Chinese Firms Going Global: How They Manage Expatriates?

Thesis for applying for MBA Degree of CKGSB

Organization:	Cheung Kong Graduate School of Business
Major:	Master of Business Administration
Applicant:	张乃通（Naitong ZHANG）
Supervisor:	Jennifer Huang
Student ID:	CKMBA1921

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Abstract

Starting from 1978 China’s economic reform, Chinese firms going global have experienced four periods of development and became major players in the global market. China’s 14th Five-Year Plan (2021-2025) continues to strengthen China’s international economic position, while many Chinese firms are still facing difficulties in sending suitable employees working abroad. This article will study the current Chinese employees’ needs in working overseas and Chinese firms’ global human resource policy, address matching and mismatching between company policies and employee motivations and recommend improvements to the current human resource management.

The writer has worked for China Harbour for 5 years including 3 years expatriation in Pakistan. In response to the current demand, it is the writer’s responsibility to address this management issue and provide solutions combining work experience and academic studies.

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Key Words: International Human Resource Management, Expatriate, Conjoint Analysis, ERG Theory, China Harbour, Huawei, SME

Index

Chapter 1 Introduction 1

1.1 Research purpose 1)

1.2 Structure and methodology 2

Chapter 2 Decomposition of Chinese firms going global 3

2.1 Initial and evolvement 3

2.2 Future of Chinese firms’ globalization 5

Chapter 3 Analysis on Chinese firms’ global employees 9

3.1 Background and segmentation of Chinese firms’ global employees 9

3.1.1 Expatriate 10

3.1.2 Dispatched labor 10

3.1.3 Foreign employee 11

3.2 Current condition and expectation of Chinese expatriation 12

3.2.1 Current condition 12

3.2.2 Expectation 13

3.3 Expatriate motivation 14

3.3.1 Three findings on motivation 15

3.3.2 Three main drivers 16

3.3.3 ERG theory 17

3.3.4 Formation of four motivations 19

3.4 Conjoint analysis on expatriate motivation 21

3.4.1 Study design 22

3.4.2 Data collection 23

3.4.3 Data analysis 23

Chapter 4 Human resource management of Chinese firms 24

4.1 China Harbour’s management 25

4.1.1 Firm character 26

4.1.2 Main policy 26

4.1.3 Matching of motivations 30

4.1.4 Condition of business 31

4.2 Huawei’s management 33

4.2.1 Firm character 34

4.2.2 Main policy 35

4.2.3 Matching of motivations 39

4.2.4 Condition of business 40

4.3 SMEs’ management 41

Chapter 5 Suggestion on Chinese firms 44

5.1 For China Harbour and other SOEs 45

5.1.1 Mixed-ownership reform 45

5.1.2 Prospects of SOEs 46

5.2 For Huawei and other POEs 47

5.3 For SMEs 48

5.4 General suggestions 49

Chapter 6 Research conclusion and limitation 54

6.1 Conclusion and contribution 54

6.2 Limitation and prospect 55

References 56

Appendices 59

Acknowledgment 63

List of Figures

Figure 1 Comparison of changes in China’s outward direct investment flow (2010-2019) 4

Figure 2 The proportion of salary cost in income 32

Figure 3 Huawei grain package generating factors 37

Figure 4 Logic of Huawei grain package program 38

Figure 5 Huawei net profit (2009-2020) 40

Figure 6 Huawei’s growing dependence on the captive Chinese market 41

List of Tables

Table 1 Overall operation situation of the surveyed private-owned enterprises since the beginning of operation (%) 4

Table 2 Cross-table of operating status and future development confidence of the surveyed private-owned enterprises (%) 8

Table 3 Current overseas employment profile 9

Table 4 Findings on expatriate motivation 16

Table 5 Top 10 enterprises by turnover of foreign contracted projects (2018 / 2019) 24

Table 6 Top 10 enterprises ranked by newly signed contract amount of foreign contracted project business (2018/2019) 25

Table 7 CHEC salary distribution system 27

Table 8 Auxiliary wage (Unit: RMB/month) 28

Table 9 CHEC subsidy standards for overseas areas (Unit: RMB/month) 30

Table 10 The matching of CHEC’s human resource policies and expatriates’ motivations 31

Table 11 Industry ranking of CHEC (2012-2019) 31

Table 12 Huawei organizational performance objective framework 37

Table 13 The matching of Huawei’s human resource policies and expatriate motivations 39

Chapter 1 Introduction

1.1 Research purpose

Starting from 1978 China’s economic reform, Chinese firms going global have experienced four periods of development and finally become major players in the global market. In recent years, the world especially Western countries felt threats from China and made the international business environment uncontrollable, while Chinese firms are not going to stop globalization. China’s 14th Five-Year Plan stated that during 2021-2025 the globalization would be promoted, contributed, and maintained by emerging market countries represented by China (Liu S. , 2021). The requirement for high-quality international talents will become higher and the demand for enterprises to send overseas personnel will be greater.

With the rapid international expansion of Chinese firms, it is necessary to ensure that international human resource management will be carried out effectively. As identified by Willis Towers Watson (2018), Chinese firms are facing difficulties in sending and using expatriates and their repatriation. Expatriation processes started to become common in the 1970s and previous studies on expatriates from English-speaking countries, such as the United States, the United Kingdom and Australia, have been lacking in studies on China, which is at the initial stage of its international development. The content of the expatriation can be divided into two aspects. In the individual aspect, previous studies focused on the cross-cultural adaptability of expatriates, how expatriates improve the performance of the organization, the degree of satisfaction and resignation intention of expatriates and influencing factors of expatriate motivation. In the organizational aspect, previous studies focused on the expatriate management policy, such as performance evaluation, promotion, training and compensation. Few studies combine the individual aspect and organization aspect, and the situation is different for Chinese young generations as well. This thesis will explore the management of expatriates from both aspects: Chinese expatriate motivation and the matching and mismatching of Chinese firms’ global human resource management using examples from leading companies such as China Harbour and Huawei. This thesis not only enriches the study of the types of expatriate motivation in theory but also in practice inspires Chinese multinational enterprises to implement their human resource management appropriately.

1.2 Structure and methodology

The thesis is organized as follows. Chapter 2 explains more than forty years of Chinese firms going global, and then through the economic development perspective analyzes the future of Chinese firms operating globally. Chapter 3 analyzes the composition of Chinese firms’ global employees, regarding their history, development, and current situation, applies several human resource management theories to explain the expatriate motivation and runs the conjoint analysis to roughly evaluate the importance of each motivation. Chapter 4 illustrates the current global human resource management of China Harbour representing state-owned enterprises (hereinafter referred to as SOEs), Huawei representing private-owned enterprises (hereinafter referred to as POEs) and small and mid-size enterprises (hereinafter referred to as SMEs). Chapter 5 suggests improvements for these diverse types of firms on their global human resource management. Chapter 6 concludes the thesis.

For this thesis, using publicly disclosed data such as academic articles, case records, annual reports, investor relations materials, news, as well as interviewing with internal employees.

Chapter 2 Decomposition of Chinese firms going global

2.1 Initial and evolvement

Starting from 1978 China’s economic reform when China had 385 RMB per-capita GDP to the current more than 10,000 USD per-capita GDP, Chinese companies have experienced 4 stages of globalization (Wang H. , 2018). In the 1980s, Chinese enterprises learned from the practices and experiences of multinational corporations to prepare for going global. SOEs such as China Harbour Engineering Company and China Road and Bridge Corporation started subcontracting overseas infrastructure projects. Private enterprises such as Haier and Huawei were improving their product competitiveness, and foreign companies such as Hewlett-Packard and Panasonic had a chance to enter China. From 1979 to 1989, more than 21,000 foreign companies set up in China, setting the model for Chinese companies to go abroad. Chinese enterprises only made sporadic overseas investments, and their awareness and practice level of global operation were low. In the 1990s, under the reform of establishing a socialist market economic system and the strategy of “Go Global”, the outward direct investment reached an average annual level of 2.3 billion USD and the direct export became the most important overseas business activity of Chinese enterprises, followed by overseas operation and construction project contracting.

In the 2000s, China joined the World Trade Organization (WTO) and the “Go Global” strategy was officially promoted as a national strategy during this period, encouraging Chinese firms to participate in the global market. Chinese firms’ overseas trade and investment experienced explosive growth. At the same time, Chinese firms understood the global market and learned advanced technologies and management practices. For example, Sinochem transformed from a trading company to a resource and market organizer and acquired several overseas oil and gas resources; manufacturing companies such as Lenovo, Geely, TCL and BOE acquired world-class technology and a broad market in a relatively short period.

At present, Chinese enterprises have seized the opportunity to achieve leapfrog development, achieved a historic breakthrough in outward direct investment as shown in Figure 1, ranking second in the world, and exceeded the level of foreign investment attracted in the same period, becoming a net capital exporter (Wang & Xing, 2020).

Figure 1 Comparison of changes in China’s outward direct investment flow (2010-2019)

(left unit: 100 million USD, right unit: %)

Source: Research on development of China’s outward investment and economic cooperation (2020)

According to the survey of POEs shown in Table 1 (Dataway, 2019), 62.1% of the overseas invested enterprises have been operating smoothly. Among them, 31.5% of enterprises faced difficulties at the beginning, but now their operation is relatively smooth.

Table 1 Overall operation situation of the surveyed private-owned enterprises since the beginning of operation (%)

The overall operation	The proportion
Start difficultly, now running smoothly	31.5
Business has been smoothly all the time	30.6
Start smoothly, now facing difficulties	12.6
Operating performance is not stable, volatile	10.4
Business has been difficult	6.4

Source: Dataway (2019)

The globalization trend can be explained by many theories, which have identified the needs, drivers, and motives for expanding abroad (Lattemann, Alon, Chang, & Mcintyre, 2012). As partially identified early, major positive drivers are pushing Chinese companies going global, such as home country’s supportive policies like China’s “Go Global” strategy and the Belt and Road Initiative (the institutional-based view), the existence of cooperative local partners (network theory), and increased home market demand especially the consumption demand in developing countries. Major negative drivers which include home-country/industry’s overcapacity and low profitability, intense competition in the home market (the product life-cycle theory), and the lack of local funding are pulling Chinese firms’ internationalization. Besides, internal drivers (and motives) can be derived from transaction cost economics, the market-based view, and the resource-based view and its successors which are the knowledge-based and capabilities-based views. As the country’s specific advantage gets stronger, Chinese firms’ representing China expanded into foreign markets to seek efficiency, to acquire strategic assets, resources, and markets. For example, China’s domestic environment is undergoing momentous changes such as labor costs becoming higher, and enterprises begin to transfer production capacity outward and improving the position of products in the global value chain. In a word, globalization has been an essential and feasible path for Chinese firms to grow further.

2.2 Future of Chinese firms’ globalization

Dominant forces of globalization are changing. For a couple of years, the world environment has become “uncontrollable” as the notion of “VUCA” and “deglobalization” is gaining popularity as a term to cover various dimensions. The role of developed countries in the global economy has gradually declined, especially after the financial crisis, and the rate of decline has been more pronounced to reverse the hyper globalization process of the past 20 years. At this critical moment when globalization is at a crossroads, China is a core force in promoting the sustainable and equitable development of globalization.

There are many interpretations about globalization in different dimensions, one of which is the average Transnationality Index (hereinafter referred to as TNI, the relative shares of their foreign assets, sales and employees) of the top 100 companies ranked by foreign assets. As one signal of deglobalization, FDI has been stopped increasing in the last decade, leading to the global average TNI stagnated. Besides, the stagnation can also be explained by a change in the composition of the list. Emerging market new entrants, having low internationalization levels, take the fastest speed to internationalize their operations regarding foreign assets and sales. The growth of internalization was mainly driven by two industries, which are the infrastructure industry and the technology/Internet industry.

The booming of the infrastructure industry with the increasing number of projects in the past several years was largely due to the policy support from the Chinese government, and projects focus on transport infrastructure and power generation, not only in Asia but also in Africa, in Latin America and the Caribbean. For Chinese firms going global, the major impact factor is policy as mentioned in the investigation report carried out by CCG in 2018 (Wang & Miao, 2018). The Belt and Road Initiative is an important international cooperation platform where China and the countries involved have achieved a series of important outcomes in trade, investment, and international production cooperation. In 2020, China and other 15 countries formally signed the regional comprehensive economic partnership agreements (RCEP), to promote the whole area and the related countries in economic development (Hu, 2021). In China’s Government Work Report 2020, the Chinese government mentioned the “One Belt One Road” total four times and planned to build a new system for an open economy at a higher level, to promote joint high-quality development of “One Belt One Road”, and to build a network of high-standard free trade areas open to the world during China’s 14th Five-Year (2021-2025) (Li K. , 2021).

Why do Chinese technology and Internet companies represented by Huawei and Tencent want to go overseas? In March 2020, China had 904 million Internet users and 897 million mobile Internet users, according to the Statistical Report on Internet Development in China released by China Internet Network Information Center (CNNIC). In the context of a new round of scientific and technological revolution and accelerated industrial transformation, China’s Internet development has made a breakthrough. The scale of the digital economy is among the world’s largest, and the number of digital enterprises is leading the world. New drivers, represented by the Internet platform economy, are constantly powering the industrial upgrading. The huge market, cutting-edge products, mature models and abundant talents have laid a foundation for Chinese Internet companies to go overseas. Through enterprises going overseas, the fruits of China’s digital economy development are being shared by the world, especially developing countries (Liu Y. , 2020). The global mobile Internet has experienced rapid development in the past few years. At present, there are still 3.2 billion people in the world who are not connected to the Internet. Chinese Internet companies going overseas still enjoy traffic dividends and the technology applications of Chinese Internet companies are constantly going abroad and gaining rapid popularity in many countries (Huawei & Baijing App, 2020).

One aspect that did not cope with globalization is that Chinese overseas M&A decreased to the lowest level of the past 10 years. The decrease may be due to restrictions on outward investment, geopolitical tensions and a volatile global trade and investment policy environment (UNCTAD, 2020). On the other side, cross-border data flows which today contribute more to global GDP than the older type of globalization have been growing at over 50% per year for over 20 years. During the Covid-19 pandemic, this type of global integration almost certainly grew even faster in cross-border scientific collaboration, cross-border messaging and cross-border education (Gupta, 2021). Furthermore, it is confident to say that Chinese companies’ internationalization would keep its uptrend reflected in the enterprises’ confidence index carried out by Dataway as shown in Table 2. To the current situation, 83.2% of the surveyed enterprises hold an optimistic attitude towards the future development of their enterprises overseas with a high level of confidence. Researchers further cross-analyzed the degree of confidence in the development of enterprises and the current operating conditions of enterprises. They found that the enterprises with smooth operating conditions had higher confidence in the future, while more than half of the enterprises with difficult or fluctuating operating performance also expressed confidence in the future development.

Table 2 Cross-table of operating status and future development confidence of the surveyed private-owned enterprises (%)

	Having Confidence	No Confidence	Hard to say	Total
Business has been smoothly all the time	96.9	0.6	2.5	100
Start difficultly, now running smoothly	89.8	1.2	9	100
Start smoothly, now facing difficulties	70.2	10.4	19.4	100
Operating performance is not stable, volatile	61.8	12.7	25.5	100
Business has been difficult	55.9	20.6	23.5	100
Total	83.2	4.7	12.1	100

Source: Dataway (2019)

Chapter 3 Analysis on Chinese firms’ global employees

This globalization of Chinese firms is calling for more skilled employees to work in foreign assignments for managing the business of the operating division in another country. Human resource plays a more significant role in the performance of Chinese firms’ globalization than other factors such as material resourerces, financial resources, information and time. Before moving to further analysis, Chapter 3 will provide a deep understanding of expatriates themselves.

3.1 Background and segmentation of Chinese firms’ global employees

China’s labor cooperation about overseas employment with foreign countries started as a part of China’s foreign economic assistance projects in the 1950s. After the reform and opening up, the situation has developed into the export of labor in exchange for salary under the market mechanism as Chinese firms start subcontracting overseas construction projects and earning foreign currency. After the 1990s, with the gradual expansion of Chinese firms going global, various forms of overseas employment including expatriates, dispatched labors and foreign employees continued to develop. Their relative profile is summarized based on the writer’s experience and available sources as shown in Table 3.

Table 3 Current overseas employment profile

Category	Expatriates	Dispatched labors	Foreign employees
Gender	Majority are male	Almost 95% are male	Depending on the country
Age group	Around 30	Around 50	Diversified, 20 to 80
Duration	3 to 5 years in one country	Depending on the project	Diversified, 0 to 20 years
Location	Diversified	Developing countries	Mostly in the home country
Quantity in 2019	487,000	992,000	2,266,000
Development trend	Increasing	Decreasing	Increasing

3.1.1 Expatriate

The so-called expatriate refers to the staff who accepts the management of the internal management system of the Chinese enterprise and takes the post on behalf of the enterprise overseas. The term expatriation refers to such a foreign job assignment for a specific period. From the point of legal relation, expatriates and Chinese companies which operate the business have a labor contract relationship, namely expatriates direct managed by the employer, on behalf of the employer during the assignment specified in the corporate workplace such as overseas wholly owned, holding subsidiaries or joint ventures. Normally expatriates are sent overseas to establish branches and to build customer markets and relationship channels. As the local representative of the parent company, expatriates are the communication linkage between the parent company and the subsidiary company, bringing the business philosophy and policies, the knowledge and technology to the local while keeping the confidentiality of production and marketing information. Peltokorpi and Froese (2009) classified expatriates as self-initiated expatriates (SIEs) and organizational expatriates (OES) and pointed out their differences: autonomous expatriates refer to active individuals who arrange their careers in a highly autonomous manner, while organizational expatriates refer to those who are sent to other countries by their employers. Since the internationalization of Chinese firms is at the initial stage and there are few independent expatriates, this paper does not distinguish them. Even corporate expatriates are important to Chinese firms with high demand, their current growth is weak.

3.1.2 Dispatched labor

Dispatched labor was the most common type under the background of China’s economic globalization. The dispatched labor is through the foreign labor cooperation company sent overseas to engage in all kinds of labor and these two parties are a labor contract relationship, realizing labor service export. Thus, dispatched labors are in the employer owned company, their work effort and contribution of labor still directly or greatly evaluated by the employer, and management is between labor and the labor company (Chen W. , 2016). From a regional point of view, since 2014, China’s dispatched personnel to foreign labor cooperation in all regions have shown a downward trend. In 2015, the scale of dispatching foreign labor service cooperation decreased for the first time, with the number of foreign dispatches reaching 530,000 in 2015 (Gao, 2018). In 2019, the number of foreign dispatches reduced to 487,000. Till the end of 2019, there were 992,000 dispatched labors abroad.

3.1.3 Foreign employee

From Chapter 2, we can see that the internationalization level of Chinese enterprises is relatively low at present, and the main issue is the low ratio of foreign employees having their unique network and local business experience. These companies could promote the localization strategy by increasing the proportion of foreign employees, which is conducive to better integrating into the local society, avoiding business risks, and creating a good and harmonious business environment, and to timely and accurate understanding of the dynamic changes of local market information, so that enterprises can adjust the direction of business and production in time, reduce mistakes, and enhance the competitiveness of enterprises (Zhong, 2013). Furthermore, it provides more employment opportunities for the local people and improves the visibility and popularity of enterprises in the local areas. The number of foreign employees employed by Chinese overseas enterprises continues to rise and the growth potential for foreign employees is huge. Chinese overseas enterprises employed 2,266,000 foreign employees at the end of 2019, accounting for 60.5% of the total number of employees employed by overseas enterprises at the end of that year, and the number increased by 389,000 compared with the end of 2018 and increased by 556,000 compared with the end of 2017.

3.2 Current condition and expectation of Chinese expatriation

Increasing the ratio of foreign employees is an inevitable trend, while expatriates are still needed to ensure values of the firm and uniformity in communication. It should be noted that 29.2% of the surveyed companies still had more Chinese employees than local employees. The Chinese labor force’s participation is supposed to retain in the next few decades even domestic labor costs continue to rise and the arrival of the RMB appreciation and aging (Wang H. , 2018). In the practice of expatriation in China, employees around 30 years old are the mainstream of those who are sent to developing countries. They have few family commitments, have not graduated for long, are enthusiastic about their work, and are able to acquire new knowledge and integrate with local culture (Wang & Tian, 2008). Employees who have a chance to change their careers or move up to a higher position are more likely to work abroad as well.

3.2.1 Current condition

China’s economy has entered the new normal and the global economy has entered the adjustment stage, while Chinese expatriation is still having problems. First, Chinese firms and expatriates must face typical risks of international work. To the organization: premature termination of assignment; expatriate ‘neutralized’ in foreign branch; tensions between headquarter and international subsidiary; negative impact on relations with customers, suppliers and local authorities. To the employee: negative impact on career; loss of momentum/confidence; being out of the loop; family issues. Willis Towers Watson summarized “hard to send”, “poor use” and “no return” to describe the current Chinese expatriation problems. “Difficult to send” refers to the lack of selection criteria for expatriates, the reluctance of some suitable employees from the headquarter to go abroad, and the difficulty in evaluating the performance and ability of expatriates in cross-cultural work. “Poor use” is reflected in the fact that some expatriates do not adapt to the international working environment, the assessment standards of overseas institutions are difficult to design reasonably, and the compensation and welfare system is lacking in incentives. “No return” refers to the brain drain caused by expatriates after they finish their overseas tenure. The evidence shows that 30-75% of international assignments fail and the cost of the failed assignment is estimated 3-4 times the expatriate’s annual salary plus the cost of relocation. The premature return of the expatriate manager to his/her home country is the main expatriate failure. There are several reasons for premature return, which are family concerns, a new position in the home office, early completion of the assignment, cultural adjustment challenges, security concerns, career concerns, quality of life and remuneration. Companies shall address these challenges through training, selection mechanisms and most importantly satisfying the demand of expatriates for living overseas.

3.2.2 Expectation

Chinese human resource supply would not be a shortcoming for globalization. After considering the change of population structure and the improvement of health and education level, the total human resources in China have been on the rise in the past 20 years. Looking forward to the changing trend of China’s total human resources before 2050 in the absence of any policy changes, the precipitous decline of the young population does have a drag on the workforce, with changes in the size and structure of the population leading to a drop of 16% in the workforce in 2035 compared to 2000. However, improvements in health and education will not only make up for the impact of population decline but will also optimize the country’s human resources pool. It is expected that China’s total human resources will continue to rise over the next 30 years, rising to 119.4 in 2035. The combined improvement of health and education will contribute more than one-third of the total human resources (Li D. , 2021). Besides, under the situation of involution in China, many young people who have achieved academic success end up struggling at the bottom of the society such as delivering takeaways or working as civil servants in street offices, suggesting a waste of human resources.

China is in the era of the knowledge economy, and with the development of China’s globalization, the proportion of knowledge workers in enterprises would be increasing (Xu, Wang, Zhao, & Wang, 2021). Knowledge-based talents play a significant role in the development of enterprises. As identified by Peng (2016), Huawei’s majority expatriates are knowledge workers who have a wide personality, diverse needs and strong value creation potential, pursuing autonomy and personal sense of achievement. The needs of knowledge workers are multi-faceted and multi-layered, not only in terms of salary and bonus but also in pursuit of a sense of achievement, self-actualization and ability improvement. Young Chinese’s values and incentives have been changing as well. As for national consciousness, young people’s values changed from “would rather sacrifice themselves than betray the organization” to “sacrifice their lives at the same time regretting forgetting to betray the organization”. “Little pinks”, animal community, doll community and other small interest groups have become the trendy community for young people to follow. In general, young people have strong curiosity, like to explore the unfamiliar environment, pursuit excitement and make foreign friends. With the dynamic change of the composition of the expatriate, their motivation shall be identified and matched accordingly.

3.3 Expatriate motivation

Many theories regarding international human resource management have been developed in the past discussing expatriate motivation. Employees have a variety of motivations for expatriation such as career development, salary, or experience, so their needs are too complex to have a uniform expatriate motivation classification in the academic field now. This thesis will try to summarize expatriate motivation by discussing several trendy and classic findings and theories regarding global human resource management.

3.3.1 Three findings on motivation

After many empirical studies, knowledge management expert Mahan Tampoe (1993) believes that top four factors that motivate knowledge workers are individual growth, work autonomy, business achievement and financial wealth. And he even ranked the importance of these four motivators based on a survey of 75 knowledge workers that individual growth accounts for 33.74%, work autonomy accounts for 30.51%, business achievement accounts for 28.69% and money wealth accounts for 7.06%. Knowledge workers have a constant pursuit of knowledge and personal and career growth. They want to be given the autonomy to do their work in the way they think is effective. While being paid commensurate with contributions is still an important motivator for knowledge workers, it is more effective (the marginal value of money) in motivating them if it meets their needs for personal growth, work autonomy, and business achievement. According to the organizational behavior textbook written by Robbins and Judge (2017), several characteristics likely influence job satisfaction, including job conditions, personality, salary and corporate social responsibility (CSR). Job conditions include working environment, social interactions, and supervision. Personality is about the person itself, normally people who believe in their inner worth and basic competence is more satisfied with their jobs. In an article written about expatriate motivation and the fit of Bank of China’s management, Feng, Cheng & Wang (2017) based on 22 interviews on employee motivation and the ERG theory identified five motivations: economic wealth, career development, family relationship, exploring new things for excitement, and escaping the existing lifestyle and living environment. The summary of three findings is shown in Table 4. Apart from CSR, most other motivations are related.

Table 4 Findings on expatriate motivation

Mahan Tembo	Robbins and Judge	Feng, Cheng & Wang
individual growth	personality	career development
work autonomy	personality	exploring new things for excitement, family relationship
business achievement	personality	career development
financial wealth	salary	economic wealth
	job conditions	escaping the existing lifestyle and living environment
	corporate social responsibility

3.3.2 Three main drivers

Harlow concluded that three main drives are influencing and powering humans’ behavior (Pink, 2009). The first (Motivation 1.0) drive is the living drive. Humans are like other animals need to eat, drink and have sex. The second (Motivation 2.0) drive comes from the external rewards and punishments which are delivered for behaving in certain ways in the environment. The third (Motivation 3.0) drive is the performance of the task for getting intrinsic rewards. In comparison between Motivation 2.0 and 3.0, Motivation 2.0 concerns less with the inherent satisfaction of an activity and more with the external rewards and is fueled more by extrinsic desires than intrinsic ones. While Motivation 3.0 meets the new realities of how we organize and think, and do what we do, depending more on intrinsic desires than extrinsic ones. It concerns itself more with the inherent satisfaction of the activity itself rather than the external rewards to which the activity leads. This theory can be further interpreted by Deci and Ryan’s fashioned “self-determination theory (SDT)”. This theory provided three innate psychological needs, which are competence, autonomy, and relatedness. People’s motivation, productivity and happiness are highly related to whether those needs are satisfied or not. Through detailed study with producing hundreds of research papers, Deci and Ryan reach the same conclusion that people have an innate drive to be autonomous, self-determined, and connected. People would achieve more and live richer lives when the innate drive is liberated. Currently, most Chinese expatriates work in the management and research field which needs brain more than muscle, so autonomy in the work and good living conditions are important for them to be autonomous, self-determined, and connected to one another.

3.3.3 ERG theory

Maslow proposed growth motivation that leads people to progress, learn, and actualize their potential and achieve their goals, and Alderfer extended and refined the theory of Maslow’s Need Hierarchy Theory and classified human needs into ERG (stands for three basic categories which are existence, relatedness, and growth). This theory argues that there is no rigid hierarchy need, and people may operate more than one need at a single time. The findings of this thesis are consistent with Alderfer’s ERG theory that employees can have multiple motivations for assignments at the same time, validating the principle of multiple needs in ERG theory.

Existence needs are basic human needs essential for the survival of any human being. They are just like physiological and security needs of Maslow hierarchy need. Physiological needs (or survival needs) are basic needs essential for the survival of human beings like food, water, shelter, rest and clothes. Similarly, security need involves protection against unexpected events and uncertainty and risk such as fire, accident, security, old age, disease and permanent disability. Survival motivation can be divided into two aspects, salary motivation and living condition motivation. The impact of salary motivation: the salary and benefits of expatriate employees are generally higher than those of domestic employees, and some employees, especially young ones, choose to expatriate because of the attraction of high salary and benefits. Different companies are not necessarily the same, but the salary is generally at least double. Due to the big gap between the salary levels at home and abroad, some people do not want to come back. Impact of living condition motivation: along with the rapid development of China’s economy, China’s environment has been damaged, and the air quality in various cities in China especially Beijing is bad, while the natural environment in many overseas countries can be particularly good.

Relatedness needs are concerned with maintaining relations with others which is equivalent to the social needs and respect needs in Maslow’s hierarchy of needs. Social needs include factors such as affection, sense of belongingness, acceptance and friendship. Having a good relationship and interaction with other humans is necessary for any individual though it is not as strong as our basic survival needs. Good interactions are positive in nature and make people happy. Relationship motivation plays a large part in whether an employee is willing to accept an assignment and it includes family ties and social motivation. One important reason why some people are willing to accept an expatriate assignment is that their children will receive better education in a foreign country with a full English language environment. Social motivation is influenced by the fact that for some unmarried young employees, an assignment allows them to go abroad. During the expatriation, they can make better local friends, explore new things and an unfamiliar environment, and take the excitement of a challenge. Suitable autonomy, living condition and salary are all essential for expatriates to build relations, such as having interactive activities with the residents of the host country.

Growth needs are concerned with self-esteem and self-actualization in high-level of Maslow’s hierarchy of needs. It refers to the personal growth of a person to be creative and live a meaningful life for improvement and development, respect, self-confidence, autonomy and the full use of one’s abilities. Interesting and challenging jobs provide motivation to grow and enhance opportunities and finally helps in self-fulfillment, self-actualization, independence, and spontaneity. Employees’ growth motivation for expatriation includes career development motivation and self-experience motivation. Career development motivation is an important influencing factor for most expatriates. Due to the existing policy that requires headquarter employees to have grassroots work experience, those employees who want to work and be promoted in the headquarter choose to expatriate. Many employees in the system, whenever they reach a bottleneck and need personal promotion, they can choose expatriation as an opportunity to break the dilemma for career development. Self-experience motivation develops a good perception of reality that managers should know the need of every individual to assign the job and motivate them, helping them to complete work with full responsibility (Lin, 2010). Besides, the true global manager must experience three stages which are expatriation, staying for several years overseas and back to home country to coordinate the global market. The headquarter can utilize these precious human resources to improve the global operation level (Mo, 2006).

3.3.4 Formation of four motivations

Chinese enterprises’ global development stage is different from Western countries due to lacking global experience and global human resource reserve, which is a bottleneck for Chinese firms going global. Besides, the types and the degree of incentive factors to the expatriate varies depending on the economic development and cultural environment, countries or regions of the same country, and periods. Based on previous findings and the writer’s experience of working abroad, Chinese expatriates are generally motivated by four factors in working abroad: autonomy, developmental space, living condition and salary.

Autonomy is important for young Chinese employees who would consider work for happiness, work and life balance and meaning of lives more than the previous generations (Chen C. , 2021). Employees who feel empowered by their leaders experience higher job satisfaction (Robbins & Judge, 2017). Huawei’s “let those within earshot call for fire” is empowerment to the frontier employees. High autonomy also includes more annual holidays compensating for their sacrifice of working abroad. SOEs in overseas currently operate mostly in a prison-like manner, which may not be suitable for personnel needs because more autonomy is necessary to adapt to life in a foreign country.

Developmental space includes training, corporate promise on promotion, and achievements with the development of the country. Huawei and China Harbour require that leading cadres must have several years of working experience in less developed countries. Countries which are less developed are also more likely to develop at a faster rate, thus having more business opportunities than developed countries.

The living condition can be roughly considered as Human Development Index (HDI) plus how friendly to China. HDI is established by the United Nations Development Programme (UNDP) as a comprehensive index based on the three key dimensions of human development: life expectancy, education level and quality of life and calculated according to a certain method and was released in the Human Development Report of that year 1990. Since then, UNDP has released the HDI for all countries in the world every year to measure how development has improved human life and people tend to live in (Conceição, 2020). If someone cares about security most, he or she would choose to live in countries with high HDI. In addition to HDI, how friendly to China shall also be considered for Chinese expatriates because the living condition can be quite different for similar HDI countries.

Salary includes all short-term and long-term incomes, compensations and benefits. Reasonable salary incentive plays an important role in promoting the potential of expatriates and improving their performance. Enterprises pay basic salary plus the “expatriate subsidy”, making all employees of the company, including those who are sent abroad, have only one salary system, but the expatriate personnel will enjoy certain subsidies during the period of the assignment to ensure that the quality of life remains the same before and after the move. To some extent, family challenges can be relieved through high salary that expatriates could meet their families more when they have enough budget for transportation.

3.4 Conjoint analysis on expatriate motivation

To test the robustness of the previous summarization on four motivations and quantify different importance, conjoint analysis is applied. Conjoint analysis is a professional survey-based statistical technique that is normally used in market research that helps marketers to understand that how people value different attributes (feature, function or benefits) that make up an individual product or service. Respondents of the survey are asked to compare and choose what combination of a limited number of attributes from a group of products is most favorable for them, and they are facing challenging tradeoffs in making such decisions. The outcome of the conjoint analysis is to get the relative influential weight of different attributes on respondents’ choice or decision making. Finally, the analyzer can select an optimal combination of features for a product/service, predict market shares among products with different sets of features and identify market potential for product concepts not yet available.

Compared with the earliest approaches to conjoint analysis, Choice-Based Conjoint (CBC) is more user-friendly that the respondent expresses preferences by choosing from sets of concepts rather than rating or ranking them, thus it has become the most widely used survey-based approach (Sawtooth Software, 2017). All methods estimate part-worth for each individual and the weakness of CBC is that it requires more sophisticated analysis and larger sample size. This thesis will develop, administer, and analyze a questionnaire with a choice-based conjoint design, collecting data on preferences and analyzing it. The whole conjoint analysis is using Sawtooth Software, which is a leading provider of analytical tools that empower organizations to build predictive models of how their customers make decisions and what aspects of a product or service they value most. The overall conjoint analysis procedures are as follows:

3.4.1 Study design

1. Choose expatriate treatment as a service category.

2. Identify four attributes, including autonomy, developmental space, living condition and salary. Firstly, these attributes are independent and relevant to the current and potential consumers of this service category. Secondly, these attributes are actionable by the firm because firms can make decisions on sending whom to which country, giving him/her how much empowerment/salary and offering what promises/training. These attributes are also clear and unambiguous.

3. Decide “levels” for each attribute based on some qualitative research. The decision is that two levels for developmental space and three levels for autonomy, living condition and salary. First, these levels span the realistic range of possibilities for existing products as well as products not yet exist but need to be investigated and levels within each attribute are mutually exclusive. The flaw is that these levels are concise statements without concrete meaning. Different levels of autonomy, developmental space, living conditions and salary are designed to be evaluated by respondents themselves. For a part of living conditions, which is human development index, United Nations have identified 66 “very high human development” countries such as Singapore, Saudi Arabia and the United States, 53 “high human development” countries such as Iran, China and Brazil and 70 “low to medium human development” countries such as India, Myanmar and most African countries, total three levels.

4. Create a questionnaire that was automatically generated by Sawtooth Software and was composed of 4 rating questions and 8 multiple choice questions as shown in Appendix 1. This questionnaire’s combination of attribute (feature) levels is fundamental for making conjoint analysis work properly that each level appears nearly an equal number of times and appears with levels from other attributes nearly an equal number of times to make a fair and balanced (orthogonal) experiment where the utility value (the preference) of each attribute level can be measured independently and with high precision.

3.4.2 Data collection

Administer the questionnaire to about 100 individuals to collect 10 responses in total.

3.4.3 Data analysis

With rating data, compute part-worths (the level of the attribute) with latent class algorithm by Sawtooth Software automatically. Part-worth is the standard approach used in the industry. The effect of each attribute level on choice is separately estimated, resulting in a separate part-worth utility value for each attribute level. Latent class uses effects-coding to implement part-worth estimation (such that the sum of part-worth utilities within each attribute is zero). An attribute’s importance is proportional to the range of its part-worths. For each attribute, the range is equal to max(part-worth) – min(part-worth), and importance is equal to range / (sum of ranges). The empirical results are shown in Appendix 2.

These utilities are consistent with the writer’s expectation. Due to the limited number is not significant enough for a practical analysis, the analysis will not be further interpreted in detail. In the past 40 years of development, China started from an extremely low beginning when people had food scarcity issue and struggled to meet their most basic needs, to the current situation that people have fulfilled basic needs and seek to higher pursuits.

Chapter 4 Human resource management of Chinese firms

After looking through employees’ actual needs in working abroad, Chapter 4 is going to analyze the current global human resource management through looking into two representative firms and identify whether the management met expatriate needs well. Global human resource management is related to attracting, selecting, developing, retaining and compensating employees in the most strategic roles (those roles necessary to achieve organizational strategic priorities) on a global scale. Chinese enterprises should strengthen the management of expatriates in the process of actively participating in the overseas market, making it play a positive role for enterprises to better participate in international competition. Firms’ human resource management must adapt to the market demand, link the supply side and the demand side, improve the utilization efficiency of human resources allocation, and fit in firms’ globalization. As one of the ways for Chinese enterprises to participate in foreign investment and cooperation, foreign contracted projects have made a positive contribution to the stability of foreign trade, especially the export of service trade. Subjects of this research are China Harbour and Huawei which have done very well in globalization as their rankings regarding the turnover and contract amount in 2018 and 2019 are shown in Table 5 and Table 6. Their global human resource management could provide a guideline to all Chinese firms in their globalization.

Table 5 Top 10 enterprises by turnover of foreign contracted projects (2018 / 2019)

Serial number	Enterprises are ranked according to the turnover of foreign contracted projects by the end of 2018	Enterprises are ranked according to the turnover of foreign contracted projects by the end of 2019
1	Huawei Technologies Co., LTD	Chinese Construction Group Co., LTD
2	China Construction Group Co., LTD	Huawei Technologies Co., LTD
3	China Harbour Engineering Co., LTD	China Harbour Engineering Co., LTD
4	China Hydropower Construction Group International Engineering Co., LTD	China Hydropower Construction Group International Engineering Co., LTD
5	China Communications Construction Co., LTD	China Railway Construction Co., LTD
6	China Railway Construction Co., LTD	China Communications Construction Co., LTD
7	China Road and Bridge Engineering Co., LTD	China Road and Bridge Engineering Co., LTD
8	China Mechanical Equipment Engineering Co., LTD	China Gezhouba Group Co., LTD
9	China Gezhouba Group Co., LTD	China Mechanical Equipment Engineering Co., LTD
10	China Metallurgical Group Co., LTD	China Civil Engineering Construction Group Co., LTD

Source: Ministry of Commerce of the People’s Republic of China (2020)

Table 6 Top 10 enterprises ranked by newly signed contract amount of foreign contracted project business (2018/2019)

Serial number	Ranking of enterprises according to the newly signed contract amount of foreign contracted project business in 2018	Ranking of enterprises according to the newly signed contract amount of foreign contracted project business in 2019
1	China Construction Group Co., LTD	China Hydropower Construction Group International Engineering Co., LTD
2	China Hydropower Construction Group International Engineering Co., LTD	China Railway Construction Co., LTD
3	Huawei Technologies Co., LTD	China Harbour Engineering Co., LTD
4	China Gezhouba Group Co., LTD	China Construction Group Co., LTD
5	China Metallurgical Group Co., LTD	Huawei Technologies Co., LTD
6	China Harbour Engineering Co., LTD	Chinese Chemical Engineering Seventh Construction Co., LTD
7	China Civil Engineering Construction Group Co., LTD	China Gezhouba Group Co., LTD
8	China Railway Construction Co., LTD	ZTE Corporation
9	China Communications Construction Co., LTD	China Civil Engineering Construction Group Co., LTD
10	China Railway International Group Co., LTD	China Communications Construction Co., LTD

Source: Ministry of Commerce of the People’s Republic of China (2020)

4.1 China Harbour’s management

At present, SOEs are still the main force of Chinese firms going global. By the end of 2019, SOEs have accounted for more than half of the total stock of overseas investment (Wang & Xing, 2020). Due to the implementation of “One Belt One Road”, with large-scale infrastructure construction, SOEs create complete basic conditions such as routes, transportation, resources, and industrial parks for private enterprises to go out, forming a pattern of “SOEs build the stage and private enterprises perform the opera”. These SOEs have relatively similar policies on expatriates due to the similarity of ownership.

China Harbour Engineering Company Ltd. (CHEC) was established in the 1980s by Ministry of Communications of China, experienced multiple organization restructuring and became a subsidiary of China Communications Construction Group Co., Ltd. (CCCC) in 2005. Starting from aiding Malta to build the largest dry dock in the Mediterranean in 1972, China Harbour has operated for over 40 years globally. At present, China Harbour has more than 90 branches (subsidiaries) and representative offices around the world conducting business in over 100 countries and regions with more than 1,000 employees undertaking hundreds of international projects whose total contract amounts to over 30 billion USD.

4.1.1 Firm character

The biggest character of the company is that it is fully state-owned, apart from stock market investors, no other external investor. The corporate culture is basically the Party’s culture, and the management style is administrative rather than market-oriented, so there is low empowerment and autonomy given to the frontier employees. The highlight point is its vacation policy. Foreign employees can enjoy a return to China (Mainland) leave for 20 days after working for half a year and in total 40 days a year. The developmental space is not large as known that the promotion speed in the administration system is slow, and contributions to personnel growth are very few. Employees who stay in fast-developing countries could benefit from the development of the country, having more growth opportunities.

4.1.2 Main policy

The salary structure of China Harbour is relatively complex, including base salary, auxiliary wage, performance pay, allowance and subsidy, special bonus and welfare for four types of working locations which are domestic institutions, foreign institutions, domestic project office and overseas project office as shown in Table 7. The salary structure is indeed complex with small components, while the total is not competitive.

Table 7 CHEC salary distribution system

Category	The serial number	Salary structure name	Domestic institutions	Foreign institutions	Domestic project office	Overseas project office
Base salary	1	Base salary of post	√	√	√	√
Auxiliary wage	2	Professional wage	√	√	√	√
	3	Years of work pay	√	√	√	√
	4	Educational background wage	√	√	√	√
	5	Qualification wage	√	√	√	√
Performance pay	6	Performance pay	√	√	√	√
	7	Project bonus	×	×	√	√
Subsidy and allowance	8	Regional allowance	×	√	√	√
	9	Spouse subsidy	×	√	×	√
	10	Post allowance	×	√	√	√
	11	Construction allowance	×	×	√	√
	12	Holiday allowance	√	√	√	√
Special bonus	13	Special bonus	√	√	√	√
Welfare	14	Social insurance	√	√	√	√
	15	Supplementary medical insurance	√	√	√	√
	16	Housing accumulation fund	√	√	√	√
	17	No House subsidy	√	√	√	√
	18	Housing subsidy	√	√	√	√
	19	Enterprise annuity	√	√	√	√
	20	Accident injury insurance	√	√	√	√

Source: CHEC salary management measures

Employee’s base salary is determined by his/her ranking in one of the five tracks, which are management, engineering, marketing, professional and production. Under this policy, the salary of staff at the same track and the same level is mostly the same. Management track has 91 levels starting from 1,300 RMB to 26,600 RMB; engineering track has 42 levels, starting from 6,500 RMB to 23,000 RMB; marketing track has 42 levels, starting from 4,100 RMB to 20,200 RMB; professional track has 35 levels, starting from 3,600 RMB to 18,400 RMB (the writer was in level 17 with 7,600 RMB base salary in 2020); manufacturing track has 42 levels, starting from 1,300 RMB to 12,400 RMB. Auxiliary wage includes several miscellaneous pays shown in Table 8.

Table 8 Auxiliary wage (Unit: RMB/month)

Name	Professional technical position		standards
Professional and technical wage	Senior		800
	Deputy senior		600
	Intermediate		400
	Associate		300
Name	Degree		standards
Record of formal schooling wage	Doctor		480
	Master, graduate student		400
	Double bachelor’s degree, Bachelor		320
	Professional college		240
	Technical secondary school, high school, senior high school		160
	Junior middle school and the following		80
Name	Participate in work time		standards
Years of work pay	1 to 10 years		5 yuan/year
	11 to 20 years		8 yuan/year
	21 to 30 years		12 yuan/year
	31 years and above		15 yuan/year
Name	Requirement		Standard
	International institution granted	Domestic institutions granted
Qualification wage	International recognition, senior membership, or equivalent qualifications	Experts or equivalent qualifications	800
	Internationally recognized members or equivalent qualifications	At the national level or equivalent qualifications	500
	International recognition associate member or equivalent qualifications	The national level 2 or equivalent qualifications	300
	Construction enterprises “three” production safety management certificate		200

Source: CHEC salary management measures

Performance pay is aligned with the year’s performance appraisal on objectives. There are three levels of performance goals and employees are paid based on the third level appraisal which is related to the individual. First-level performance goals refer to company-level annual performance goals, which are formulated according to the operation and management goals and the company’s development strategy assigned by the group company CCCC and undertaken by the company’s leading team members respectively, mainly including strategic goals, production and operation goals, financial goals and management goals. The second level performance goals targeting the executive unit (overseas branch), and it is related to the first level performance goals undertaken by the person in charge of the executive unit. The performance appraisal of the overseas branch includes production and operation objectives, management objectives and matrix member objectives (if applicable). The third level performance objectives come from the person in charge of the executive unit expanding the second level performance appraisal objectives to the level of the subordinate employees. Employee performance appraisal indicators cover most of the work contents of employees in the executive unit and they could be one or more of the following categories: production and operation indicators (developed from the production and operation performance objectives of the strategy executive unit), management indicators (mainly the key indicators reflecting the job responsibilities of the staff), matrix member performance indicators (alternative indicator, which is implemented from matrix performance objectives to matrix member performance indicators), periodical task indicators (alternative indicator) and indicators of the leadership and executive ability (or indicators of the attitude of employees). Such performance pay makes no difference for the same level of employees working in the same institute and employees may get no performance pay due to the poor performance of the branch in the year. The subsidy standards for overseas areas shall be determined by region as shown in Table 9 considering national policies, natural conditions, operating environment, price index, public security conditions, the risk of war and other factors.

Table 9 CHEC subsidy standards for overseas areas (Unit: RMB/month)

Regional category	National, regional names	Regional allowances standard
Class 1 region	Asia: Hong Kong, Macau, Singapore, Korea, the Philippines, Turkey, Syria, Jordan, Oman, Cyprus, Malaysia, Thailand, Indonesia, Israel; Europe: Western countries, Malta; America: the United States, Jamaica, Trinidad and Tobago, Barbados, Antigua and Barbuda; Africa: Morocco, Tunisia, Libya, Egypt, Seychelles, Mauritius, South Africa.	1500
Class 2 region	Asia: Vietnam, Cambodia, Mongolia, Afghanistan, Iraq, Palestine, Iran, Saudi Arabia, Kuwait, United Arab Emirates, Qatar, Lebanon; America: Cuba, Peru, Suriname, Bahamas; Oceania: Fiji, western Samoa; Africa: Botswana, Lesotho, Namibia, Zimbabwe, Zambia, Kenya, Algeria.	3000
Class 3 region	Asia: Pakistan, India, Laos, Myanmar, Sri Lanka, Nepal, Bangladesh, Yemen. Oceania: Papua New Guinea, Vanuatu, Marshall, Micronesia, Tonga; Africa, Uganda, Rwanda, Burundi, Tanzania, Zanzibar, Mozambique, Madagascar, Senegal; Americas: Brazil, Argentina, Chile, Venezuela, Costa Rica, Grenada, Panama, Mexico.	4500
Class 4 region	Asia: Aden, East Timor; Americas: Guyana, Ecuador, Colombia, Bolivia; Oceania: Kiribati; Africa: Ethiopia, Somalia, Comoros, Central Africa, Nigeria, Cape Verde, Sao Tome and Principe, Angola, Gabon, Cameroon, Benin, Togo, Ghana, Cote d ‘Ivoire, Liberia, Gambia, Congo-Brazzaville, Democratic Republic of the Congo, Equatorial Guinea, Guinea, Guinea-Bissau, Mauritania, Chad, Niger, Sudan, Djibouti, Mali, Burkina Faso, Sierra Leone, Eritrea.	7000

Source: CHEC salary management measures

4.1.3 Matching of motivations

The matching comparison is made in Table 10 to test whether there are corresponding items in the existing management policies on expatriation of China Harbour to meet expatriates’ motivation. It can be found that the human resource management policies of China Harbour for expatriation are principally matched with the motivation of expatriation. At least China Harbour has been aware of these motivations and has tried to match the relevant management policies.

Table 10 The matching of CHEC’s human resource policies and expatriates’ motivations

| Expatriate motivations | Human resource policies | | — | — | | Autonomy | 1. Offer 40 days’ vacation time for employees sent to foreign countries. If the employee giving up vacation, the company would arrange family visits. | | Developmental Space | 1. If the person has stayed in overseas for five years, the person can apply for coming back. If the person has stayed in developed/underdeveloped regions for several years, he/she would be arranged to underdeveloped/developed regions for several years.

1. If headquarter senior position are short of personnel, expatriates from difficult and underdeveloped regions should be selected first.
2. Middle managers from headquarter with excellent performance can be promoted to management positions in overseas institutions.

3. Arrange the posts of the repatriated personnel in advance.
   	Living Condition	1. Provide a unified safety and health insurance plan.

4. Encourage overseas organizations in difficult areas to take appropriate measures to ensure the food hygiene and safety of their employees.
   	Salary	1. The salary of the expatriate staff is unified, and the subsidy is adjusted according to the region.

5. Encourages the spouse to stay overseas. The spouse staying in China can get subsidies.
6. Provide subsidies to minor dependent to receive local education.

7. Provide Beijing hukou (registered permanent residence).

4.1.4 Condition of business

According to the ranking of China’s foreign contracting enterprises released by the Ministry of Commerce, the company’s newly signed contract amount and turnover are always among the top in the industry as shown in Table 11. In 2019, the amount of new overseas contracts signed by China Harbor reached 15.5 billion USD, accounting for 6.7% of the total amount of overseas contracts signed by Chinese enterprises.

Table 11 Industry ranking of CHEC (2012-2019)

Year	Chinese companies		CHEC		CHEC accounted for		CHEC ranking
	Contract amount	turnover	Contract amount	turnover	Contract amount	turnover	Contract amount	turnover
2019	2296	1250	155	60.7	6.7%	4.8%	3	3
2018	2418	1690	132.2	61.2	5.5%	3.6%	6	3
2017	2653	1686	120	50	4.5%	3.0%	5	5
2016	2440	1594	110	39.5	4.5%	2.5%	6	6
2015	2101	1541	104	41	5.0%	2.7%	5	4
2014	1918	1424	66	40	3.4%	2.8%	7	4
2013	1716	1371	60	33.9	3.5%	2.5%	6	5
2012	1565	1166	55	32.2	3.5%	2.8%	6	5

Source: Ministry of Commerce of the People’s Republic of China

Though China Harbour’s business is rapidly developing, its efficiency in using employees is getting lower. The proportion of the company’s management expenses in the income has been on the rise and is slightly higher than that of the benchmarking companies in the same industry as shown in Figure 2. The overall talent introduction, education, use, retention system, especially the incentive performance, need to be strengthened; talents do not match the company’s current business structure resulted in strong demand for personnel training and career development; there is an extreme lack of comprehensive high-end talents, investment professionals and project management personals.

Figure 2 The proportion of salary cost in income

Source: CHEC annual report

4.2 Huawei’s management

Private enterprises are playing an increasingly prominent role in globalization. There is an obvious trend of high-end industrial investment, global operation and market expansion from developing countries to developed countries. Huawei, Tencent, Lenovo, Fuyao, Geely, Haier and other large private enterprises have achieved satisfactory results in the process of going global. These private enterprise policies are different due to their different characteristics of business, while they all did relatively well in human resources management, making them last for decades.

Founded in 1987, Huawei is a leading global provider of information and communications technology (ICT) infrastructure and smart devices. It has approximately 197,000 employees and operates in over 170 countries and regions. In 2019, Huawei employed over 37,000 people in countries outside of China, with an average localization rate of 67%. The overseas workforce Chinese rate has dropped year on year from 38% in 2015 to 33% in 2019 (Huawei, 2021). Among all Chinese firms, Huawei is famous for sharing benefits to its employees and the founder Ren Zhengfei takes 0.81% of the share of Huawei (Huawei, 2021). Ren stated that Huawei’s employee needs have been analyzed, summarized, and researched, so Huawei only provides a basic guarantee and its benefit sharing rule is market-orientated (Ren, 2015). The rules are as follows: first, Huawei’s value distribution is based on strivers. The people who pull the cart earn more than the people who don’t pull the cart. Second, the front-line staff should be given material incentives. The basic salary should be based on the value of the staff and adjusted according to the staff’s contributions and achievements. Year-end bonus and immediate reward shall have no upper limit. Third, to encourage arduous work, staff working in areas in need are offered with a tiered level of subsidies and priority to promotion. Fourth, the incentive mechanism of virtual shares and Time-based Unit Plan lead to employees’ continuous dedication (Chen P. , 2020).

4.2.1 Firm character

Huawei has formally put forward the concept of “internal financing and employee ownership” since 1990, either as a way of talent incentive, to form an internal centripetal force in difficult times, or as an internal financing method to obtain development funds. In 1998, Huawei introduced the incentive system of virtual shares, which made it clear that shareholders had no ownership and voting rights, and such shares did not have to go through the tedious approval procedures of the securities industry supervision and management department. Ren designed the Employee Stock Ownership Plan (ESOP) model without reference, relying on experience and intuition. In his article “A Spring River Flow East”, he wrote: “When I founded the company, I designed the employee stock ownership system to unite the employees through benefit sharing. At that time, even the west has been very developed in this aspect and has various forms of incentive mechanism, I did not know the option system. Based on the past life setbacks, I learned to share responsibilities and benefits with my employees.” Although it is called ESOP, but it is quite different with the international version. First, Huawei employees buy shares at the price of 1 yuan per share and can only apply for redemption from the company when the employee leaves, that is, the shares cannot be transferred. Secondly, shareholding employees only enjoy the right of distribution, not other rights owned by shareholders, including voting, value-added earnings which means employees can only apply to the company for the redemption of shares at the original price of 1 yuan. Each shareholding employee has a share certificate issued by Huawei and stamped with the red seal of Huawei’s capital planning department (Yang, 2014).

In 2013, Huawei began to adopt the five-year time-based unit plan (TUP), adopting the allocation scheme of “deferred + incremental”. The operation method is illustrated as follows: If you are granted TUP qualification in 2021 and you have 10,000 units, the virtual face value is 1 yuan. In 2021 (the first year), there was no reparation right; In 2022 (the second year), get 10000 × 1/3 of the right of distribution; In 2023 (the third year), get 10000 × 2/3 of the right of distribution; In 2024 (the fourth year), 100% of the 10,000 units will be paid in full; In 2025 (the fifth year), in addition to obtaining the full amount of the distribution right, additional appreciation settlement will be carried out. If the face value appreciates to 5 yuan, the return in the fifth year will be: full dividends + 10000 × (5-1). At the same time, the right and interests of these 10,000 TUP units are cleared. Huawei correlates the calculation method of TUP par value with the stock price of the virtual restricted shares. For example, the price of the virtual shares is 5 yuan when the qualification is granted, and the value of the virtual shares increases to 10 yuan five years later, and the value of the TUP equivalent rights and interests also increases to 5 yuan.

The problem with TUP is that their five-year cycles are not sufficiently tied to long-term growth, and they are not suitable for a few core levels, especially those at the top who already have a sense of long-term mission. Therefore, TUP is unlikely to be the only long-term incentive model for Huawei. It can cooperate with the virtual restricted stock to solve the problems of short-term and long-term, majority and minority.

4.2.2 Main policy

Huawei’s expatriates’ salary including TUP is distributed by the representative office and the overall organizational performance objective framework of the representative office is shown in Table 12. The purpose of compensation management of the representative office is to grant reasonable grain packages (including salary packages and bonus packages) to the representative offices and to enable the representative offices to manage and restrain themselves within the boundary, to fully release the vitality of the representative offices. The organizational performance has an influence on individual’s salary and the overall salary illustration is shown in Figure 3 and Figure 4. General rules are as follows: 1) The grain package shall be granted to the representative office as a whole, and the representative office shall divide the grain package into salary package, operational bonus package and strategic/land fertility bonus package according to certain rules; 2) The savings of salary package generated by the reduction and efficiency can be converted into operational bonus; 3) The operational bonus package cannot be converted into the wage compensation package; 4) 30% of the grain package after deducting the salary package will be used as the strategic/land fertility bonus to draw the medium and long-term investment of the representative office. Elements of grain package generation of a representative office are as follows: 1) Historical extension line: the grain package in the current year is weighted, based on the extension line of the income coefficient and profit coefficient of the representative office in the recent three years; 2) National difficulty coefficient: according to the operation situation of the country, the difficulty coefficient is adjusted; 3) Inflation coefficient: refer to the overall inflation situation of the company; 4) Resource settlement: the grain package includes the food of resource personnel (including regional and agency support personnel); 5) The grain package for implementing Huawei business group’s strategy. The grain package is calculated based on historical extension and the current year’s income, profit, national difficulty coefficient and inflation coefficient. The total compensation package includes bonus and salary package, leave home allowance and hardship allowance. The grain package budget is generated at the beginning of the year, and the grain package budget is generated according to the budgeted income and profit, which is controlled by the representative office following the rolling forecast during the process and calculated at the end of the year according to the actual completion of objectives.

Table 12 Huawei organizational performance objective framework

Towing point	Serial number	The name of the KPI	The purpose and definition
Harvest more grain	1	Place an order	Promote and lead the increase of order
	2	Sales revenue	Promote and lead sales increase
	3	Contribution to profits	Measure profitability, business results, at the same time set the baseline contribution requirements
	4	Operational
net cash flows	Inspection office management’s ability to generate cash, measure liquidity conditions, supporting the effective operation
Increase the land fertility	5	Strategic	Strategic mountain project, strategic objectives, business environment
	6	The customer	The key customer relationship management, customer satisfaction
	7	Organization cadre personnel	Based on long-term business development needs, build key businesses and team capabilities, gain competitive advantages, and drive the increase of per capita contribution
The internal and external compliance	8	Internal and external compliance	Traction representative office to manage internal and external compliance risks, more dozen food; Evaluate by way of review

Source: Huawei organization performance management scheme for Argentine representative office (Tentative)

Figure 3 Huawei grain package generating factors

Source: Huawei salary management scheme for Argentine representative office (Tentative)

Figure 4 Logic of Huawei grain package program

Source: Huawei salary management scheme for Argentine Representative Office (Tentative)

Back at the past, each time the shareholding reform can be seen as Huawei in reference to the environment of a kind of innovation and improvement, but with the “benefit sharing” the basic principle of the early 90s, the introduction of the employee stock ownership plan for Huawei in early stage greatly alleviated the pressure of capital requirements, and make Huawei survive in the domestic market competition. In 2001, the reform from “real” to “virtual” makes Huawei expand rapidly in overseas markets. The 2008 rights issue was intended to reduce the internal contradictions that the shareholding plans themselves created. The timely introduction of benefit sharing innovation always plays an unimaginable significance in Huawei’s growth process.

Since 2001, Huawei has made willingness to participate in overseas markets an important criterion for the selection and promotion of its cadres. It favors overseas marketing staff, whose bonus can be 3-5 times that of domestic staff, and the allowance can range from $50 to $2,000 per day depending on the region. In some places, such as Iraq and Afghanistan, annual allowance can reach hundreds of thousands of RMB. Huawei encourages its employees’ families to visit overseas and reimburses them for three round-trip flights a year. If the family members wish, they can accompany Huawei employees overseas. For those who stay in overseas markets for more than three years, a one-off relocation allowance of 150,000 RMB is available.

4.2.3 Matching of motivations

The matching comparison is made in Table 13, to test whether there are corresponding items in the existing management policies on expatriation of Huawei to meet expatriates’ motivation. Regarding autonomy, Ren mentioned that Huawei should not provide fire support for any frontier calls because it is a waste of resources, so its autonomy is basically at the medium level. It makes sense due to the large enterprise size. Besides, Huawei’s equity-related capital gain has structural design problems, and the young generation may have become less interested in the aggressive monetary motivation than in other motivations.

Table 13 The matching of Huawei’s human resource policies and expatriate motivations

| Expatriate motivations | Human resource management policies | | — | — | | Autonomy | 1. Let the front to self-organize and make decisions; Rear organization offers empowerment and supervision.

1. Offer 30 days’ vacation time for expatriates.
   	Developmental Space	1. Development training throughout the whole work period.

2. Select cadres from the successful team.
   	Living Condition	1. Provide a unified safety and health insurance plan.

3. Encourage overseas organizations in difficult areas to take appropriate measures to ensure the food hygiene and safety of their employees.

4. Ensure that the living condition such as kitchen, KTV, swimming pool in Africa is approaching Western countries.
   	Salary	1. The salary of the expatriate staff is set based on the capability, short-term project-based bonus is provided and the subsidy is adjusted according to the region.

5. Launch employee stock ownership plan and time-based unit plan, adopting the allocation scheme of “deferred + incremental”.
6. Encourages its employees’ families to visit overseas and reimburses them for three round-trip flights a year. For employees who need to work overseas for more than three years, the company will give relocation allowance of 150,000 Yuan, which will be paid in a lump sum before going abroad. Purchase medical care and insurance for expatriates and their families in the countries where they work.

7. Provide subsidies to minor dependent to receive local education.

4.2.4 Condition of business

Huawei has gained significant attention in the last decade. In 2020, the net profit of Huawei amounted to approximately 72 billion RMB, a huge increase compared to the previous year as shown in Figure 5. However, Figure 6 illustrates that Huawei was having slow growth speed in overseas markets and stagnated in 2019. Huawei’s sales derived from overseas have decreased to 41% in 2019 from 66.5% in 2012. The direct reason is the US sanction on Huawei’s overseas business. Ren was coming from a military background, and the company is criticized for deep links with China’s military. Besides, Huawei’s virtual equity does not have decentralized bookkeeping to ensure its transparency, which is controversial (Shui, 2018). The Financial Times described Huawei’s virtual equity registration in this way: “in a secret room at Huawei’s headquarter in Shenzhen, there is a glass cabinet containing 10 blue booklets, which are several centimeters thick and contain the names, ID numbers and other personal information of about 80,000 employees. It is the first presentation of the bookkeeping to foreign journalists to counter criticism that it has not been transparent about its holdings.”

Figure 5 Huawei net profit (2009-2020)

Source: Huawei annual report

Figure 6 Huawei’s growing dependence on the captive Chinese market

Source: Huawei annual report

4.3 SMEs’ management

Upto 2017, there were nearly 4 million SMEs in China, accounting for more than 90% of the total number of enterprises, among which more than 450,000 SMEs have carried out different forms going abroad (UPTOUR, 2017). Chinese SMEs are better at establishing cooperation with domestic large enterprises or related enterprises in the industrial chain through the network of relationships to promote globalization. Such as in the situation of “One Belt One Road”, large-scale infrastructure projects are carried out and manufacturing from SMEs is followed up. Since the decision-making process of SMEs is relatively short, they can leverage favorable resources by using network relations more flexibly and timely. For example, Chinese SMEs are also particularly good at making use of existing network relationships in overseas markets to help them expand their overseas business and effectively reduce their externalities to overseas markets, local culture and local governance (Cai & Zhang, 2018). SMEs are the most active group of innovation, can adapt to the characteristics of rapid technological updates in the international market, their products and services are often closer to the market demand. “A small boat is easy to turn around”. SMEs are relatively small in scale, sensitive to market changes, respond flexibly, and can make timely adjustments according to the changes in the international market environment. In addition, China’s SMEs have rich products, strong competitiveness and broad market prospects. These SMEs’ human resources policies are more flexible and more diverse compared to large enterprises.

In the process of internationalization, SMEs generally have problems of attracting and retaining talents. First, due to the lack of cash, it is difficult for SMEs to attract and retain talents by offering high salaries and benefits at the beginning years. In addition, the development risk of SMEs is generally higher than that of large enterprises, thus could not provide a secure feeling to employees. Second, due to the lack of scientific talent recruitment and selection mechanism including objective and scientific standards, SMEs can hardly recruit a matching person, and they hardly have time to pay attention to recruitment. Normally important management positions are determined by kinships. Third, due to the relatively weak management foundation, SMEs can hardly have effective long-term incentive mechanisms to motivate employees in the long term. Most SMEs’ internal staff incentive mechanism is simple that employees are usually do their share of the work and do not reward or punish for a long time. Managers are difficult to pay attention to employee psychological needs and real demands, and it is difficult to be detailed and specific in the formulation of welfare programs and incentive mechanisms to meet the needs of different employees (Du, Gong, & Zhou, 2009). Most SMEs still have egalitarianism in salary distribution and incentive mechanisms, meaning that the staff pay gap is less and the labor value of professionals cannot be truly reflected. Eventually, SMEs would lose those professionals.

For small Internet or technology companies, most policies are the same, and the only difference may be the compensation. For example, Bigo Technology founded in 2014 is one of the fastest-growing technology companies, with more than 30 offices and 6 R&D centers around the world. A few years ago, its global human resources management was in a mess, but offering overseas subsidies about 100 dollars per day and a high basic salary of about 2-5 thousand dollars per month. Compared with people working in big firms, their working condition is more comfortable, and they have more flexibility in their normal lives. The annual holiday is about 15 days, which is much less than big firms. However, some people quitted Huawei and joined such Internet companies working overseas because they felt that Huawei’s work was so tough for them. In addition to the overwork, those people from Huawei used to do a lot of field works, enduring dangers and harsh conditions, but now they just work in cities and enjoy a more work-life balance job.

Chapter 5 Suggestion on Chinese firms

After the above analysis on specific companies’ situations, Chapter 5 would review the management and provide recommendations accordingly. Based on the Expectation Theory (Jones & George, 2012), the effective matching of human resource management policy and employee motivation is the key factor to attract employees to relocate abroad. The motivation is high when the worker believes that high levels of effort lead to high performance which leads to the attainment of desired outcomes. It can be expressed as the formula: motivation = expectation × instrumentality × valence. In expectancy theory, expectancy refers to a perception about the extent to which effort results in a certain level of performance, normally based on personal experience to judge; instrumentality refers to a perception about the extent to which performance results in the attainment of outcomes. Managers promote high levels of instrumentality when they link efforts to desired outcomes. Valence refers to how desirable each of the outcomes available from a job or organization is to a person. In other words, it is the value of an attainable outcome in satisfying an individual’s needs. Expectation theory reflects the relationship between needs and outcomes. To motivate employees, employers must make sure that the outcomes of the work can provide employees with what they need. When the human resource management can satisfy the motivation of an employee to relocate abroad, the employee’s valence will be high; When employees obtain information about the management policy on foreign assignment, they will judge the degree of their needs are satisfied, thus determining expectations. Therefore, the more human resource management policy matches expatriate motivation, the stronger the motivation will be. Managers must first understand what employees’ needs, so that policy formulation can match.

5.1 For China Harbour and other SOEs

The expatriate management policy of China Harbour is matched with four motivations at relatively low levels. Even the business has been developed well, but the problem regarding human resource management is reflected in its rising proportion of salary cost to income. Expatriate motivation changes dynamically, and China Harbour failed to notice that because of its nature of being state-owned. In 2020, China’s central authorities identified the 2020-2022 period as a crucial stage for SOEs reform. A series of strategic movements have been carried out, such as ten pilot reforms, three-year action plan and “double hundred action”. Among all reform plans, organizational management reform is the priority, determining the future success of SOEs. It is an effective way to find the future of SOEs through analyzing such a specific company.

5.1.1 Mixed-ownership reform

To the current SOEs’ low-efficiency issue, the central government recognized that the biggest problem for SOEs is incentive, so the mixed-ownership reform was formally proposed by State Council in 2015 (Shi & Hong, 2019). The low efficiency is due to the administrative organization style, so the only solution is to shift the management style from administrative-oriented to market-oriented, offering competitive salary and empowerment to attract and motivate competitive market-oriented personnel. In 2016, National Development and Reform Commission issued the first batch of 9 centrally administered SOEs to trail mixed-ownership reform and Beijing New Building Materials Co. Ltd (BNBM Group) belonged to one of these 9 SOEs. Its market value has increased from about 20 billion RMB in 2016 to 70 billion RMB in 2020, proving that the market reflection on its reform is positive (Reform Office of SASAC, 2020).

The suggestion for China Harbour is as follows: First, trying to minimize the shares distributed to Party members because it will be double shareholding, which is unfair to non-Party members who can only get equity incentives such as phantom stocks. The goal of Party members is to realize communism, serve the people and pursue an official career. Part of the motivation for Party members should be solved by the administrative system. If both the Party member and the market-oriented staff are given equity, the cost is bound to be too high. Second, China Harbour can follow Huawei to apply more instant motivation offers and short-term motivation plans such as time-based unit plan to improve employee motivation. If the company fails to provide appropriate incentives to administrative employees, it will greatly discourage their work, making them push all tasks to the market-oriented personnel (this is the situation of some companies, giving market-oriented managers high salary but with even higher amount of works, giving too much pressure on their responsibility and these managers normally takes a bucket of money and leave). As proven in the conjoint analysis, young people are no longer motivated by traditional job promotions, but by tangible monetary rewards and a platform for creativity. China Harbour is lagging in the pace of management development, it must carry out the mix-ownership action of sharing benefit and empowerment to attract and retain young talents in the company at the earliest.

5.1.2 Prospects of SOEs

At present, the per-capita profit of SOEs is much smaller than that of the market. Therefore, SOEs are in urgent need of adapting to the market incentives addressing the essence of the low-efficiency problem. It might be hard to reform because indiscriminate egalitarianism is embedded deeply in SOEs. However, the inward revolution courage of the Party members shall not be underestimated as proven in the case of BNBM Group. The biggest advantage is trust inside and outside of the organization. Since the shareholder is SASAC, the higher the position level, the higher the ranking in the Party system. Constant ideological communications and mutual criticisms make the degree of trust between Party members extremely high. If there is a dispute, SASAC will coordinate. We can see miracles created by other such enterprises in the world, including Japanese enterprises represented by Mitsui Group, and Xiaomi Group. These enterprises not only hold shares but also have deep cooperation with invested enterprises. Fundamentally, SOEs have tremendous potential to achieve world-class competitiveness and evolve a series of strategic companies comparable to Alibaba and Tencent.

5.2 For Huawei and other POEs

Huawei’s benefit sharing plan, especially the employee stock ownership plan, has become a flagship in human resource management and more companies are following up. In June 2021, traditional manufacturing company Gree Electric Appliances launched the employee stock ownership plan. The ESOP plan involves up to 12,000 people, from the company’s directors (not including independent directors), supervisors, and senior management, down to the middle-level cadres and core staff. Gree hopes that the ESOP will provide incentives for employees to be more confident and motivated to develop with the company, rather than just pursuing short-term profits. Till the middle of 2021, Xiaomi has issued several rounds of stock incentive plans covering technical experts, middle and senior core managers and outstanding young engineers, achieving a high degree of binding between personal income and company performance.

A further suggestion is to build a transparent equity structure. The ambiguity of shareholding is one of the biggest reasons to curb Huawei in Western countries right now when they are struggling to develop, especially in terms of investment and acquisition. Employees may have concerns that the issuing of phantom stocks may be like the massive release of global currency during the pandemic. Blockchain technology is one of the effective means of restricting the uncontrolled issuance of M2, so the suggestion is to use a blockchain equity structure. This approach has advantages of decentralization, tamper-resistant, adjusted issuing volume, and transparent traceability. The data cannot be deleted and modified, and the whole network backup has a complete record, which can achieve post-audit with its retroactive history. Applying blockchain to design dynamic equity structures can make profit distribution to match the contribution, the ownership structure adapts to the business development of the company, and at the same time enables the former contributors to continue enjoying the basic right to maintain a livelihood (small-scale peasant economic behavior: the dominant motives of small-scale peasant economic behavior are “risk avoidance”, “safety first”, the moral concept of respecting everyone’s basic right to maintain a livelihood in the same community (Li H. , 2018).

5.3 For SMEs

Traditional SMEs have a small scale and little capital, so it is difficult to provide a high salary and high welfare to attract talents. Previous theories show that people are a complex mixture of economic, social and self-actualization. On one hand, SMEs could appropriately empower employees to unveil their potential and creativity. On the other hand, SMEs should design a variety of effective incentive measures that combine spiritual incentive, material incentive and employee self-motivation. SMEs should consider different incentive methods in combination with local practices more adaptably, such as creating ideal job opportunities; providing support for career and personal development; providing employees with shares and options; offering instant bonuses and flexible employee benefits. In addition, attractive corporate culture, charismatic managers, cooperative team spirit and the enterprise to individual recognition and other hidden incentive measures will also produce an exceptionally favorable effect.

The frustration-regression principle of ERG theory suggests that employees may have both survival and growth needs, and when a person is frustrated at a higher level of needs, his needs at a lower level may increase instead. For example, when an employee’s career development need is not satisfied, his family relationship need will be stronger. From the perspective of the enterprise, it is not necessary for the enterprise’s human resource management policies to fully match expatriate needs, but only need to match part of the need. The implication for human resource management is that if the assignment management policy fails to satisfy the high-cost motivation of employees, it is necessary to strengthen the management of low-cost motivation. Offering employees with high autonomy, even the salary is at a medium level compared with Huawei’s high-level salary, the chance of choosing SMEs and the chance of choosing Huawei could be similar.

5.4 General suggestions

It is surprising to find that most companies and expatriates themselves were not paying much attention to training especially intercultural training, which is included in the developmental space of the conjoint analysis. As identified in the report from Dataway (2019), problems faced by Chinese-funded private enterprises in managing local employees are that half of the enterprises have problems such as getting along with and communicating with foreign employees due to cultural and customs differences, and around 30% of the enterprises report that the differences in ethnic, religious, living habits and cultural customs of local employees affect the normal production activities of the enterprises. When managing foreign employees, Chinese enterprises often face the following difficulties: first, it is difficult to recruit excellent talents to join the company; second, even if the high salary attracts, companies must bear the operating pressure brought by high investment and low return; third, even if companies hire better employees, they often leave the company sooner.

Expatriates usually have a certain sense of cultural pride. They pay too much attention to their own culture while ignoring foreign culture in enterprise management. They tend to simply transplant and infiltrate their own culture, which can easily lead to conflicts between their own culture and foreign culture and harm the smooth progress of work. For example, Europeans and Americans are characterized by arrogance, believing that their culture, education and management experience are the most advanced and worthy of respect, therefore they are naturally resistant to China. In Islamic countries, Chinese employees are likely to have conflicts with local Muslims if they have not accepted proper knowledge regarding Islamic culture. In Africa, many countries are rich in land resources but poor in education resources, and local people have developed a casual and comfortable lifestyle to play and be happy. Asking them to work long hours is considered to deprive their opportunities to have fun. If the domestic management system is strictly applied to African employees, they will boycott or even strike. There are certain cultural background differences among different employees within the enterprise, and these cultural factors will run through the entire process of enterprise management, leading to interest conflicts among employees easily, which is not conducive to operation and management activities.

SOEs are having poor inclusion that foreign talents can hardly participate in corporate governance, which is essential for international operations. To improve globalization, SOEs shall rebuild the culture and decrease bureaucratization. There are three value systems of Chinese SOEs in abroad. Two systems come from China, one is mainly based on the ranking in political status, the other one is mainly based on the profession. The remaining one is the overseas social value system. There is almost no possibility for foreign employees to be integrated into SOE’s culture because foreigners cannot join the Party, so they still follow the overseas social value system in the company. For example, the low-caste employees promoted by Chinese companies in India cannot lead the high-caste employees at all. They must weaken the Party culture at the enterprise level and let the real corporate culture, mission, vision and values accompany the globalization of the company. Only in this way can they attract young people and international talents. For example, China began investing heavily in Pakistan’s electricity market in 2015, but after the power plants began operating in 2018, the unexpected triangular debt problem (also known as the multilateral debt problem) was revealed. Power plants could not get the money from the government and take hundreds of millions of dollars in debt to pay for coal generating electricity because the government was unable to charge for electricity from its people (due to theft and mismanagement). This problem arose in Pakistan in the early 2000s and is a classic business case for local business schools. In Pakistan, as in most other countries, the lack of electricity is not due to the lack of capacity, but simply due to the lack of ability to collect utility charges. Hiring a local MBA to write a feasibility study regarding power plant investments could have saved billions of dollars in losses.

As a representative of Chinese large POEs and one of the best Chinese enterprises, Alibaba even experienced frustrations in overseas due to cultural conflicts (Su, 2020). Since 2016, Alibaba Group has spent three billion USD to acquire a 90 percent stake in Southeast Asian e-commerce firm Lazada as it seeks to expand in Southeast Asia. However, under Alibaba’s management, Lazada’s staff morale has deteriorated, and its position as Southeast Asia’s number one e-commerce player has been lost to rivals. Alibaba’s control measures during the COVID-19 pandemic outbreak, requiring daily health reports and other measures, were also seen by Lazada local employees as an invasion of privacy and were resisted, again highlighted a long-standing culture clash between local employees and Chinese management. Executives assigned by Alibaba to Lazada are leaving at a rapid rate. Yin Jing, Lazada’s former co-president, quietly left his post in January and returned to Alibaba’s headquarter in Hangzhou. Alibaba co-founder Peng Lei stepped down as Lazada’s CEO in 2018, just nine months after taking the job. Some of the executives assigned by Alibaba to Lazada instinctively used the Alibaba norms because they had been proven right in China, and many did not show enough respect for the market to have the patience to understand it deeply. By the end of 2019, Shopee became the most downloaded and used e-commerce app in Southeast Asia, pushing Lazada to the second place.

Most SMEs pay attention to the pure technical training to the staff, while the management of the cross-cultural training is often not enough. SMEs normally have more communication with locals, so they shall pay more attention than large firms to the cross-cultural training, which is just a powerful tool to solve the cultural conflict. As researchers have concluded that work-related values are varied by cultures from five value dimensions of national culture which are power distance, individualism versus collectivism, masculinity versus femininity, uncertainty avoidance and long-term versus short-term orientation (Robbins & Judge, 2017). The cross-cultural training eliminates the understanding and communication conflicts caused by the differences in cultural background, so that all employees from different nationalities, different religious beliefs and different educational backgrounds can understand and cultivate the overall consciousness, eliminate the gap between the concepts of “we” and “they”, and make their behavior conform to the local development goals of the enterprise.

China’s rapid growth over the past three decades may prove to be one of the biggest beneficiaries of globalization, while internationally there are concerns about Chinese companies going global. One important thing is balancing the interest of the firms with the responsibilities to the communities in which they operate. In 2018, the general manager of COSCO Shipping Pakistan Karachi Branch was killed by a gunman who was hired by the company’s local business partner just because the benefit sharing mechanism and the relationship between COSCO and the local partner was not managed well (EWORLDSHIP.COM, 2018). Besides, the rapidly widening gap between the rich and the poor is also a huge obstacle to globalization. Chinese expatriates should be missionary to make effective use of China’s huge production and market scale to promote further international development cooperation, integrate the production bases of intermediate products into other developing countries, and form an efficient global production chain. Chinese firms’ employees should take this social responsibility by implementing the principle of “inclusive multilateralism” to help developing countries gain more developmental space (Zheng, 2016).

Chapter 6 Research conclusion and limitation

6.1 Conclusion and contribution

Based on previous findings, this thesis summarizes four motivations which are autonomy, developmental space, living condition and salary, applies the conjoint analysis to quantify the different importance, provides analysis and implications on Chinese firms’ global human resource management. China’s contracting projects have been developing rapidly, the import and export trade has increased significantly, and direct investment has been moving forward. Currently, many enterprises are still in the primary stage of global human resources management, to catch up with the development it is very necessary and urgent to improve the relevant policy and send more appropriate expatriates to needed positions. It should be noted that there are heterogeneous types of firms, and different firms should apply complex and adaptive human resource management based on heterogeneous expatriate needs. When the company formulates incentive policies, it should truly consider the motivation from the perspective of employees and formulate practical, feasible and effective incentive measures. To some extent, these efforts could relieve the workplace involution happening in current China. With limited resources, firms can become good places to work and motivate and engage employees to generate superior financial performance.

Previously, there were various approaches to identify what motivates employees and no conclusive one. In this thesis, ERG theory is mainly applied to the study of expatriate motivation, which enriches the research theory of expatriate motivation and verifies the principle of Chinese human resource development that multiple needs of ERG theory coexist.

6.2 Limitation and prospect

There are some limitations to this thesis. First, the selected companies China Harbour and Huawei could not fully represent all firms in their corresponding categories. Second, regarding the conjoint analysis, due to the limitation of resources, the respondents are limited to 10, which may influence the accuracy of the analysis and levels of attributes lack concrete meaning. In future follow-up studies, the conjoint analysis can increase the sample size and be more specific on attribute levels.

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Appendices

1. Questionnaire

• Autonomy includes empowerment, annual holiday, and life-work balance.
• Developmental space includes training, corporate promise on promotion, and achievements with the development of the country.
• Living condition can roughly be considered as Human Development Index (HDI) plus how friendly to China. **HDI is a single index measure that aims to record the three key dimensions of human development: access to knowledge, a decent standard of living, and long and healthy life.
• Salary includes all short-term and long-term incomes, compensations and benefits.

For HDI, US belong to the high level, China belong to the middle level and most African countries belong to the low level. For the other three attributes, different levels are designed to be evaluated by respondents.

1. Please rate Autonomy in terms of how desirable they are.

| | Undesirable | Somewhat Desirable | Very Desirable | No Opinion | | — | — | — | — | — | | High | | | | | | Medium | | | | | | Low | | | | |

1. Please rate Developmental Space in terms of how desirable they are.

| | Undesirable | Somewhat Desirable | Very Desirable | No Opinion | | — | — | — | — | — | | High | | | | | | Low | | | | |

1. Please rate Living Condition in terms of how desirable they are.

| | Undesirable | Somewhat Desirable | Very Desirable | No Opinion | | — | — | — | — | — | | High | | | | | | Medium | | | | | | Low | | | | |

1. Please rate Salary in terms of how desirable they are.

| | Undesirable | Somewhat Desirable | Very Desirable | No Opinion | | — | — | — | — | — | | High | | | | | | Medium | | | | | | Low | | | | |

1. If these were your only options, which would you choose?

| Autonomy | High | Low | Medium | NONE: I wouldn’t choose any of these. | | — | — | — | — | — | | Developmental Space | High | Low | High | | | Living Condition | Low | Medium | High | | | Salary | Medium | High | Low | | | Select | | | | |

1. If these were your only options, which would you choose?

| Autonomy | Medium | Low | High | NONE: I wouldn’t choose any of these. | | — | — | — | — | — | | Developmental Space | High | Low | High | | | Living Condition | High | Low | Medium | | | Salary | High | Medium | Low | | | Select | | | | |

1. If these were your only options, which would you choose?

| Autonomy | High | Medium | Low | NONE: I wouldn’t choose any of these. | | — | — | — | — | — | | Developmental Space | High | Low | High | | | Living Condition | High | Medium | Low | | | Salary | High | Low | Medium | | | Select | | | | |

1. If these were your only options, which would you choose?

| Autonomy | Low | High | Medium | NONE: I wouldn’t choose any of these. | | — | — | — | — | — | | Developmental Space | Low | High | High | | | Living Condition | Medium | High | Low | | | Salary | Low | High | Medium | | | Select | | | | |

1. If these were your only options, which would you choose?

| Autonomy | Medium | High | Low | NONE: I wouldn’t choose any of these. | | — | — | — | — | — | | Developmental Space | Low | High | High | | | Living Condition | High | Medium | Low | | | Salary | Medium | Low | High | | | Select | | | | |

1. If these were your only options, which would you choose?

| Autonomy | Low | Medium | High | NONE: I wouldn’t choose any of these. | | — | — | — | — | — | | Developmental Space | Low | High | High | | | Living Condition | High | Low | Medium | | | Salary | Medium | Low | High | | | Select | | | | |

1. If these were your only options, which would you choose?

| Autonomy | High | Medium | Low | NONE: I wouldn’t choose any of these. | | — | — | — | — | — | | Developmental Space | High | Low | High | | | Living Condition | Medium | Low | High | | | Salary | Low | Medium | High | | | Select | | | | |

1. If these were your only options, which would you choose?

| Autonomy | Low | High | Medium | NONE: I wouldn’t choose any of these. | | — | — | — | — | — | | Developmental Space | High | Low | High | | | Living Condition | Low | Medium | High | | | Salary | Low | High | Medium | | | Select | | | | |

1. Please provide your email address for receiving the result.

2. CBC Analysis Summary

Attribute	Level	Utility	Standard Error	Lower 95% CI	Upper 95% CI
Autonomy	High	38.22	9.20	17.71	58.73
	Medium	21.70	8.96	1.73	41.67
	Low	-59.92	10.31	-82.88	-36.95
Developmental Space	High	27.60	5.88	14.50	40.69
	Low	-27.60	5.88	-40.69	-14.50
Living Condition	High	39.08	6.98	23.53	54.62
	Medium	34.84	13.76	4.20	65.49
	Low	-73.92	12.62	-102.04	-45.80
Salary	High	38.37	10.85	14.20	62.54
	Medium	12.21	8.08	-5.80	30.22
	Low	-50.58	9.40	-71.52	-29.64
None Option	None Option	-59.03	42.98	-154.79	36.73

	N=10
Attribute	Importance	Standard Error	Lower 95% CI	Upper 95% CI
Autonomy	27.12%	3.70%	18.87%	35.37%
Developmental Space	13.80%	2.94%	7.25%	20.34%
Living Condition	33.62%	4.34%	23.96%	43.28%
Salary	25.46%	3.46%	17.76%	33.17%

The impact of autonomy on people’s preference of working abroad is high, consisting with different theories and observations. The living condition has the highest demand among all four attributes for respondents. The salary is important, but it is ranked no.3 to be concerned with.

Acknowledgment

I would like to express my heartfelt appreciation to my Supervisor, Prof. Huang from CKGSB for her valuable and tireless support towards my research; I would also express our gratefulness towards all respondents of the survey for devoting their time to assist us in collecting the data, most of them are my friends, my schoolmates, and my previous colleagues.