The ability of expatriate managers to transfer technological and business knowledge to companies abroad is a key factor in many expatriate assignments. But the ability to establish good formal and informal communication links with a host organization is equally important – as Hyundai Motors discovered after starting a joint venture with a Chinese car-maker in Beijing.

The rapid rise of Asian MNEs is exemplified by the progress of the Hyundai Motor Company (HMC), a Korean MNE whose expansion strategy includes transplanting assembly operations to newly industrializing countries in Asia. When HMC started a joint venture with the Chinese car maker, Beijing Automotive Company, more than 200 expatriate managers and engineers from Korea were assigned to set up and manage HMC’s Beijing operation (Zou and Lansbury, 2009). The Korean expatriates were appointed to all senior management positions and controlled production activities and workshop procedures.

However, the Koreans’ dominance triggered tensions with the Chinese. The expatriates regarded local managers as inexperienced and unreliable, and criticized the Chinese workforce for lacking discipline and work ethic. The Chinese criticized the Koreans for their authoritarian management style which the Chinese saw as inappropriate for the local workforce. At first HMC relied on standard employment policies and practices transferred direct from its Korean operation but it soon recognized the need to adapt these to Chinese conditions.

After two years, HMC reduced labour costs by cutting the number of expatriate managers in the Beijing factory from 200 to 60. (Chinese managers are cheaper to hire than Korean expatriates.) Since then, Korean managers and engineers have been sent to Beijing for short, focused periods to carry out very specific tasks, such as overseeing the introduction of a new model or training Chinese employees to implement a new procedure.

Small groups of Chinese managers and engineers are periodically sent to Korea to be trained in production management skills, but also to learn the company’s values of company loyalty and strong work ethic. While they are in Korea the Chinese delegates learn how their cross-cultural communication skills could be improved, with the longterm aim of minimizing conflict between Korean and Chinese employees in Beijing.

1 What specific employment policies and practices would have the effect of improving relations between Chinese and Korean managers and employees at HMC’s Beijing plant?
2 ‘HMC’s success in China depends on its ability to effectively manage cross-cultural communication with Chinese managers and employees.’ Suggest three specific ways in which cross-cultural communication in the plant might be improved.