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Table of Contents
Introduction...............................................................................................................................................3

Cultural differences between China and Italy.........................................................................................3

IHRM strategies in China for La Cost bucks..........................................................................................5

Challenges for expatriates in China.........................................................................................................7

Conclusion..................................................................................................................................................9

References................................................................................................................................................10
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Introduction
Human resource management deals with staffing, training and development,
compensation, and developing the strategies to attract and retain the potential employees in an
organization (Armstrong & Taylor 2020). This is also the duty and responsibility of the HR
department of any organization to motivate the employees by treating fairly and equally the
employees ((Kianto, Sáenz & Aramburu 2017). This is often known as the diversity of the
employees where people from different gender, country, caste, and religion work together and
achieve the common goals of the organization (Kundu, & Mor 2017).

Cultural differences between China and Italy

One of the key challenges for HR managers is managing workforce diversity. The
problem is even more prominent in the case of multinational organizations. La Cost Bucks will
have to face many challenges in managing the operations as well as hiring and recruitment of the
staff. Before going into the detail discussion, we need to know that La Stuck Buck is an Italian
coffee company which is having quote different culture and values compared to the culture and
values of the Chinese organization. the company is existing in different locations of the world
and hence the size of the company is increasing day by day. This shows that the company
decided for entry in China would not be an easy decision for the company management. The size
of the company will further increase, and this will show more status quo and inertia. The
management will have the issue of efficiency and effectiveness because of its size (Dreyfus, Nair
& Talluri 2020). The working culture of the two countries is quite different and this would be
quite difficult for the management of the La cost Bucks to mold into the culture of China. China
is having practices of high productivity and low cost while the European market looks for the
quality. This would be quite challenging for the company to adopt the low-cost strategy of the
Chinese market which is already dominated by the local Chinese coffee market. Luckin coffee
which is a Chinese origin company for coffee manufacturing has outperformed the world well-
known coffee Starbucks and this is going to capture the international market with significant
market share.

The HR department of the company will also face problems in hiring and recruitment of
the employees. Chinese market is richer with the productive workforce however this would be
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difficult for the company to hire the management who can also understand the European style of
management. As discussed the Chinese market is having a low-cost strategy while the European
companies more do believe in quality. Besides this, the Chinese market is not having a good
reputation for the CSR policies while the European companies give more importance to the CSR
policies and implementation. This will make challenging for the company to have the
management and employees who have awareness regarding CSR policies so that the core value
of the company is implemented and followed throughout the company.

Talking specifically about the two culture differences or similarity of the China and Italy
this is important to have close overview of the two countries and understand the difference
between the two cultures. Before going into the detailed discussion, we should know that the
culture of the host country and parent company national culture both play an important role in
managing the business. when there are large differences this would create more problems in
adopting the culture of the host country. People behavior towards the work, time, punctuality,
and social values all are some important values that make together to form the national culture.
European companies expect their employees to follow the values and attend the office on time.
In other words, they expect that the employees will be following the punctuality and time
function. Communication between employees and organizations also form the culture. Chinese
companies and people most often have communication indirectly while the Italian companies
have direct companies. Battaglia, Giancarlo Nadin, and Luca Gobbini (2004) have a detailed
study regarding the cultural difference between China and Italy. This study has covered the
different aspects of the cultural difference between Chinese and Italian companies. Talking about
the communication style, the Chinese companies have indirect messages and communication, but
Italian companies and people have direct messages and communicate with clear ideas. The study
also found that Chinese Yes or No always does not mean yes or no but this can be reviewed and
changed accordingly. The study also discussed the problem-solving approaches of the two
companies. Italian companies and people do decision making based on the rational and logical
ground while the Chinese people and companies do decision making based on the nonlinear
approach and there is no clear approach towards problem-solving. The leadership in two country
companies for exerting and showing the power is also important. Chinese companies take too
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much time in making a decision especially in the case of the conflict while the Italian companies
leadership has a direct approach and they try to solve the conflict immediately and earliest.

Li (2017) also has studied the difference and similarities between Chinese companies and
Italian companies cultures. According to this study, Italian companies have a culture of
innovation while Chinese companies usually do not have innovative culture and they try to
increase productivity with the learning effects and repeatability. Since Chinese companies have
limited freedom because of the political and economic factors they do not have an innovative
mind. On the other hand, Italian companies enjoy freedom and they have an open mind to accept
the innovation. Another cultural difference between the two countries is the language. Chinese
people have limited knowledge of the English and non-Chinese languages wile the people from
Italy know English and French language. However, both these languages are difficult to
understand and hence this will be difficult for the companies to communicate the message
according to its core meaning in Italy.

IHRM strategies in China for La Cost bucks

International HRM is the application of the HRM strategies and policies on the
international level (Al Ariss & Sidani 2016). This is common in MNC and other types of global
organizations which is having business in the international market. When we talk about the
international HRM, there are few possible options and issues that need to be addressed and
follow for the effective management of the workforce.

While working in the international market most often the MNC has problems in
managing workforce diversity. They most often have the three options in hiring and staffing
policies. Each of these three approaches has pros and cons. Talking about the staffing policies in
prospective of the Chinese market, the following three options are discussed.

The first policy which is followed by the HR of the companies in international business is
the ethnocentric policy. In this type of policy, the key position in the business is occupied by the
managers from the parent company while all other positions are occupied by the local of the host
country (Lakshman, Lakshman & Estay 2017). This approach is effective when the company
tries to hold the key positions and they try to manage the culture of the companies throughout the
world (Patel et al. 2019). In other words, the company tries to maintain the culture of the
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company and does not try to change or modify the culture of the company in a new market. The
company tries to maintain its uniqueness with the help of the management from the parent
company. This also helps companies in transferring the core values to the new destination of the
company. This is also an effective policy when there is a lack of competent management in new
destinations and hence company induces its culture. The method is however having limitations of
the culture myopia and this may result in the form of conflict and resistance from the national
people of the host country (Verešová 2017). They find fewer opportunities to grow and hence
they can resist.

The 2nd policy which is popular in international business and HR is polycentric. In this
type of policy, the key position is allotted to the people and managers from the host country
however the top position of the headquarters level is occupied by the parent nationality of the
company (Eash 2016). This methodology is adopted to give local culture touch to the company
and hence overall the business gets the advantage of the local production staff. This methodology
is having the advantage of low cost as the staff from the host country is not allotted with any
external or extra benefit. Besides this, the company also gets the advantage of the manager's
ability to understand the local culture and hence deal with the labor and workforce according to
the local culture and setting (Desai 2019). The methodology is however having the limitation of
the poor communication and more conflicts occur between subsidiaries and headquarter (Zhu
2019). This is also having a problem in maintaining the culture of the organization and there
might some problem occur regarding the reputation of the company.

The final method is the geocentric where employees are hired from any nationalities or
cultures who are having competencies and skill levels. They are attracted to the business and
organization irrespective of culture, race, and religion (Furusawa & Brewster 2019). The only
criteria for the selection is merit and skill level. This is helping the company in attracting the best
workforce from all around the world and hence the company enjoys the best talent to occupy.
However, the methodology is limited when there are nationalities issues come in front.

Keeping all the above discussion in view, the best method that suited the La stuck bock to
adopt the ethnocentric method. The ethnocentric methodology will help the company to adopt
and hired the parent country culture and they will be able to deploy the parent culture and core
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ways of doing the business. Although the company is looking for maintaining the core values in
China and other Asian markets, but this is important that the company need to understand the
local culture and legal constraints. This is supporting the ethnocentric method, but this is
important to mention that the Chinese government prefers the international firms to adopt and
hire the local people and people cooperate more in such cases. The company may train the
people from the parent company regarding the culture and language of the Chinese market. they
will learn the market trends and understand the business methodologies the companies follow in
china.

Talking about the other strategies which are most often challenging and creating problem
for the HR international HRM is the training and adoption of the local market. This can be
solved with the help of the training of the managers who are going to be shifted to the new
market of China. Since Chinese people have a lack of command on English or any other
language this would be important that La Costbuck train managers about the Chinese culture and
language. Since managers will also try to shift their family from Italy or any other country of
Europe this would also be important for the company to train the families of the managers. This
would although make the method very expansive however the way the company is looking for
the business is best suited by this strategy. Another issue that will be faced by the company is the
compensation issue. The company will have to offer special incentives to the managers for his
new assigned duty according to the location of the market. This would also make it more
expensive as the Chinese market is having relatively high inflation compared to Europe.

Keeping all the above discussion in mind this is clear that no method purely fits the
purpose of the La stuck bucks to follow in case of entry into the Chinese market. The
ethnocentric methodology is showing the best one to adopt but the cost associated with the
methodology is limiting the effectiveness of the policy. So, this is suggested that in starting the
company follows the ethnocentric methodology however with the time the company may train
the local staff and managers to control the business in the future and hence gradually shift to the
polycentric methodology.

Expatriates always have problems while having a job in a new location. This is mainly
because of the cultural differences, environment differences, and rules and regulations.
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Technology and skill differences also create problems for the individual in achieving and
maintaining the status in the international market. Distance from the home country also makes it
difficult for expatriates to settle in the new market.

Challenges for expatriates in China

China which is located in Asia and having quite different cultures and societies values
would not an easy destination for the expatriates to settle down and start working there. One of
the main barriers for expatriates is the local language which is quite difficult for the people from
European countries. This is the only language that is taught and understand in China. Few people
understand the English, and this is very difficult for them to communicate their message with
English. The expatriates will have to learn first the language for a clear understanding of the
people and the market.

According to the survey of the Expat insider (2019) survey, 80 percent of the expatriates
confirms that the main barrier in settling in China is language. This is difficult for them to learn
and understand the language of China. The same study has another interesting result for the
challenges in China for expatriates. According to the result of the study expatriates also face a
challenge for environmental pollution. China is having a huge and excellent infrastructure of the
transportation system, but this is also true that the country is having the issue of the environment
in terms of the poor air quality. China which is also a hub of the global production system and
this is attracting the world large manufacturer to get the advantage of low cost is also creating
environmental pollution. Industrialization is always linked with environmental pollution
especially the carbon emission. Chinese companies are also having bad reputation regarding the
CSR and especially the working conditions for the workers. Employees are not provided with
good working conditions. The same report has also discussed the issue of media censorship and
freedom. Since the media in China is very controlled and only censored material is published and
telecast this is also creating troubles for the expatriates to work in China. People specially from
Europe and Italy enjoy freedom of expression and they have access to all the information they
want, but the case is different in China. The government is controlling the media and only
selected material is published.
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Karcz, Liu, and Adamski have (2006) have also the same opinion. According to their
study, the main barriers for the expatriates in China is a language barrier. The study also found
during the interview that people do not have problems in shopping and purchasing however they
have issues in food and restaurants. Chinese people have different taste compared to the other
parts of the world, especially the Italian and European countries. The study also found that the
expatriates in China needs full support from the parent company. If the parent support is limited
this will limit the ability of them to adopt in the culture of China. The same study has also
identified the challenge of the controlled media and censorship. Meriläinen (2008) also found the
challenges that expatriates may find or face during their job in China. According to the study,
family settlement is a major issue for the expatriates to settle in China as the education level and
medium of instruction is quite different. Another major issue is the technical skills and ability to
adapt to the changes and innovation creates problems for the people having a job in China. China
is focusing more on productivity and low cost and they are having an interest in technology
import as China is still lacking in the quality of the technology and machinery (although in recent
years China has done excellent jobs in innovation and technology).

Besides this, the expatriates will also have the problem of the government interventions
in businesses. Especially the media and all the advertisements etc. are controlled by the
government and this lacks the ability of the organization to openly express the message the
company products and services are carrying. The expatriates nowadays in China are also facing
the problem of the competition as china is going to be the hub of manufacturing and this will
attract a large number of expatriates to the country. This will build extra pressure on the
expatriates for holding the position and compete with other expatriates for performance.

They can overcome these challenges by training and offering the best incentives to
motivate the employees in the Chinese market. Another key incentive for the expatriates in
staying in China is the status that China is going to have in the future regarding the world
economic power. China is dominating the international market with its low-cost production and
this is going to outperform the rivals countries for the production capacity. Prior training of the
expatriates is the key to adjust the employees in China and hence prepare them mentally and
psychologically to adopt the culture and difference of Chinese culture.
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Conclusion
La Costbucks decision is evaluated for entry into the Chinese market from the HR
perspectives. This is found that the Italian company will have problems in hiring and staffing
people and managers who can have awareness and knowledge about the two cultures. This
would be quite challenging for the company to induce the culture of the parent company in the
Chinese market, so this is suggested for the company to follow the ethnocentric staffing policy.
Training of the employees who are going to shift to china is key requirements for the company to
prepare its staff for settling in China. Language barriers, freedom issues, and controlled and
censored media are some of the challenges that expatriates will face in china. So, the best way to
overcome these is the training of the expatriate and offering them incentives to motivate them for
the future challenge.
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