Cross-Cultural perspectives on managing diversity By: David Pickering Huang,DeJing(Kevin) Roy Tanuwidjaja Norito Kobayashi Luisa.

Cross-Cultural perspectives Cross-Cultural perspectives on managing diversityon managing diversity

By:By:David PickeringDavid Pickering

Huang,DeJing(Kevin)Huang,DeJing(Kevin)Roy TanuwidjajaRoy TanuwidjajaNorito KobayashiNorito Kobayashi

LuisaLuisa

ChinaChina

CHINA OVERVIEWCHINA OVERVIEW

President:President: Hu Jintao (Since 2003) Hu Jintao (Since 2003)

Location:Location: Eastern Asian with area 3.7 million square Eastern Asian with area 3.7 million square miles. miles.

Major cities:Major cities: Beijing (Capital), Shanghai, Tianjin, G Beijing (Capital), Shanghai, Tianjin, Guangzhou, ect……………… uangzhou, ect………………

Sources:Sources: (China Daily) (China Daily)

CHINA OVERVIEW CHINA OVERVIEW

Population:Population: 1.3 Billion (July 2004) 1.3 Billion (July 2004)

Languages:Languages: Mandarin (Official), and many local dial Mandarin (Official), and many local dialects. ects.

Ethnic Groups:Ethnic Groups: Han Chinese (92%). Han Chinese (92%).

Religion:Religion: Officially atheist;Taoist, Buddhist, Muslim(1-2 %), Christian Officially atheist;Taoist, Buddhist, Muslim(1-2 %), Christian(3-4 %).(3-4 %).

Sources: Sources: (Asia Pulse; Dow Jones Newswire). (Asia Pulse; Dow Jones Newswire).

CHINA REAL GDP GROWTHCHINA REAL GDP GROWTHsource: (Financial Times)source: (Financial Times)

7.60%7.80%8.00%8.20%8.40%8.60%8.80%9.00%9.20%

2004Real GDPGrowth Rate

2003 Real GDPGrowth Rate

Series1

CHINA EXPORTS AND IMPORTSCHINA EXPORTS AND IMPORTS

CHINA EXPORT: $ 529.3 billion( 2004). CHINA EXPORT: $ 529.3 billion( 2004).

CHINA IMPORT: $ 505.8 billion( 2004). CHINA IMPORT: $ 505.8 billion( 2004).

Sources: (Financial Times)Sources: (Financial Times)

CULTURAL DEFFERECESCULTURAL DEFFERECES

Decision Making:Decision Making:

A. Western-Fast decision making; quickly gathered A. Western-Fast decision making; quickly gathered and processed information. and processed information.

B. Chinese-Deliberate longer; Want to be included. B. Chinese-Deliberate longer; Want to be included.

Sources: (China Daily)Sources: (China Daily)

CULTURAL DIFFERENCESCULTURAL DIFFERENCES

““YES” MEANS “NO”YES” MEANS “NO”

A. Chinese-Don’t like say “No” in a business setting nor A. Chinese-Don’t like say “No” in a business setting nor admit don’t understanding something. admit don’t understanding something.

B. Western-Encouraged to express.B. Western-Encouraged to express.

Sources: (China Daily)Sources: (China Daily)

CONNECTIONCONNECTION

Relationships-with vendors, suppliers, Relationships-with vendors, suppliers, central government. central government.

Both outside and inside relationships Both outside and inside relationships building.building.

PERSONAL STYLEPERSONAL STYLE

Chinese-Don’t challenge the instructor. Chinese-Don’t challenge the instructor.

Western-Encourages to questions, hand Western-Encourages to questions, hand on training. on training.

Lose faceLose face

Hofstede TheoryHofstede Theory

Country Power Uncertainty Individualism Masculinity

China 78 36 15 50

U.S. 40 46 91 62

Hofstede Theory (cont’d)Hofstede Theory (cont’d)

Long term orientation vs short term Long term orientation vs short term orientationorientation

Nike’s international staffingNike’s international staffing

Nike uses Regiocentric approach.Nike uses Regiocentric approach.

The strategic decision made at the region The strategic decision made at the region level.level.

Each region has its own VP.Each region has its own VP.

WWW.NIKE.COMWWW.NIKE.COM

Nike’s global Area DivisionNike’s global Area Division

U.S Headquarter

Production MarketingHuman

ResourceFinance

Asia Pacific Region

Americas Region

EMEA Region

NIKE NIKE

US-7 Subsidiaries.US-7 Subsidiaries.

OTHER COUNTRIES-34 Subsidiaries.OTHER COUNTRIES-34 Subsidiaries.

Employees-25,000(none of them are represented by Employees-25,000(none of them are represented by unions). unions).

Distribution-21 centers around globe, 23,000 retail Distribution-21 centers around globe, 23,000 retail accounts. accounts.

Sources: (Securities and exchange commission).Sources: (Securities and exchange commission).

NIKENIKE

Athletic Footwear-Largest seller in the Athletic Footwear-Largest seller in the world.world.

China-36% manufactured in China. China-36% manufactured in China.

Revenue-120 foreign countries account for Revenue-120 foreign countries account for 53%. 53%.

Grew from “single product, single market”Grew from “single product, single market””multiple ”multiple brands, multiple markets”brands, multiple markets”Subsidiaries:Subsidiaries:

Sources:http://www.nike.com/nikebiz/nikebiz.jhtml?page=3&item=facts#nikeSources:http://www.nike.com/nikebiz/nikebiz.jhtml?page=3&item=facts#nike

Nike’s SubsidiariesNike’s Subsidiaries

Net Revenue by Global RegionNet Revenue by Global Region(US $,millions(US $,millions))

Total net rev. increased 15%Total net rev. increased 15%

Sources:Sources:http://www.nike.com/nikebiz/gc/r/fy04/docs/company_profile.pdfhttp://www.nike.com/nikebiz/gc/r/fy04/docs/company_profile.pdf

FY 04 FY 03 FY 02United States 4793.7 4658.4 4669.6EMEA 3834.4 3241.7 2696.5Asia Pacific 1613.4 1349.2 1134.9Americas 624.8 527.0 568.1Other 1386.8 920.7 823.9Total 12253.1 10697.0 9893.0

Net Revenue in U.S.Net Revenue in U.S.

FY’04 : $4.8billion (39% of Nike revenue)FY’04 : $4.8billion (39% of Nike revenue)

Increase 2.9%Increase 2.9%

FY 04 FY 03 FY 02

4550

4600

4650

4700

4750

4800US $

, millions

Fiscal Year

Net Revenue in US Region

China’s attraction:China’s attraction:

Emerging economiesEmerging economiesCheap labor costsCheap labor costsStable currencyStable currencyBountiful raw materialsBountiful raw materials

Sources:http://www.fortune.com/fortune/subs/print/0,15935,375164,00.htmlSources:http://www.fortune.com/fortune/subs/print/0,15935,375164,00.html

Nike approaches ChinaNike approaches China

Moved most production into China in mid 1980sMoved most production into China in mid 1980sMore than workshopMore than workshopSet challenge: to change China’s cultureSet challenge: to change China’s culture

Sources:http://www.chinalaborwatch.org/en/web/article.php?article_id=50214Sources:http://www.chinalaborwatch.org/en/web/article.php?article_id=50214

Open the China marketOpen the China market

Phase I:Getting Swoosh recognizedPhase I:Getting Swoosh recognized

-Donated equipment and sponsor high school basketball game -Donated equipment and sponsor high school basketball game

-Bring NBA player-Michael Jordan to visit-Bring NBA player-Michael Jordan to visit

-Target middle class: seeks Western culture-Target middle class: seeks Western culture

Phase II:Bring in Black culture-Hip HopPhase II:Bring in Black culture-Hip Hop

-Encourage rap-style trash talk-Encourage rap-style trash talk

Phase III:Challenge Confucian-stylePhase III:Challenge Confucian-style

-Fragrant possibilities of higher-quality shoes-Fragrant possibilities of higher-quality shoes

Sources:Sources:http://www.chinalaborwatch.org/en/web/article.php?article_id=50214http://www.chinalaborwatch.org/en/web/article.php?article_id=50214

Nike’s success in ChinaNike’s success in China

Sales through 1990s increase 60% a yearSales through 1990s increase 60% a yearBiggest seller of athletic shoes Biggest seller of athletic shoes Example: Zhang HanExample: Zhang Han

-20 years old art student in Beijing-20 years old art student in Beijing

-Owns over 60 pairs of Nikes shoes costing $6,000(RMB)-Owns over 60 pairs of Nikes shoes costing $6,000(RMB)

Western goods mean “status” to Chinese consumerWestern goods mean “status” to Chinese consumerNike did not enter China selling usefulness, but selling Nike did not enter China selling usefulness, but selling statusstatusGrew 66% in revenue in the past yearGrew 66% in revenue in the past year

Sources:Sources:http://www.chinalaborwatch.org/en/web/article.php?article_id=50214http://www.chinalaborwatch.org/en/web/article.php?article_id=50214

Nike CaseNike Case

LeBron James in Chamber of FearLeBron James in Chamber of Fear

Nike CaseNike Case

Corporate Transparency in oversea factoriesCorporate Transparency in oversea factories

- Contracting through unbiased audits- Contracting through unbiased audits

Nike CaseNike Case

Computer hacking: Stickman copy right Computer hacking: Stickman copy right lawsuitslawsuits

Expatriates in ChinaExpatriates in China

CEO’s and top executivesCEO’s and top executives

Senior and middle managersSenior and middle managers

Costs and BenefitsCosts and Benefits

Nike IHRM in ChinaNike IHRM in China

Production staffProduction staff

Production management personnelProduction management personnel

Corporate managerCorporate manager

Home Country NationalsHome Country Nationals

EstablishmentsEstablishments

Employee profileEmployee profile

Pay compensationPay compensation