INTEL IN CHINA

INTEL

In 1999, Intel considered China to be their single most important market. Indeed, in 1997, over half (56 per cent) of Intel's revenue was generated outside of the United States, with the Asia-Pacific region and Japan accounting for almost a third of Intel's revenue. In the mid-1960s, Intel introduced the world's first microprocessor, sparking a revolution in the technological industry. To help strengthen the Pentium brand name, Intel focused on emerging markets with programs that stimulated demand for Intel products.

Intel was an unequivocal success story its strategy of "driving new technology, serving global markets, and increasing customer preference for the Intel brand, while delivering excellent financial results to our stockholders" had served them well over the years.

INTEL PEOPLE'S REPUBLIC OF CHINA (PRC)

Intel PRC Corporation established a representative office in China as early as 1985; however, it was not until 1993 that Intel felt the time was right to more fully enter the Chinese market with the establishment of two wholly-owned foreign enterprises. With its large population and fast economic growth, China's potential was extremely attractive to multinationals. The second, Intel (China) Technology Co. Ltd., was the entity of Intel's assembly and testing plant operations. The first, Intel Architecture Development Co., Ltd. (IADL) was responsible for the sales, marketing and development of Intel's products and services in China.

Though still at its early stage of development, China's computer market had been growing twice as fast as the world average, and was poised to become the second-largest computer market in the world by the end of the century.

CHARLES TANG

Tang had not returned to China since his departure eight years prior and his home country had changed dramatically during that time. During his time there, Tang established Intel's software developer support program an integral part of Intel's China strategy. The board's broad mandate was to "spearhead industry programs by working with trade associations and industry leaders to influence the development of programs throughout the region to promote indigenous development of the industry by transferring Intel's acquired experience and expertise locally."

YONG LI

Yong Li was one of four AMs, each of whom had individual projects in addition to their primary responsibility. According to Tang, an AM's required skill set included the ability to interact as an Intel ambassador with senior managers and owners of the software firms with whom Intel was developing relationships. This involved effectively communicating Intel's IT strategy, "not from a technical viewpoint, but rather from a strategic perspective," while ensuring full customer satisfaction on a daily basis. Another critical strategic component of the AM's responsibilities lay in their ability to consistently recognize the possibilities of advancing the mutual interests of IADL and its clients a key part of Intel's strategy in China. An AM's ability to exceed his clients' expectations was determined by his effectiveness in mobilizing Intel's internal resources, which involved extremely strong people skills and the ability to consistently demonstrate a mature, professional and diplomatic manner.

THE ISSUE

Tang's attention was drawn to Li's project upon reviewing Li's employee file. On the other hand, Chen confessed she was confounded by Li's reaction. When Tang took over Intel's Beijing division, he was eager to familiarize himself with the operation of each department, and to aid him in this, he reviewed the files of all employees to understand their roles. Using his best judgment, Tang reassigned work as he deemed necessary, to ensure that each employee was working, both individually and within a team, toward advancing the strategic goals of the department and, thus, Intel in China. The same rationale was behind a reassignment of various departmental managers, and in the process, Tang reassigned the AMs under Qing Chen, a Beijing native. Tang decided that given Li's reaction, the best course of action was to bring them all together, and he scheduled a meeting as soon as he could to resolve the issue. When Chen informed Li of Tang's decision to cancel the project, Li "totally rejected her," and he was not willing to even listen to the rationale behind the decision. Tang felt that the project would be better suited for a writer who specialized in issues in the software industry. Though Tang felt the basic concept behind the project to be sound, he felt that it had expanded to such an extent from that which was initially proposed that it was not reasonable to expect that Li could realize the project's goals without it interfering with his primary duties of servicing his account base.

However, Li approached the project with such unchecked zeal that it quickly transformed from a manual to a book form, with a chapter dedicated to comprehensive business planning issues, beginning with such basics as how to incorporate a business in China, sourcing venture capital, and the development of a comprehensive marketing plan tailored to software products.

LI'S PERSPECTIVE

During his brief history with Intel, Li had dedicated himself to exceeding his clients' service expectations. Indeed, Tang readily acknowledged that Li had excelled at developing relationships with senior management in the companies in his assigned account base. Tang agreed that this was no small feat, as Tang's client base included some of China's most influential software firms, and in some cases had been so successful that he had created strong 'guanxi' with senior management at those firms. Guanxi was the basis on which business in a Chinese context thrived. Loosely translated as 'relationships,' guanxi was such an integral part of doing business in China, that it was essentially impossible to do without it. Thus, when guanxi was established, it was protected at great cost, as it was widely considered to be the single most important factor in a successful business transaction. Its value in a Chinese business context could not be underestimated.

Li's success, therefore, in the realm of his primary duties was indisputable; however, he also applied himself equally to conducting research for his project and took ownership of it very seriously. Upon hearing that Tang had cancelled his project, he voiced his opinion immediately to Chen, saying that the two months of work he had conducted on his project were "wasted." Moreover, it was Li's strong contention that Tang altered not only one of his projects, but the essence of his responsibilities in one broad stroke, without due consideration, thereby undermining his efforts to date. Li continued:

This is typical of expat managers they come along and don't really care about what the workers are doing. They don't show respect and change the workplace according to their whim without providing explanation, and without warning.

Li felt that Tang had caused him to 'lose face.' Causing another to 'lose face,' could result in irreparable damage to the interpersonal relations between those two parties.

TANG'S PERSPECTIVE

Though he had heard through Chen that Li was very upset, Tang was previously unaware of the extent to which Li felt he had 'lost face.' Tang was thus largely unsure of how his actions could have affected Li at such an emotional level, and he took a few moments to consider his perspective of the situation. Tang acknowledged that Li was successful in establishing strong relationships with his clients. However, Li won various concessions for his clients through a demanding style toward his colleagues and a single- mindedness of purpose. Another talent that Tang acknowledged Li brought to his AM position was his ability to "think big." However, Li's assertive manner was not commonly found in traditional Chinese workplaces, and some of his colleagues, both within his department and throughout other departments that Li relied upon, were uncomfortable with Li's level of zeal. Complicating the situation was Tang's assumption that Li had not been formally indoctrinated to the Intel culture.

To demonstrate the Intel culture, Tang explained that Intel's employees throughout the world were characterized by their energy and youth, and thrived in a dynamic and creative environment. Tang further explained that in order to sustain intense levels of innovation, a degree of dissension and constructive criticism was encouraged; however, policies that helped advance Intel's 64,000 employees globally in the same direction were required. Tang explained a crucial part of Intel's culture which was in place to achieve this end the "disagree and commit" philosophy.

If a consensus has been established that a particular course of action or a decision is appropriate, any individual employee would not only have to commit to that decision, but if he or she were responsible in any way in implementing it, this concept would dictate that they act as if they were in 100 per cent agreement with the decision. This means that once the course of action had been decided, it should not be discernible who was for and who was against the decision before it was made. This is a condition of employment at Intel. It is the professional code on which I was brought up on at Intel.

Given Li's reaction, Tang wondered whether he had communicated to Li, and potentially his other employees, the quintessential role that this philosophy played in Intel's culture.

Tang reflected upon what other factors he should consider in analysing Li's behavior beyond his inexperience and apparent ignorance of Intel doctrine and considered potential underlying cross-cultural issues that might help to explain Li's behavior, while at the same time increase his understanding of all his employees. Although Tang had grown up in China and pursued his undergraduate degree in China, he had received a graduate degree in the United States as well as almost a decade of Western experience. Thus, he found himself in a precarious balance between two cultures. This created a rather unique situation for Tang internally, he was perceived as a expatriate, yet because of his precise fluency in Mandarin and obvious comfort in Chinese culture, Tang felt he was perceived externally as a local Chinese.

TANG AN EXPATRIATE OR A LOCAL?

First, at 33, he was significantly younger than most senior managers at multinationals in Beijing. Second, most often local Chinese did not hold positions of such power in multinationals. To establish his credibility externally, Tang used a clever and effective technique. Had things changed drastically since he had been away or was Li's behavior out of the ordinary?

When Tang first returned to China, when meeting with local government officials, he had a difficult time in persuading them that he was directly authorized to make decisions. In subsequent meetings, it became clear to the local officials that Tang's "boss'" decision correlated precisely with Tang's personal decisions, time and time again.

What challenged Tang also, with regard to managing Li, was how much of a departure Li's behavior was from what Tang considered to be a traditional Chinese business culture. Tang wondered whether he should question some of his beliefs about Chinese communication patterns and organizational behavior.

ORGANIZATIONAL DIFFERENCES

Differences in communication patterns between the East and the West

Generally speaking, Chinese organizational structures were more vertically layered than Western firms, resulting in dense reporting lines and bureaucratic administrative mechanisms. Moreover, Chinese organizations were most often led by a strong autocratic figure who took an active role in daily operations as well as the strategic direction of the firm. Whereas in some Western firms the organizational structure, supported by cultural influences, encouraged a degree of dissension and disagreement to advance the firm's organizational effectiveness and strategic direction, generally speaking, Chinese firms operated on a principle of unquestioning adherence to the direction as dictated by senior management.

In contrast to Eastern management style, in Tang's opinion, Western organizational and communication systems promoted a more open discussion between managers and their employees. Tang's management experience suggested to him that employees in the West had a higher propensity to be more open and possessed a greater willingness to listen to their bosses if they had established a proven track record of being reasonable and open-minded. In contrast, Tang felt there seemed to be more suspicion among employees toward their supervisors in an Asian business context, as they managed with a much more closed style.

Though Tang considered his management style to be a mixture of Eastern and Western characteristics, he felt that many Western management principles manifested themselves more strongly. For example, he considered being open with his employees an integral part of managing, and indeed had succeeded in encouraging many of his employees to treat him as a confidant. On several occasions, he had been approached by members of his team and had held closed-door, one-on-one discussions regarding various aspects of their personal and professional lives. Tang was proud of the role he was able to take in acting in this capacity for his employees. On a broader level, Tang did his best to ensure that his employees' needs and concerns were addressed. For example, Tang ensured that his employees' salaries were commensurate with their responsibilities, and competitive as compared to other multinationals for employees working in a similar capacity. Tang considered actions such as this to be critical in establishing his employees' trust in him. It was actions such as this that reinforced Tang's belief that his employees were more comfortable approaching him than they may have been with an expatriate manager from North America or Europe.

THE DECISION

Li was otherwise a promising employee who had forged valuable 'guanxi' with his accounts. Tang did not want to risk losing him. Moreover, on a personal level, Tang cared about the welfare of his employees and, thus, it was upsetting to him that he may have caused his employee some distress. Tang considered whether, in light of Li's emotional attachment to the project, he should allow him to continue with it, as in the scheme of things it was a relatively short-term project. Or was there a way to modify the project, finding a compromise between his needs and Li's desire to continue with the project? Tang was eager to have his employees contribute in such a way that would advance the strategic direction of his department, and felt strongly that whatever decision he made should be guided by that general principle. Tang knew that perhaps the easiest means to achieve this end would be to coerce Li to follow the "disagree and commit" philosophy at Intel and redirect Li's attention altogether to a more appropriate project. However, he was concerned about Li's reaction to this move, given his emotional state.

Tang also considered the idea that perhaps this issue pointed to a larger one. Were the systems that facilitated vertical communication sufficient or should he consider implementing a more effective, more formal internal communications strategy? But Tang did not have time to consider this issue at the present moment he glanced at his watch, jumped up and hurriedly placed his laptop in his briefcase to rush to a meeting.

Question:

1.Background and Situation Analysis - Before answering the core case questions, Problem Identification (if any), Solution/Answer/Recommendation with proper justification (whenever and wherever required)

2.Based on your case analysis, identify and discuss in details some differences in Western and East Asian communication patterns. How would you have handled the situation with Li?

3.Based on your analysis of the case, explain how realistic do you consider Tang's management style and action in dealing cross cultural conflict?