Manchester Metropolitan University Business School Working Paper Series

Cindy Wang HRM Research Group Human Resource Management in Transition: A study of MNEs in China WPS035

October 2002

The Business School of the Manchester Metropolitan University is one of the largest business schools in the UK comprising more than 150 academic staff organised into eleven thematic research groups. The Working Paper series brings together research in progress from across the Business School for publication to a wider audience and to facilitate discussion. Working Papers are subject to peer review process. The Graduate Business School of the Manchester Metropolitan University publishes management and Business Working Papers. The graduate Business School is the centre for post-graduate research in all of the major areas of management and business. For further information contact: The Director, Graduate Business School, Manchester Metropolitan University, Aytoun Building, Aytoun Street, Manchester M1 3GH Telephone No: 0161 247-6798. Fax No: 0161 247 6854

Cindy Wang Department of Management The Graduate School of Business Manchester Metropolitan University Aytoun Street Manchester M1 3GH Telephone: 0161 247 6790 Email: c.wang@mmu.ac.uk

Biography Cindy Wang is a full time PhD research student in the Department of Management, started in October 2001. Her research area is human resource management in China, and her current research interests are expatriate management and knowledge transfer. She completed an MSc. Degree in Manchester University in 2000. Prior to the high educational study, she worked 7 years in the Department of Human Resource Management for Gillette Shanghai Limited in China.

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Abstract China over the last decade has been at the forefront of the globalisation process. It has reacted to the movement in economic and business environments by initiating changes in human resources management (HRM) practised by both state-owned enterprises (SOEs) and multinational enterprises (MNEs). This process of change speeded up after January 1995 following the issue of the New Labour Law. Many researches have been carried out in this area. However, to date few researchers have focused their studies on the issue of knowledge transfer in association with the management of expatriates. It is suggested that expatriate management plays a vital role in bridging the home parent company with its local subsidiary. Although knowledge transfer is still a new concept, it is seen as an essential element in achieving good organisational performance. This paper is a literature review of the changes in China’s HRM in a transitional age, and identifies a research area: Expatriate management and knowledge transfer. Key Words: Chinese Economical Reform, Globalisation, Human Resource Management, Expatriate Management, and Knowledge Transfer

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1 Introduction China introduced ‘Open Door Policy’ in 1978. Since then China has begun the Chinese Economic Reforms (CERs). It has demonstrated movement in social and management practices. The extent to which Chinese management has converged to either a Western or Asian Model is to be investigated (Shaw and Marsden, 2001). The purpose of this working paper is to review the literature on the topic of human resource management (HRM) in China, and to seek a specific research area related to the changes of China’s HRM. The working paper is arranged in such a way that the first section seeks to provide an understanding of the research context that is the CERs and foreign investments in China. The Chinese culture is also reviewed because of its peculiar social context. The second section gives a short review on HRM literature, and will be explored in more detail in a later re-visit of the working paper. The third section is the main part of this working paper. It seeks the changes of China’s HRM since the CERs in 1978. It begins with reviewing Chinese management in association with Chinese culture, and