Relationship is preeminent, and then trust and trade
will follow. This way of conducting business is lengthy, which is contrary to how Trinidadians do
business. Trinidadians place importance on transaction speed and social interactions in Trinidad
are considered to be more casual and leisurely.

6.1.2 Reward management

One of the basic modules of IHRM is compensation which has to take into consideration the
type of package for international assignees including base salary, benefits, perquisites,
allowances, pension, security, income tax arrangements, taking account of exchange rates and
cost of living issues, appropriate accommodation in line with the accustomed standard of living
and long term & short term incentives that valued by employee (Scheuer 2013). Compensation
issues could include not knowing if accommodation is suitable until the expatriate arrives and if
other incentives offered are valued by the expatriate.

Additionally, after reviewing the base salary offered, the expatriate would be satisfied
according to Beijing standards. However, by Trinidadian standards the salary is subpar when
compared to salaries of other staff in the same wage bracket, taking into consideration the
current exchange rate of 1TTD to 16.44 YEN (Google Finance 2017).

7. Recommendation
Due to the cultural differences, training is necessary as the expatriate may have problems
communicating and dealing with local staff, especially if individuals have to take instructions
from the expatriate. Pressure can easily be created when new expatriates a new work
environment and country therefore, sufficient support must be provided for the transition into
their new environment.

Furthermore, the base salary presents the author with a dilemma since the compensation
agreement was made in the parent country. Therefore, to be ethical other benefits such as free
yearly airfare to visit China could be added to make the package more appealing.

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8. Conclusion
IHRM is not restricted to any one style or ideology and engages an array of communications for
diverse workforce groups' (Boxhall, P. and Purcell, J. 2008). Additionally, Hofstede’s theory has
been criticized by many academics as being flawed due to the use of IBM as the only MNE
whilst assuming that there is only one IBM culture and one global job-related culture. However,
Hofstede’s model is still the most widely used and referenced concept today.

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Reference list

Boxall, P & Purcell, J 2008, Strategy and Human Resource Management, 2nd ed., Palgrave
MacMillan, New York, NY.

Crawley, E, Swailes, S & Walsh, D 2013, Introduction to international human resource

management, Oxford University Press, Oxford.

Google Finance 2017, viewed 7 April 2017, https://www.google.tt/intl/en/googlefinance/

Government of The Republic of Trinidad And Tobago Ministry Of Energy and Energy Affairs
2014, Media release: Energy Minister Kevin Ramnarine Signs the 17th Exploration and
Production Agreement in the Last Three Years, viewed 1 April 2017,
http://www.news.gov.tt/content/energy-minister-signs-17th-exploration-and-production-
agreement#.WOYcB_krK00.

Hofstede, G n.d., China in comparison with Trinidad and Tobago, viewed 3 April 2017,
https://geert-hofstede.com/china.html.

Milikić, BB 2009, 'The influence of culture on human resource management processes and
practices: The propositions for Serbia', Ekonomski Anali / Economic Annals, 54, 181, pp. 93-118,
Business Source Complete, EBSCOhost, viewed 9 April 2017.

'PESTLE' 2007, Bloomsbury Business Library - Business & Management Dictionary, p. 5656,
Business Source Complete, EBSCOhost, viewed 5 April 2017.

Rochelle, T & Chan, O 2015, 'Determinants on the Quality of Social Networks Among Hong Kong
Chinese', Journal Of General Psychology, 142, 1, pp. 34-47, Business Source Corporate Plus,
EBSCOhost, viewed 7 April 2017.

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Scheuer, S 2013, 'The Equity-Equality Conflict-Dilemmas in the Management of Reward
Systems', Journal Of Management & Sustainability, 3, 3, pp. 158-165, Business Source
Corporate Plus, EBSCOhost, viewed 6 April 2017.

trinidadexpress.com 2014, ‘Vendors-blame-poor-sales-on-online-bargains’ viewed 2 April 2017,

http://www.trinidadexpress.com/news/Vendors-blame-poor-sales-on-online-bargains-
286628011.html

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Appendices

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