Shui Fabrics Examination
1. How would you characterize the main economic, legal-political, and socio-cultural differences influencing the relationship between the partners in Shui Fabrics? What GLOBE Project dimensions would help you understand the differences in Chinese and American perspectives illustrated in the case? Although Shui Fabrics pulled off a 5% ROI within 3 years, Rocky River Industries an American partner is ready to pull the plug on Shui. A 5% ROI is great for Chiu Wai the Chinese general manager Shui but not Ray who needs the company’s bottom line closer to 20%.
Chiu is more interested in complying with legal-political standards than increasing Shui’s ROI. Since Shui is doing better than many Chinese companies, Chiu sees no need to be more competitive. Overall, China is ranked far lower on the Global Competitiveness Report 2007-2008 at 32 whereas the US ranks number 1 (Daft & Marcic, 2009). Rocky River in the US is much more economically developed than Shui Fabrics in China. According to a 2009 Gallup poll, the US was more likely to be an economic powerhouse in 20 years than China (Saad, 2009).
Despite economic downfalls, the US is much more globally competitive than China. Rocky River’s economic competitiveness is a source of friction for Chiu Wai who favors the Chinese political “status quo” over monetary growth. Chiu mistrusts Rocky River and may perceive any increased output as further “exploitation” since Chinese workers already earn far less than American employees. Both managers can agree that Shui cut labor costs for Rocky River, opened up a huge market, and overcame contentious US-Chinese textile trade negotiations (Daft & Marcic, 2009).
However, with US tariffs and quota fluctuations and strict supervision by local authorities, Rocky River is starting to lose faith in continued economic progress. Cultural differences also affects how much “say so” Ray has over Chiu at Shui. Chiu listens to Ray but does what local authorities dictate. In China, the social structure is formal and hierarchical (Graf, 1994). For Chiu, local authorities have a higher social ranking and have the final say on how Shui Fabrics operates. Ray gets his “marching orders” from Paul in America where social structures are much more relaxed. Ray will need to onfront Chiu about Shui’s future but doing so in a “direct” way is taboo (Graf, 1994). Americans value “individualism” whereas the Chinese regard “group” norms over self-worth. In other words, Ray values his position and Shui’s global competitiveness whereas Chiu cares about the employees and local authorities. In terms of GLOBE Project dimensions, assertiveness, future orientation, societal collectivism, individual collectivism, and performance orientation are key areas where Ray and Chiu differ. Americans are assertive, and rely on individual strengths when making decisions.
There is also a need for high performance and goal setting for the future. For Chiu, making some profit is fine but not too much so high performance is not a necessary goal. Chiu is governed more by societal collectivism where people are more important than achieving monetary profits. Ray will need to sell increased profitability to Chiu as a “positive reward” for the group as a whole not only for Rocky River. 2. How would you define Shui’s core problems? Are socio-cultural differences the main underlying cause of this problem? Why or why not?
How would you handle the conflict with your boss back in the United States? Shui Fabrics suffers mainly from differences in performance management between Chiu and Rocky River. For Chiu, Shui Fabrics is running optimally and sees no need for increasing profits to 20% (Daft & Marcic, 2009). In fact, Chinese officials are satisfied with Shui’s performance which gives Chiu a sense of personal satisfaction. Indeed, government officials in China decide how companies run, lower-level managers like Chiu rarely have a say if any at all (Weihrich, 1990). By contrast, decision-making in U.
S. companies rests with individual managers like Ray Betzell who gets his “marching orders” from his boss at Rocky River (Weihrich, 1990). Rocky River may be under economic pressure to appease stockholders and so want larger profits. China does not have such economic constraints and need only appease government authorities. Socio-cultural differences are not at the center of Shui’s problems. However, since Chiu already feels foreign companies exploit Chinese workers, asking for greater effort on employees is more exploitation (Daft & Marcic, 2009).
Rocky River may want a 20% profit but culturally speaking-current profits are more than fine for Chiu and authorities. Therefore, Chinese officials may not approve Chiu’s request for attaining greater profits at Shui. So directive control and profit levels are the key performance management issues at Shui Fabrics. Cultural differences only exacerbate existing conflicts. A sit-down between Chiu and Ray’s boss at Rocky River may reduce conflict and reach attainable goals. By meeting with Chiu in China, Paul Danvers may gain a different perspective on the situation.
Meeting with Chinese workers and officials in China is showing respect on Paul’s part. In return, Chiu will be more receptive to changes and can frame things in a way that authorities can approve. Showing respect and spending personal time with Chiu can reduce conflict and gain more acceptance for company objectives. Daft, R. L. & Marcic, D. (2009). Understanding management (7th ed. ). South-Western, Cengage Learning. Weihrich, H. (1990). Management practices in the United States, Japan, and the People’s Republic of China. Institute of Industrial Engineers, Inc.
Gale, Cengage Learning. Retrieved from: http://www. thefreelibrary. com/Management+practices+in+the+United+States%2c+Japan%2c+and+the+People%27s… -a08925953. Graf, R. (1994). 10 Major cultural differences between China and the United States. HubPages. Retrieved from http://rgraf. hubpages. com/hub/10-Major-Cultural-Differences—China-and-the-United-States. Saad, L. (2009). U. S. surpasses China in forecast for economic powerhouse. Gallup. Retrieved from http://www. gallup. com/poll/114658/Surpasses-China-Forecast-Economic-Powerhous