Ho / Koh HR Due Diligence

Mergers and Acquisitions in China
1. Auflage 2011
ISBN: 978-1-78063-328-2
Verlag: Elsevier Science & Techn.
Format: EPUB
Kopierschutz: 6 - ePub Watermark

E-Book, Englisch, 190 Seiten

Reihe: Chandos Asian Studies Series

This book examines how to conduct due diligence on mergers and acquisitions for organisations in China written from a management perspective. Aimed primarily at practitioners within the field of International Human Resource Management, it highlights models that appear straightforward and yet are susceptible to oversights and failings. It examines the roles of human resource practitioners from when a target company is identified for mergers or acquisitions through to assessing its risks. The book incorporates adopting human resource management strategies under differing business conditions, negotiating to secure the deal and integrating the new business unit to the merged or acquired organisation. This title gives a fantastically detailed analysis of due diligence, capturing the nuances of the Chinese way of doing things and how this affects a business environment. - Provides practical and realistic solutions to real-world problems - Concisely draws upon the authors' wide-ranging practical and research experience in conducting due diligence assignments in organisations in China - Written by highly knowledgeable and well-respected practitioners in the international Human Resource Management field

Dr ChyeKok Ho (lead author) teaches International Human Resource Management at the School of Business, Monash University Sunway Campus in Malaysia. Prior to pursuing a career in academia, he held leadership positions in Human Resource Management with an investment bank, a government-owned conglomerate, and an international media storage manufacturer. Educated both at University of Cambridge, England and University of Melbourne, Australia, Dr Ho is an elected fellow of the Cambridge Commonwealth Society, and a member of the Institution of Engineering and Technology, United Kingdom. His research interests are in the areas of organisational learning and knowledge, expertise sharing in Chinese communities, and international Human Resource Management.

Autoren/Hrsg.

Ho, Chyekok

Koh, Chinseng

Leseproben

2 Cultivating affective relationships
Abstract:
Cultivating affective relationship by building guanxi is a pre-requisite in managing the Human Resource Due Diligence process. The notion of guanxi is unpacked into human-heartedness; affection; appointed trust; usefulness of trust; personality; and face in society. The importance of social exchanges of favours; dynamic positioning of social hierarchies; and the intricate balancing of power are emphasised in M&A negotiations. For the Chinese people, the law is not beyond humaneness. Key words guanxi human-heartedness affection appointed trust face social hierarchies humaneness Relations and relationships
In Western economies, business is generally conducted within rules-based systems under laws that are widely known and justly enforced. In contrast, business conducted in China is based on personal contacts and relationships. The Chinese have an aversion to formal, written contracts and prefer to rely on personal relations, and social contacts with those in power to get things done. Chinese businessmen typically start with a bare skeleton of written agreements and rules, leaving the rest to negotiation and oral interpretation as the business relationship evolves. Personal connections and loyalties are often more important than organisational affiliations or legal standards. Business is transacted within a relation-based system, supposedly made on the strength and interpretations of verbal agreements anchored on trust. In building affective relationships, there are two Chinese concepts which can be used as management precepts. The first one, guanxi, is well known in the Westernised world. The second concept, He Qíng (??), He Li (??), HeFa (??) is less well known, especially among Westerners. Guanxi means connection and/or network. QíngLiFa (???) can be interpreted as ‘in conformity with the context of the given situation, in conformity with the principle of reasonableness and in conformity with prevailing laws and regulations’. From an application of the ideas in terms of its use, or usefulness, guanxi can be said to be externally pulled whereas QíngLiFa is internally driven. In building relationships or networks which facilitate business processes, the sources of influence are all external, whether they are the regulatory authorities, permit-granting authorities, bureaux, business/project partners, key suppliers, joint venture partners or customers. In managing Chinese employees, QíngLiFa can be relied upon as a core management principle as it embodies the traditional values and societal values more than the Chinese as a people have imbibed. If one were to examine the Chinese culture and study the manner in which matters are viewed, one will find that the Chinese are inclined to consider all three factors, qíng, li and fa holistically, and one aspect of an idea is never considered without the others. Qíng is considered to be the foundation and li is the key to resolving issues. This is the case as qíng and fa need li to achieve the level of clarity and understanding of any given situation. Qíng without li is tantamount to being ruled by emotions whereas fa without li is a case of a bad law being enacted. Guanxi (??)
The Chinese word guanxi is a combination of guan (?) and xi (?) According to the Xian Dai Han Yu Ci Dian (?????? or Modern Chinese Dictionary), guan means ‘door’ with an extended meaning ‘to close up’. Xi means ‘to connect and enter into relationships’ as in kinship. As a metaphor, guanxi suggests, ‘you may be one of us if you are inside the door that we have closed; but if you are outside the door, you are not one of us’. It implies ‘the old boy network’ of public schools in Western societies; the clans and triads in Chinese businesses, or ‘the inner circles’ of a government’s members. As a concept, guanxi refers to the drawing on connections in order to secure favours in personal relations. It is an aspect of the Chinese business practice whereby individuals are able to establish a complex network of assistance. Guanxi is an intricate and pervasive relational network that the Chinese cultivate energetically, subtly, and imaginatively (Luo, 1997). Historically, it was Chinese merchants seeking informal mechanisms and ‘backdoor’ relationships to secure the kind of transactions often protected by law that gave rise to the idea of guanxi. Guanxi provided a balance to the cumbersome government bureaucracy by allowing people to circumvent rules and regulations through the activation of personal relations. In this respect, guänxi operated with some success in place of the law of the land that was often unclear, biased, unreliable, and in constant flux. The idea of guanxi originates from the early days in China. Living under harsh conditions, Chinese peasants continually experienced famine and starvation. With limited resources, lives were extremely difficult and uncertain. Scarce resources were allocated according to whom you knew. Reliance on one’s family resources was not sufficient. It was necessary to extend one’s familial form of support through kin and distant relations, membership of a village community, and work groups. The method of extending familial support beyond one’s family came to be known as guanxi. Guanxi are established in places where there are Chinese communities. For example, when the Chinese came to Southeast Asia in search of work, they arrived on their own without their families or kin. Fresh off the boats, the new arrivals turned to people originally from their villages in China for food, lodging, and work. They sought support by ‘connecting’ to groups that were organised along the lines of their dialects; the villages they originally came from, or ancestry as in having the same family name. If they were not able to locate their groups, they would get in touch with intermediaries to connect them to help groups. Access to help groups was based on the personal recommendations of intermediaries. Referrals were important for ‘peripherals to legitimately participate in communities of guanxi’. As membership of these communities grew, mutual help groups were institutionalised as clans, and trade associations. Through social activities, clans and trade associations created opportunities for the migrant Chinese to establish guanxi with potential traders and bankers. Chinese migrants found work mostly through the guanxi channels. In addition, the Chinese towkay (businessmen and employers) strengthened their networks of dependable guanxi by binding capable workers to their businesses through marriages. Hence, guanxi became a web of networks that encompasses a broad range of relationships and kinships. Individuals are encouraged to develop relationships of respect and responsibility. Guanxi was modelled on filial piety, relationship between spouses, and traditional family values underpinned by Confucian ideals. The key themes that are intricately linked to the core concept of guanxi are emotion, trust and face. As the Chinese have a tendency to follow their hearts more than their heads, the building of relationships is predominantly an emotive process. Such emotive processes are bounded by two closely-knit ideas: rénqíng (human-heartedness – ??); and ganqíng (affection – ??). Rénqíng may be defined as felt experience gained through social exchange of favours. It connotes a mental state of indebtedness as a consequence of ‘securing a favour from someone’ with moral and social obligations of reciprocity. Ganqíng translated literally means affection. Affection, as defined in The Shorter Oxford Dictionary, is ‘an emotion, a feeling and a disposition towards something’. From a guanxi perspective, ganqíng connotes goodwill generated through exchanges of favours in social encounters and feelings towards one another cultivated over a period of time. Trust refers to the ‘willingness of a person to accept vulnerability based on positive expectations of another’s intentions or behaviours’ (Mayer et al., 1995; Rousseau et al., 1998). Tong and Yong (1998) stated that a Chinese business person is more interested in whether a person will deal honestly with him in particular. This willingness is influenced by the pre-existence of guanxi. If there is no pre-existing guanxi, the reluctance of the business person to undertake risk is higher. The business person could really only build up xìnyong after s/he has first established guanxi. For a peripheral participant in a community of guanxi, it is more...