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Guide to corporate internal communications in China: a policy handbook

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Guide to corporate internal communications in China: a policy handbook

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Content GUIDE TO CORPORATE INTERNAL COMMUNICATIONS IN CHINA
A POLICY HANDBOOK
by
Winvy Lung
____________________________________________________________________
A Thesis Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
MASTER OF ARTS
(STRA TEGIC PUBLIC RELATIONS)
May 2007
Copyright 2007 Winvy Lung
ii
Table of Contents
List of Figures iv
Abstract v
Introduction 1
Chapter One: The Worth and Impact of Internal Communications 3
Internal Communications in the West 3
Why PR, not HR? 4
Internal Communications’ Impact on Business 4
Senior Executives’ Attention to Junior Employees 6
Lateral Internal Communications 7
Give Employees a Say 8
Employee Engagement Benefits – How They Change
Employee Behavior 9
Implications for Internal Communications Development in China 11
Chapter Two: An Overview of Internal Communications in China 12
The Chinese Business Environment 12
Degree of Internal Communications Usage in China 13
Why Isn’t Internal Communications in China a Reality? 15
The Chinese Perception of Western Companies 17
Chapter Three: Breaking Cultural Barriers 19
What Chinese Employees Expect 19
Confucian Ideology 22
Corruption and Money 23
Don’t Trust the Red-Beard, Green-Eyes 25
Guan Xi 26
Saving Face 29
Confidant Troops 30
Fewer Expatriates 31
Chapter Four: Case Study: McDonald’s in China 33
Bringing the American Dream to Chinese Employees 33
Overview of McDonald’s in China 33
Localization 34
McDonald’s Corporate Culture 35
Training 36
Employer Brand 37
Encourage Dialogue 38
iii
Chapter Five: An Interview with Ah Ye – Grandpa – of McDonald’s China 39
Corporate Culture 40
Customer at Every Level 41
Buddy System 42
Happy McPride 43
Fun Engagement 44
Chinese vs. Western Work Attitudes 45
Tips for Western Executives 47
Crisis Mechanism 49
Chapter Six: Case Study: Disneyland Hong Kong. Instilling Disney
Core Values in the Chinese Crew 50
Disney Corporate Culture 50
Lunar Problems 51
Workers’ Complaints 51
Employee Integration 52
Chapter Seven: Research on the Degree of Internal Communications
Application in China 54
Background 54
Methodology 55
Results 55
Analysis 55
Limitations 59
Chapter Eight: A Guide to Effective Employee Communications in China 61
Talk to the Chinese in Chinese 61
New Ways of Communication 64
Managing Expatriates 65
Senior Executives’ Role 67
Attract Locals 68
Building an Employer Brand in China 71
Speak Up, China! 72
Conclusion 75
Bibliography 77
Appendix: Survey Results 82
iv
List of Figures
Figure 1: The Correlation Between Internal Communications Frequency and
Employee Trust in Company 57
Figure 2: Communications Tools Most Frequently Employed by Companies
and Employees’ Preferred Communications Tools 60
Figure 3: Respondents’ Company Business Nature 82
Figure 4: Respondents’ Company Origin 82
Figure 5: Respondents’ Company Size 83
Figure 6: Communications Tools Currently Used by Companies 83
Figure 7: Corporate Communications Content 84
Figure 8: Corporate Communications Frequency 84
Figure 9: Respondents’ Trust in Company Disseminated Information 85
Figure 10: Respondents’ Most Preferred Way of Communication
with Supervisor 85
Figure 11: Respondents’ Most Preferred Form of Corporate
Communications 86
Figure 12: Importance of Corporate Communications to Respondents 86
Figure 13: Respondents’ Job Satisfaction Level 87
v
Abstract
Corporate internal communications is an extensively researched topic in
Western countries, and results link effective communications to better return on
investment. A growing number of Western corporations have extended their global
businesses into China, and are finding ways to better incorporate their internal
communications programs to their businesses in China. This thesis serves as a
guidebook to help global corporations design effective internal communications
programs specifically targeted to their Chinese employees, and create a more
engaged and productive Chinese workforce.
This thesis analyzes the communications barriers that internal communications
specialists expect to encounter when talking to Chinese employees, and highlights
some outstanding case studies, where multi-national corporations have successfully
adopted effective internal communications programs in China.
1
Introduction
What sets a company apart from its competition is not tangible products or
astronomical earnings numbers, but rather the value of contributions from its people,
its employees: “There is an emerging awareness that what companies have – people,
culture, leaders – are unique assets that drive value, and these things cannot be easily
replicated.”
1
The culture of a corporation is formed and upheld by employee engagement,
which is “the emotional state of commitment of employees that turns into behaviors
that drive business.”

According to the Best Employer studies conducted by Hewitt
Research, the best employers have a 73% employee engagement level, compared
with 52% at average employers. Another study conducted by Hewitt Research,
which looked at over 100 public corporations in China, showed that high performing
companies scored 20 to 25% higher on employee engagement level compared to
average employers.
2
Continuous, genuine two-way communication between a company and its
employees is the most effective and long-lasting way of keeping employees engaged.
Many Chinese business leaders, however, see creating marketing buzz, yielding
instant return on investments, or keeping the government happy, as more important
than “engaging the hearts and minds of its staff to drive business outcomes.”
3

1
Caplan, Jessica. (2004). Engage your employees, energise your business! China Staff, 10 (11), 8-9.
Retrieved March 1, 2007, from ProQuest database.
2
Ibid.
3
Ibid.
2
This thesis will highlight the importance of employee communications to the
overall development of corporations, and the effect such efforts have on work
productivity. For many western executives of foreign-invested firms, who have little
experience in communicating with their Chinese employees, this thesis will serve as
a guidebook to address their concerns, and will lay out the guidelines for actual
employee communications implementation.
3
Chapter One: The Worth and Impact of Internal
Communications
Internal Communications in the West
Twenty years ago, internal communications was equated with corporate
newsletters sent out from the human resources department; these could most often be
found in the rubbish bin. Today, “the internal communications function has grown in
power and responsibility and has been moved out of the HR department. The
majority of FTSE 100 companies now have a separate internal communications
department, reporting to a corporate communications director or a marketing
director.” The demand for internal communications specialists has grown rapidly as
this function has gained more attention in corporations. Many universities have
started postgraduate diploma programs to train internal communications
professionals.
4
Major corporations’ annual reports now state the importance of communicating
with employees because “the business is almost entirely dependent on the spirit and
motivation of its employees.” Companies now realize that internal and external
audiences are equally important. Mobile phone company O2 integrates its marketing
and corporate communications functions when it designs messages for its employees.
The company believes it is important to disseminate consistent messages for both
customers and employees.
5

4
Murphy, C. (2006, March 14). Speaking to the people. Personnel Today, 24-25. Retrieved March 20,
2007, from ProQuest database.
5
Ibid.
4
Why PR, not HR?
One of the most heated debates and greatest sources of confusion about internal
communications in companies that still do not see the value of employee
communications is whether it should be performed as a function of human resources.
This is especially true in China, where most journals on employee communications
discuss the function as a sub-division of human resources (HR) management.
The argument against having the human resources department take over internal
communications is that HR is most concerned about staff development. Most HR
professionals, however, are not trained communicators, and “making internal
communications an addendum to HR [encourages] a one-way style of
communication.”
6
Internal communications should be about establishing a
relationship between the company and its employees by setting up channels for open
dialogue. Effective communication is the best way to create an engaged employee
force. It changes “how [employees] think about their job, their relationship with
customers, [and] their relationship with the company.”
7
Internal Communications’ Impact on Business
Internal communications practices play a major role in driving positive business
development because effective “internal communications strategies will foster a

6
Ibid.
7
Ibid.
5
sense of community and participation,” which results in “increased employee
morale, decreased turnover and better bottom-line business results.”
8
Effective Communication: A Leading Indicator of Financial Performance, a
survey conducted by Watson Wyatt Worldwide, looked at the effect of internal
communications on corporate financial performance from 2005 to 2006. This survey
was a continuation of Watson Wyatt’s 2003-2004 internal communications survey.
Both surveys provided solid evidence that companies with effective internal
communications enjoyed excellent financial results and a low turnover rate. The
studies also showed that companies that incorporated internal communications as a
“strategic business function”, and actively made use of this function to increase
employee involvement in business development, enjoyed “higher shareholder value
and better return on investment.”
9
The Watson Wyatt 2003-2004 Communication Return on Investment study
revealed that the most critical factor for a successful internal communications
campaign is to create programs “that [drive] changes in behavior – moving people
from awareness to action.” Companies with the most effective internal
communications programs offered a 26% total return to shareholders from 1998 to
2002, while firms that communicated least effectively brought a negative 15% total
return to shareholders.
10

8
Internal Comms: Tying Employee Motivation To Organizational Goals. (2007, January 29). PR
News, 63(4), 1. Retrieved March 20, 2007, from ProQuest database.
9
Meisinger, S. (2006). To Keep Employees, Talk-And Listen-to Them! HR Magazine, 51 (8), 10.
Retrieved March 20, 2007, from ProQuest database.
10
Vogt, P. (2004). Awareness to Action: Connecting Employees to the Bottom Line. Communication
6
In the 2005-2006 version of the study, the returns to shareholders from
companies with the most effective communications programs were 57% higher than
those from companies with the least effective communications programs. The studies
also showed promising results for firms that made improvements in communication
effectiveness: these companies enjoyed a 20% increase in market value.
11
“Effective communications reinforce an organization's vision, connect
employees to the business, foster process improvement, facilitate change and
drive business results by influencing employee behavior. No matter how you
look at it, communication is an essential part of the business environment and
must not be taken for granted. Involving employees in the decisions that
affect an organization and their jobs can keep them engaged and eager to
contribute to the success of the enterprise.”
12
Senior Executives’ Attention to Junior Employees
Senior management should be aware of the importance of “appealing to each
employee,” and showing appreciation for his or her work. Junior staff members “are
the most important ones for senior management to reach, as they can be the
company's future leaders – or, they can leave as a result of discontent and cost the
organization valuable resources.”
13
Employee Communication & Surveys, a research firm based in Sydney,
Australia, produced data showing that the most cost-effective way to improve
employee satisfaction with internal communications is to improve the

World, March-April 2004. Retrieved October 10, 2006, from the IABC database.
11
Employee Communication Linked to Financial Performance. (2006). Benefits Canada, 5. Retrieved
March 20, 2007, from ProQuest database.
12
Meisinger, S. (2006). To Keep Employees, Talk-And Listen-to Them! HR Magazine, 51 (8), 10.
Retrieved March 20, 2007, from ProQuest database.
13
Internal Comms: Tying Employee Motivation To Organizational Goals. (2007, January 29). PR
News, 63(4), 1. Retrieved March 20, 2007, from ProQuest database.
7
communication flow between senior executives and employees. The research, also
shown to be applicable to UK and US companies, revealed that upward
communication with senior management, specifically the CEO, is the highest
correlate (0.7 out of 1.0) with employee satisfaction of internal communications.
14
The research also showed that face-to-face communication with senior
executives builds trust between the company and its employees. Such meetings help
employees fully absorb the information passed to them by the corporate
communications department, and allow employees to understand company goals and
directions by asking upper management questions in person.
15
Lateral Internal Communications
In addition to two-way vertical communication between a company and its
employees, lateral communication between employees is also an important element
of effective internal communications. Day-to-day contact between employees, like
“focus groups, small meetings, webinars, meet-and-greets, luncheons, happy hours
and message boards,” all facilitate lateral communications within a company.
16
Lateral communication does not imply only inter-rank communication within a
department; it also entails inter-discipline communication to improve business
development. Raj Subramaniam, FedEx’s senior vice-president for international

14
Gray, Rodney. (2004). Finding the Right Direction. Communication World, November-December
2004. Retrieved March 21, 2007, from the IABC database.
15
Gray, R., & Robertson, L. (2005). Effective Internal Communication Starts at the Top.
Communication World, 22 (4), 26-28. Retrieved March 20, 2007, from ProQuest database.
16
Internal Comms: Tying Employee Motivation To Organizational Goals. (2007, January 29). PR
News, 63(4), 1. Retrieved March 20, 2007, from ProQuest database.
8
marketing, says the company has a lateral communications network called “Market
Councils.” At council meetings, sales, marketing and operations gather to discuss
issues related to customer needs and to share insights on each business unit, enabling
the multiple disciplines to gain a better understanding of each other’s work for more
effective work processes.
17
IBM also experimented with employee-to-employee communications in 2002;
340,000 employees around the world engaged in a 72-hour online discussion called
“V alue Jam”, discussing what they believed were IBM’s core values. The director of
IBM's new media communications, Ben Edwards, said the “jamming” session was
highly useful in shaping corporate values and engraving such ideas in employees’
hearts because it actively involved their participation, and gave them a “sense of
authority” over core corporate values.
18
Give Employees a Say
Employees’ work performance, job satisfaction and company loyalty are all
related to how a company places them in the big picture and how the company
communicates this message. The “internal social audience”
19
wants to know how it
can contribute to the process of bringing about company success. Business decisions

17
Murray, Sarah. (2006, November 10). Internal collaboration: Many big organisations can find it
more difficult to collaborate internally than with outside partners. But companies need to be active in
nurturing and exploiting internal networks and ideas. Financial Times [London (UK)], p. 8. Retrieved
March 20, 2007, from ProQuest database.
18
Klie, S. (2006, October 23). The next frontier of employee communication. Canadian HR Reporter,
19 (18), 17. Retrieved March 20, 2007, from ProQuest database.
19
Holtz, Shel. (2005). The impact of new technologies on internal communication. Strategic
Communication Management, 10 (1), 22-25. Retrieved March 20, 2007, from ProQuest database.
9
affect employees’ job security, which is why they want to share their opinions and
expertise to help make positive contributions.
20
Corporations should take employees’ suggestions into serious consideration,
and implement changes where necessary. When a company’s employees have
provided valid suggestions that can’t be put into action immediately, it might assign
a senior executive to explain why this is the case.
21
That way , employees are more
likely to see the company as responsive to their concerns. This is also a way to
communicate to employees that they are respected and important to the overall
success of the company.
Employee Engagement Benefits – How They Change Employee
Behavior
A key function of internal communications is to “facilitate the building of
employee engagement, referring to the extent to which employees support and
endorse the business and its goals.” Greater employee engagement leads to “greater
creativity, greater enthusiasm, lower absenteeism, lower turnover, and more
enthusiasm when speaking with customers,” all of which could translate into more
dollars for the company and its stockholders.

20
Ibid.
21
Internal Comms: Tying Employee Motivation To Organizational Goals. (2007, January 29). PR
News, 63(4), 1. Retrieved March 20, 2007, from ProQuest database.
10
Keeping employees engaged through internal communications is a great way for a
company to improve its business and strengthen its financial results.
22
“Adam Goddess was having dinner with friends when he shared some
shocking news. ‘I was working Sundays then,’ says Goddess, ‘and I
remember telling my friends that I was looking forward to going to work the
next day. They were pretty surprised to hear me say that I was going in on
Sunday and that I was actually looking forward to it.”
23
This example illustrates how employee engagement can create a dedicated and
motivated workforce, and that this is directly linked to work productivity and
company performance. When employers are willing to listen to their employees, and
to take their suggestions seriously, employees become more committed to the profits
and losses of their company because they are included in the big picture.
24
Southwest Airlines is best known for its mission to treat its employees as its
most important customers. Ginger Hardage, Senior Vice President of corporate
communications at Southwest Airlines, says the company encourages employees to
“think and act like business owners” by sharing its profits with them. In 2005 alone,
Southwest Airlines shared $142 million of its profits with employees.
25

22
Engaging Employees Leads To Self-Enlightened Interest. (2005, April 6). PR News, 61 (14), 1.
Retrieved March 20, 2007, from ProQuest database.
23
Pomeroy, A. (2006). Great Communicators, Great Communication. HR Magazine, 51 (7), 44-29.
Retrieved March 20, 2007, from ProQuest database.
24
Ibid.
25
Hardage, G. (2006). Profile: Communicating the Southwest Way. Strategic Communication
Management, 10 (3), 4. Retrieved March 20, 2007, from ProQuest database.
11
Implications for Internal Communications Development in China
Formal research and journal reviews have shown the strong correlation between
effective internal communications programs and superior financial results for
companies in the west. Strong two-way communications between a company and its
employees contribute to keeping employees engaged and increasing work
productivity. The more involved employees are in a company’s business plans, the
more committed they are to its future development.
As the number of foreign companies doing business in China continues to rise,
China is adopting a more westernized way of conducting business. The following
chapters will illustrate the current business environment in China, and explain why
foreign and local-based companies should allocate more resources to developing
their internal communications programs.
12
Chapter Two: An Overview of Internal
Communications in China
The Chinese Business Environment
China embarked on the road to modernizing reform in 1978, when Deng Xiao
Ping, then President of China, announced the “four modernizations” of agriculture,
industry, national defense, and science and technology.
26
The announcement
revolutionized Chinese lives, and it also paved the way for an adjustment of the
global balance of power. From that day onwards, the Asian dragon has not ceased to
develop and reform, establishing itself as a major power. This status was confirmed
when China was accepted into the World Trade Organization in October 2001. The
selection of China to host the 2008 Olympic Games was also a tacit signal of its
status.
“China's impressive growth has enhanced its global influence and, some
would argue, helped shift the world's balance of power towards Asia. The
country's vast production capacity and appetite for resources are changing the
way its own people and people everywhere live and work.”
27
The whole world now faces the fact that China is developing significantly in
terms of economy and power. China’s economy is currently the fourth largest in the
world, and foreign money competes to invest in this Asian leader. By 2006, more
than 400 FORTUNE companies had investments in China.
28
In 2004, Dominic

26
http://news.bbc.co.uk/1/shared/spl/hi/in_depth/china_politics/key_people_events/html/6.stm
27
Barton, Dominic. (2004). Facing China. The McKinsey Quarterly, 2004 Special Edition: China
today. Retrieved November 14, 2006, from the McKinsey Quarterly database.
28
Lin, I-Ling. (2006). Profit through goodwill: Corporate social responsibility in China and Taiwan.
(Master’s Dissertation, University of Southern California, 2006). Retrieved November 20, 2006, from
ProQuest database.
13
Barton said China’s economy “will soon rival those of leading countries such as
France and the United Kingdom.”
29
Today, this is already reality . For example, the
Chinese are end-users of 25% of the world's steel and 50% of the world's cement,
making them the largest consumers of global resources. Local Chinese companies
are expanding rapidly; four of them recently joined the FORTUNE 500 list.
30
Many
CEOs of Chinese companies are hiring international consulting agencies, such as
McKinsey, Bearing Point and Boston Consulting Group, to enhance their corporate
image. In fact, 50 to 80% of the largest consulting firms’ current clients are Chinese
enterprises.
31
Degree of Internal Communications Usage in China
Prior to the 1980s, few foreign firms invested in China, and the country knew
little about the concept of internal communications. The state government assumed
the role of human resources management for most enterprises and assigned people to
jobs.
32
State-owned enterprises ran inef ficiently: for example, the Industrial and
Commercial Bank of China had about one million employees, about ten times the
number necessary to run the bank.
33

29
Barton, Dominic. (2004). Facing China. The McKinsey Quarterly, 2004 Special Edition: China
today. Retrieved November 14, 2006, from the McKinsey Quarterly database.
30
Hung, H. F. (Ed.). (2006). Voices of Experience from 20 International Business Leaders. Taiwan:
Wealth Press.
31
Ibid.
32
Ahlstrom, D., Foley, S., Young, M. N., & Chan, E. S. (2005). Human Resource Strategies in Post-
WTO China. Thunderbird International Business Review, 47 (3), 263-265. Retrieved February 10,
2007, from ProQuest database.
33
Ibid.
14
Under strict control of the Chinese central government, all major decisions were
made at the top and employees were mere recipients of information and orders. The
incentive to improve was low because industries did not respond directly to market
demand or customer needs. The government made product design and quantity
decisions, and employees at all levels were allowed only to carry out the orders.
Since all production and management decisions were made at the top, “management
development was not seen as a priority for organizational performance.
” 34
Even today, the business model in China is still molded to suit the local culture;
business methods are intertwined with proper social manners. Social rankings are
obvious and rigid, so employees often fear their superiors and consider themselves
command-followers. Very few managers see the need to communicate with
subordinates or to listen to their concerns because no opinions or feelings at the
lower level matter. Even when a company does communicate with employees, such
communications are typically one-way, from the top. Few Chinese executives see
lower-level employees as an integral part of success; therefore, they consider
external relations to be more important than talking to their own employees.
“Size is often equated with prestige and power” for many Asian companies, so
companies tend to motivate employees by reminding them about industry leadership.

34
Branine, Mohamed. (2005). Cross-cultural training of managers: An evaluation of a management
development programme for Chinese managers. The Journal of Management Development. 24 (5-6),
459-472. Retrieved January 20, 2007, from ProQuest database.
15
Few companies try to find out what information their employees would prefer to
hear, through sincere, genuine communication.
35
Why Isn’t Internal Communications in China a Reality?
In the past, very few Chinese companies had a clear corporate structure, and
there were no fair performance measurement mechanisms by which managers could
evaluate subordinates’ work. As a result, employees directed all work effort to
pleasing supervisors, instead of focusing on business development, product quality
or innovation. The loyalty of employees was directed to the Communist party, rather
than to their employers.
36
General Electric China’s Chief Learning Officer, Jeff Barnes, remarked that the
biggest challenge for the company is finding mid-level and top-level management
staff. The current management population in China is inexperienced in working for
privately owned corporations, and they do not have a role model to follow because
“their parents worked for state-owned companies.”
37
Foreign-investment companies
also face competition from local firms in their search for local management staff.
Chinese workers with western educations appear to be the answer to the personnel
shortage in China.
38
Many have returned to China because of the positive outlook of
the business environment. Experienced workers who have already attained

35
Phan, Phuong Anh D. (n.d.). Corporate Communication Strategies in Asia. Retrieved September 15,
2006, from the IABC database.
36
China's people problem: Human resources. (2005, April 16). The Economist, 375 (8422), 60.
37
Ibid.
38
Ibid.
16
management level in western countries are bringing western communications
theories back to China, improving local productivity. This new generation of
executives has the potential to change the way corporations communicate with
employees. Some of the top executives of corporations in China have worked or
received education outside of China: examples include David Wei, President of B&Q
China, Yifei Li, Managing Director of MTV China, and Zhu Min, head of
restructuring at Bank of China.
39
The shift towards a western communications approach in China does
unfortunately face certain obstacles. For example, the average age of
communications specialists is 25 to 27. It is often difficult for them to work on a
“peer-to-peer” level with older employees, especially CEOs. As a result, it is almost
impossible for corporations in this hierarchical society to introduce strategic and
management-level corporate communications campaigns.
40
Leader Member Exchange (LMX) is another way of looking at why internal
communications face so many obstacles in China. LMX measures the relationships
between superiors and subordinates in a company. Positive LMX means that
superiors have sufficient capability and power, and subordinates are obedient, loyal
and trustworthy. Both parties also share a common value system that facilitates a
harmonious work environment. Negative LMX means that superiors are dictatorial

39
Ibid.
40
Phan, Phuong Anh D. (n.d.). Corporate Communication Strategies in Asia. Retrieved September 15,
2006, from the IABC database.
17
and inconsistent.
41
Another aspect of negative LMX is that subordinates show fake
modesty, use superficially polite gestures that are inconsistent with their internal
feelings, and hide their true feelings from superiors. This aspect is particularly
prevalent in China, in which the culture values relationships and the giving of
reciprocal favors.
42
The lack of an honest, trusting relationship between superiors and
subordinates in China makes it extremely difficult for open communications to exist
within a company.
The Chinese Perception of Western Companies
Local Chinese want to work for multi-national companies because of the
companies’ reputations, and the opportunities to work overseas.
43
Such opportunities
to work within large American corporate environments have existed only recently,
and many Chinese are still finding the best ways to survive in western corporations.
44
Differences of cultural expectations in work environments have exacerbated
misunderstandings between the East and West. Chinese workers view the emphasis
of western corporations on performance measurement suspiciously, as a tool to exert
stringent control on employees, leading them to seek alternative jobs.
45
Such cultural

41
Hung, H. L. (2005). Management Intelligence of the Chinese. Hong Kong: SCMP Book Publishing
Limited.
42
Ibid.
43
Hung, H. F. (Ed.). (2006). Voices of Experience from 20 International Business Leaders. Taiwan:
Wealth Press.
44
Aspen's Chinese team engages in teambuilding. (2006, October 18). Market Daily. Retrieved
November 10, 2006, from the IABC database.
45
Fields, D., Chan, A., Akhtar, S., & Blum, T. C. (2006). Human resource management strategies
under uncertainty. Cross Cultural Management, 13(2), 171-186. Retrieved March 10, 2007, from
18
differences are hindrances to establishing trusting communications between western
management and local Chinese employees.
Traditionally a collectivist society, China is still undergoing transitions and
realigning its position in the world. Chinese managers are exploring whether, and in
what ways, “Western-style practices and employee organizational commitment
commonly found in individualistic and capitalistic countries such as the USA,” are
applicable to the Chinese culture.
46
Another fundamental difference between western and Chinese employees is
how they view their relationship with the company. Chinese employees see their
relationship with an organization as a “moral connection,” where “the collective unit
and worker have reciprocal obligations to each other.” US employees, on the other
hand, see employment relationships as “primarily calculative,” a reflection of the
high degree of individualism in US culture.
47
This pattern is also found in Europe,
where Dr. Richard Hausmann said, “To Europeans, the company is only a place to
work, but for Chinese they seek a mutual trust and reliance beyond work settings.”
48

ProQuest database.
46
Goldsmith, Carole. (2006). Human resource management a positive influence on Chinese
employees. China Staff, 12(6), 30-31. Retrieved October 10, 2006, from ProQuest database.
47
Fields, D., Chan, A., Akhtar, S., & Blum, T. C. (2006). Human resource management strategies
under uncertainty. Cross Cultural Management, 13(2), 171-186. Retrieved March 10, 2007, from
ProQuest database.
48
Hung, H. F. (Ed.). (2006). Voices of Experience from 20 International Business Leaders. Taiwan:
Wealth Press.
19
Chapter Three: Breaking Cultural Barriers
What Chinese Employees Expect
The Chinese nation aspires to upward movement and expects attainment of
goals in short timeframes. Many local employees have high ambitions, inspired by
their parents’ high expectations. The one-child-per-family policy in China means that
every young Chinese is an only child, and the hopes of the entire family rest upon the
success of one individual. It is not unusual to find a person who graduates from one
of the top universities in China, like Tsinghua University or Jiao Tong University,
and who expects to take over his or her department head’s position within three
years.
49
Chinese employees’ ambitions can help them overcome any “steep learning
curve.” Employees who might not be prepared to take up a higher position can be
motivated to outperform if given a promotion opportunity. Corporations should be
flexible and creative in developing job titles to accommodate more promotions,
which in turn bring job satisfaction and better work performance.
50
Another way to retain and recruit talent is to offer ample training opportunities,
so employees feel they are constantly improving and growing with the company.
Hilton Hotels Shanghai General Manager Lu Pei Yi sees the importance of making

49
Hung, H. F. (Ed.). (2006). Voices of Experience from 20 International Business Leaders. Taiwan:
Wealth Press.
50
Wu, Victorien. (2006). Review - China CEO: Voices of Experience from 20 International Business
Leaders. The China Business Review, 33(5), 85. Retrieved November 17, 2006, from ProQuest
database.
20
employees feel that the company values their career prospects. Employees must also
foresee promotion opportunity within the company.
51
Corporations could take a closer look at employees’ perspectives by examining
the close relationships between Chinese workers and their direct supervisors. These
relationships are much closer than those in western companies. Chinese employees
look to supervisors for training, career planning, professional development, and even
personal assistance. Supervisors expect subordinates to show respect, loyalty and
commitment. Employees’ loyalty to their company is essentially based on their
loyalty to their direct supervisor.
52
Global corporations doing business in China rely on local communications
experts to understand cultural needs during special times of the year. During Chinese
New Year, for example, Chinese employees expect to get an extra month’s pay. If
their company won’t give them the extra salary, they are likely to find a company
that will.
53
If senior executives of western companies want to make Chinese employees feel
respected, valued and motivated, at least one visit to China each year to meet with
them is of great benefit. A handshake, or a sincere “thank you”, can result in a group
of employees who will “go the extra mile for you."
54

51
Hung, H. F. (Ed.). (2006). Voices of Experience from 20 International Business Leaders. Taiwan:
Wealth Press.
52
Ibid.
53
Hymowitz, Carol. (2005, May 10). Executives in China Need Both Autonomy And Fast Access to
Boss. Wall Street Journal [New York], p. B1. Retrieved January 13, 2007, from ProQuest database.
54
Ibid.
21
An important aspect of doing business in China is role of the central
government as both regulator and customer: “Jack Q. Gao, Vice President and
regional director of AutoDesk’s operations in China, believes that ‘to grow in this
market, which is so dynamic and unique, I need to be directly supported by top
executives who can present one strategy to the government.’ China's government, he
notes, not only sets economic policy, but is the largest customer of AutoDesk and
many other multinational companies.”
55
Corporate interactions with Chinese government officials could appear absurd
and foreign to westerners who are used to a direct, frank way of communication. For
example, an American executive accustomed to picking up the phone to set up a
meeting, would find that he only reaches voicemail systems. To meet with a top-level
government official in China, he must first meet with three to four layers of junior-
and mid-level staff before he is introduced to officials at the next level. Officials at
each level would expect him to exchange favors and courtesies in order to build
Guan Xi – relationship (but this does not necessarily imply bribery).
56
Even when he
finally gets to meet with the top-level official, the executive would be foolish to dive
straight into business and press for demands. The Chinese official would expect him
to sit back, relax, and enjoy a glass of Remy Martin. If the American executive first
wins the trust of the Chinese official during friendly conversation, he is more likely
to achieve his objectives for the meeting.

55
Ibid.
56
Vu, Uyen. (2005, September 26). Doing business in China has everything to do with people.
Canadian HR Reporter, 18 (16), 5-6. Retrieved January 13, 2007, from ProQuest database.
22
Western executives must also learn the art of reading the Chinese way of
indirect communication. Silences, punctuation, and rhetorical questions, all entail a
deeper layer of meaning. For example, “If a Chinese person says, ‘I believe this is a
good idea. Are there any other ideas that you can come up with?’ he might really
mean he doesn’t like the idea and a different one is required, but a Canadian or
American might take that as, ‘Oh he really likes it.’ [Westerners] don’t hear that it
was a polite way of saying, ‘I don’t want to do what you’re suggesting. Give me
another option.’”
57
Confucian Ideology
The teachings of Confucius are deeply rooted in Chinese culture, and continue
to guide Chinese people in “learning, hierarchical relationships, harmonious social
and personal relations, standards of morality and virtue.”
58
Chinese employees have
grown up learning Confucian teachings, and the traditional school of thought has
become incorporated as part of their core values and beliefs.
Two thousand years ago, Confucius laid down one of the core management
principles in China: Ren Ai – compassion.
59
Confucius believed that compassion and
care are important in handling interpersonal relationships, including the relationships
between employers and employees. Some of the most successful corporate

57
Ibid.
58
Branine, Mohamed. (2005). Cross-cultural training of managers: An evaluation of a management
development programme for Chinese managers. The Journal of Management Development. 24 (5-6),
459-472. Retrieved January 20, 2007, from ProQuest database.
59
Hung, H. L. (2005). Management Intelligence of the Chinese. Hong Kong: SCMP Book Publishing
Limited.
23
employment relationships are not about efficient use of human resources, but are
those in which companies satisfy the personal and psychological needs of their
employees by communicating care and concern about their well-rounded lives.
On the other hand, Confucian teachings can also be a hindrance to constructive
and genuine communications between corporations and employees. Chinese are
taught to speak in polite terms. When taken to an extreme, this can become fake
modesty. When asked for an honest evaluation of their company or their supervisors,
Chinese employees tend to talk only about the positives and to suppress negative
feelings. This tendency could also be attributed to a fear of being evaluated
negatively: employees might talk only about positive aspects of their work
experience, in the hope of being evaluated in the same way.
Corruption and Money
The Chinese people are passionate about playing with money: “Gambling and
financial speculation are hardwired into their genes.”
60
This love of gambling and
money is exemplified in the rapid development of Macao, the only city for legal
gambling in China, which in 2006 surpassed Las Vegas as the largest gambling
center in the world. Most of Macao’s 22 million visitors in 2006 came from other
parts of China.
61

60
McGregor, James. (2005). One Billion Customers. New York: Free Press.
61
Barboza, David. (2007, January 24). Macao Surpasses Las Vegas as the Gambling Capital. New
York Times [New York], p. C4. Retrieved January 27, 2007, from
http://www.nytimes.com/2007/01/24/business/worldbusiness/24macao.html?_r=1&oref=slogin.
24
To many Chinese, having money in one’s pocket provides more security than
having a trustworthy friend. The Chinese belief that it is better to recognize money
than faces is a result of the upheavals in the Cultural Revolution and the corrupt
political system.
62
It is not uncommon to hear that Chinese parents would sell a
daughter as a toy to strangers for RMB 400 (US $52).
63
This obsession for money has given the Chinese nation a reputation for
corruption across all social strata. The Chinese government is trying to clear up its
corrupt administration and state-owned enterprises. Xu Guojun, former Bank of
China branch manager in the southern province of Guangdong, was arrested in
January 2006 for the biggest bank scam in China’s history, and his verdict could
transform China’s financial system.
64
China is eager to ease westerners’ concerns
about fraud and corruption, in order to attract greater investment.
65
In the midst of a changing social attitude towards money and corruption, a
corporation and its employees could do well to turn back to a Confucian teaching for
guidance: Jun Zi Ai Cai, Qu Zhi You Dao – “The gentleman loves money, but obtains
it in an ethical way.” Corporations and their employees should be ethical and
respectful of each other’s interests, and make money a motivation, not a stumbling
block to success.
66

62
McGregor, James. (2005). One Billion Customers. New York: Free Press.
63
Mak Wai Yan, personal interview, January 22, 2007.
64
Grover, Ronald. (2006, November 16). Supercrooks or Sitting Ducks? Business Week, 4009, 50.
65
Ibid.
66
Hung, H. L. (2005). Management Intelligence of the Chinese. Hong Kong: SCMP Book Publishing
Limited.
25
Don’t Trust the Red-Beard, Green-Eyes
Some Chinese who experienced the repercussions from World War II and the
Great Depression strongly believe their wealth was drained away by force as
foreigners “strong-armed their way into China” in the past two hundred years, and
they still view westerners in a suspicious way.
67
In the past, the guiding principle for many state officials in their interactions
with foreign companies has been Zhi Lu Wei Ma – “Point at a deer and call it a
horse.” Making false claims, diverting attention and distorting facts are common
practices among officials because “the party believes that to do anything else would
risk destabilizing the system.
” 68
Nowadays, the central government is making ef forts
to create a sense of trust between its officials and investors, but the effect has not
entirely trickled down to remote regional state offices. In this context, the best asset a
global corporation can have is local employees with local connections, who can
serve as the company’s navigators. However, this solution faces another obstacle.
Many Chinese have been brought up to believe that western corporations reserve the
better positions for white employees. This belief is almost exactly the opposite of
what is actually in the minds of global corporations: they are in fact eager to build a
strong body of local employees capable of filling management positions.

67
McGregor, James. (2005). One Billion Customers. New York: Free Press.
68
Ibid.
26
Multi-national companies must win the trust of local employees that this is the case,
and that they enjoy equal access to senior positions.
69
Guan Xi
“Chinese rely on Guan Xi for the things they do and also as a way of keeping
their security, protection and social support. Guan Xi can simply be
friendship, faith and the willingness to assist one another in times of
hardships or whenever necessary.”
70
The concept of Guan Xi – good connections – is the key to a successful business
in China. Within an organization, you must have good Guan Xi in order to win favors
from colleagues and supervisors. In a traditional Chinese company, many employees
are promoted or receive pay raises as a result of good Guan Xi. Establishing and
maintaining relationships at work are just as important as completing work tasks; this
network one creates is useful in solving problems, large and small.
71
In Chinese culture, the concept of self-identity is dependent upon a web of
relationships. A person is defined by the establishment of connections with other
people in society, and these relationships validate one’s role in the community. This
concept stands in sharp contrast to the typical western egocentric self-identity. Guan
Xi could be viewed as a “social currency,” enabling the “development and
maintenance of viable reciprocal relationships.” Good relationships are the basis of a

69
Lyons, Tess. (2005). Where East meets West. China Staff, 11 (9), 34-36. Retrieved October 12,
2006, from ProQuest database.
70
Lee, H. W. (2006). International Human Resource Management Can Be Achieved Through Cultural
Studies and Relevant Training. The Business Review, 5 (2), 95-99. Retrieved January 12, 2007, from
ProQuest database.
71
Hung, H. L. (2005). Management Intelligence of the Chinese. Hong Kong: SCMP Book Publishing
Limited.
27
functioning society, and form a set of disguised rules that govern the business
environment in China.
72
Ways to build positive Guan Xi include giving gifts, being a host, or returning
favors in the form of money. Gifts are tools to establish and strengthen relationships
in China, and Chinese are accustomed to gifting as a way of showing gratitude or
putting forward a request. Appreciating the giver’s caring thoughts, a recipient often
seeks to enhance the positive relationship further by returning a gift or giving a favor.
The establishment and maintenance of Guan Xi is an art, which involves finding a
balance between going overboard, making the process look like bribery, and
embarrassing the recipient by giving too little.
When Guan Xi turns negative, it usually follows four steps before the end of
friendly terms: “Tolerance, Indirect Communication, Secret Action (You’ve got your
plans, I’ve got mine) and Open Confrontation.”
73
Adhering to the Confucian
teachings, most Chinese choose to tolerate each other’s shortcomings and offer a
chance for the other party to return to friendly terms. If silence does not make the
situation better, Chinese are very talented in speaking indirectly, in riddles, to ease
embarrassment and offer a chance for relationship reparation. If indirect
communication is not sufficient to reverse the negative situation, both parties might
devise plans by which to counter-attack each other. Once one party decides to

72
Westwood, R., & Lok, P. (2003). The Meaning of Work in Chinese Contexts: A Comparative Study.
International Journal of Cross Cultural Management, 3 (2), 139-166. Retrieved September 20, 2006,
from ProQuest database.
73
Hung, H. L. (2005). Management Intelligence of the Chinese. Hong Kong: SCMP Book Publishing
Limited.
28
escalate the conflict, it turns into open confrontation. Once Chinese engage in open
confrontation, there is almost no chance for a relationship to return to friendly terms.
Chinese culture places paramount importance on saving face and showing respect.
Open confrontation is a last resort because Chinese always prefer to maintain
harmonious relations. They would rather avoid discussion of problems, and suppress
feelings of anger in order to maintain cordial relationships. When doing business,
Chinese executives prefer to take each step carefully, using indirect language to
prevent jeopardizing the harmonious environment. In contrast, western businessmen
are more direct, and, in doing so, might potentially embarrass someone publicly.
Westerners are more accepting of open conflict if that is the best way to get things
done quickly and effectively. Chinese managers are extremely uncomfortable with
this way of communication. In situations of conflict, in order to save face, they
would prefer bringing in a third party to resolve the conflict. If necessary, Chinese
managers are willing to “make concessions and maintain on good terms with
everyone to ensure harmony all around.” The teachings of Confucianism – “judge
others by oneself”, and “water drips and, given time, will drill a hole in granite” –
encourage the Chinese nation to contain its anger and reflect on its shortcomings.
They provide hope that “persistence and patience will pay off in the long run.”
74

74
Chien, Min-Huei. (2006). A Study of Cross Culture Human Resource Management in China. The
Business Review, 6 (2), 231-237. Retrieved January 17, 2007, from ProQuest database.
29
Saving Face
“In the East, saving face means that you don’t admit your own mistakes and
you don’t publicly humiliate co-workers by exposing their mistakes.”
75
A person without face is considered dishonorable and will not be given respect
by fellow colleagues. Western managers should avoid embarrassing a Chinese
employee in front of others; that paves the way for a destructive relationship within
the company.
76
The Chinese way of not losing face, and not causing others to lose face, is
potentially a barrier to communications because of the requirement to sometimes
withhold true feelings and suppress negative thoughts. Many Chinese refuse to pass
on bad news, which poses problems for a corporation’s ability to detect crisis signals
within the company. Collectivist China emphasizes the plural “we.” Employees tend
to be protective of colleagues’ wrongdoings because they view the entire staff as a
collective unit. When a Chinese wishes to refuse a request, they typically don’t
refuse directly, but use phrases such as “I will consider it,” or “maybe next time,” to
avoid embarrassing the other party.
77

75
Trombly, Maria. (2006, May 1). Saving Face in China. Computerworld, 40 (18), 37-38. Retrieved
January 17, 2007, from ProQuest database.
76
Lee, H. W. (2006). International Human Resource Management Can Be Achieved Through Cultural
Studies and Relevant Training. The Business Review, 5 (2), 95-99. Retrieved January 12, 2007, from
ProQuest database.
77
Lu, L. T., & Lee, Y. H. (2005). The Effect of Culture on the Management Style and Performance of
International Joint Ventures in China: The Perspective of Foreign Parent Firms. International Journal
of Management, 22 (3), 452-464. Retrieved October 22, 2006, from ProQuest database.
30
Companies can gather honest opinions by setting up individual or anonymous
feedback channels because “in groups, Chinese are more cautious, less open and
flexible, but they are exactly the opposite when you deal with them individually.”
78
Confidant Troops
Chinese managers evaluate subordinates according to Guan Xi, loyalty, and
capability, and categorize employees as “confidants” or “outsiders” according to
these qualities.
79
Chinese managers love to build a troop of confidants in the work
environment. This team of supporters enjoys special attention and favors from its
leader.
80
Managers locate confidants by finding those who share similar values and
working attitudes. Superficial values and attitudes can be faked, which explains why
many Chinese employees do things to please their supervisors. Average Joes, who
aren’t willing to change their personal perceptions to match their managers’ views,
find themselves in a difficult position with little opportunity for promotion.
81
The establishment of camps of confidants loyal to different department heads is
much less common in western countries, where most companies have structured,
merit-based schemes for rewarding good performance. As a result, the relationship

78
Lee, H. W. (2006). International Human Resource Management Can Be Achieved Through Cultural
Studies and Relevant Training. The Business Review, 5 (2), 95-99. Retrieved January 12, 2007, from
ProQuest database.
79
Hung, H. L. (2005). Management Intelligence of the Chinese. Hong Kong: SCMP Book Publishing
Limited.
80
Ibid.
81
Ibid.
31
between supervisor and subordinate is typically based only on work performance. In
contrast, managers in China value whether their subordinates are confidants more
highly than their work performance.
82
Groups of confidants create power camps in a company, weakening corporate
unity. Instead of seeing each other as members of opposing camps, employees should
develop mutual respect, trust and interdependence.
83
Fewer Expatriates
Many global companies initially brought expatriates to China as management-
level staff; however, this practice changed when “expats found themselves in the
precarious position of being expensive line items in cash-strapped Asia.”
84
Many
companies began to cut budgets after the Asian financial crisis by shrinking
“expensive, difficult-to-justify expatriate programs.” Many expatriates were also
desperate to return to their home countries because of health threats like SARS and
avian flu. The need for top management-level staff in China, however, did not
diminish.
85
When filling management positions previously held by expatriates, global
corporations have now begun to appreciate the expertise that local employees can
bring. Chinese managers also have good Guan Xi and understand the Chinese culture

82
Ibid.
83
Ibid.
84
Lyons, Tess. (2005). Where East meets West. China Staff, 11 (9), 34-36. Retrieved October 12,
2006, from ProQuest database.
85
Tess Lyons. (2005). Betting big on 'internationalising' local employees. China Staff, 11 (5), 12-14.
Retrieved September 20, 2006, from ProQuest database.
32
better than foreigners: “The concept of Guan Xi is particularly beneficial for a
functional head of sales, human resources or head of a business unit, where a higher
value is placed on knowledge of local culture and connections.” Local Chinese staffs
understand what resonates with local people, and know the best methods for
communication with local subordinates.
86
Consequently , the new generation of
Chinese managers is experiencing a surge of demand for them to fill positions in
many global companies that are establishing their Chinese businesses.

86
Ibid.
33
Chapter Four: Case Study: McDonald’s in China
Bringing The American Dream to Chinese Employees
McDonald’s is one of the most successful and popular fast food chains in
China’s market. Its internal communications model in China is highly effective and
has been adopted by many competitors.
Overview of McDonald’s in China
McDonald’s has grown from one restaurant in 1955 to a fast food empire with
32,000 restaurants and 1.6 million employees worldwide.
87
It has faced challenges in
recent years, however, including the death of two CEOs in 2004 and 2005,
accusations from health group advocates, and attacks from the book Fast Food
Nation and the documentary Supersize Me. Despite reports of the detrimental effects
of consuming McDonald’s greasy burgers, the fast-food company’s revenue is at a
record level.
88
McDonald’s changed its strategy from opening more locations to
increasing revenue at current locations. The restaurant chain now wants to be “better,
not bigger,” and has introduced measures to improve product development,
marketing, and store ambiance to “realign with contemporary tastes.”
89
McDonald’s business in China began in Hong Kong. Its first store in Mainland
China was opened in Shenzhen in 1990. Today it has over 1,000 stores in China, and

87
http://www.mcdonalds.com/corp/about/mcd_history_pg1.html
88
Bingham, T., & Galagan, P. (2006). Training: they’re lovin’ it. T + D, 60 (11), 29-33. Retrieved
February 22, 2007, from ProQuest database.
89
Arndt, Michael. (2007, February 5). McDonald’s 24/7. Business Week, 4020, 64-72.
34
its first drive-thru opened in Dong Guan in 2006. Recently, McDonald’s entered into
a partnership with China Petroleum and Sinopec, China’s largest oil companies, to
introduce drive-thru restaurants at gas stations around the country. This partnership
could be the turning point for McDonald’s in narrowing the significant gap between
itself and competitors like KFC China.
90
McDonald’s business in China has been a positive example of restaurant
business standardization. The restaurant brought about “American cultural
imperialism,” improving food hygiene levels and bringing effective operations
mechanisms to the food industry. The McDonald’s framework also introduced the
concepts of “queuing, individual ordering and self-provisioning” to Chinese diners.
91
Localization
In order to show trust in and respect to local employees, McDonald’s empowers
regional leaders to observe and understand local customers’ tastes and introduce
products to suit their needs. Every regional restaurant is given the freedom to add a
local taste to its menu.
92
McDonald’s China recently added rice bur gers to its menu,
using the marketing slogan “FANtastic” to create resonance with the pronunciation
of rice – fan – in Chinese. As part of recent efforts to revitalize the McDonald’s

90
Walkup, Carolyn. (2006, July 3). McD inks drive-thru deal with China’s petro-giant. Nation’s
Restaurant News, 40 (27), 1-2. Retrieved February 22, 2007, from ProQuest database.
91
Witkowski, T. H., Ma, Y., & Zheng, D. (2003). Cross-cultural influences on brand identity
impressions: KFC in China and the United States. Asia Pacific Journal of Marketing and Logistics, 15
(1/2), 74-89. Retrieved October 22, 2006, from ProQuest database
92
Bingham, T., & Galagan, P. (2006). Training: they’re lovin’ it. T + D, 60 (11), 29-33. Retrieved
February 22, 2007, from ProQuest database.
35
brand in China, the Chinese regional director decided to slowly remove the Ronald
McDonald icon from its locations, after market research indicated that local
customers could not connect with the Ronald McDonald image. To promote
McDonald’s as a young, energetic brand, the restaurant chain incorporated a mini-
catwalk fashion show at several new store openings in Hong Kong.
93
McDonald’s Corporate Culture
McDonald’s sees itself as a “people intensive business,” and recognizes the
importance of communicating this message to employees to make them feel valued
and respected. The Plan to Win, one of McDonald’s operational and leadership
training plans, concentrates on “five critical success factors: people, products, place,
price and promotion.” Of these factors, people come first because McDonald’s
believes “if [it doesn’t] reach all the way to the people at the front counters who
deliver the moment of truth to customers, [it fails].” Therefore, the restaurant giant
has an extensive system of training, which stresses “knowledge-sharing” between
employees at every level of the business.
94
The company holds regularly scheduled
networking meetings to help employees develop leadership and career management
skills, and to share best practices.
95

93
McDonald’s redefines brand. (2007, February 23). Apple Daily. Retrieved February 24, 2007, from
http://www1.appledaily.atnext.com.
94
Bingham, T., & Galagan, P. (2006). Training: they’re lovin’ it. T + D, 60 (11), 29-33. Retrieved
February 22, 2007, from ProQuest database.
95
Pomeroy, Ann. (2006). She’s Still Lovin’ It. HR Magazine, 51 (12), 58-61. Retrieved February 22,
2007, from ProQuest database.
36
One of the greatest strengths McDonald’s boasts about is its “Employee V alue
Proposition (EVP).” EVP means “energizing environment, improvement
opportunities, continuous learning and flexibility,” all of which are directed towards
career betterment for its employees.
96
Training
McDonald’s trains its executives and managers at the famous Hamburger
University, and these leaders then train crew members at local stores. The restaurant
chain understands that it faces the possibility of a high employee turnover rate
because most crew members view their employment at McDonald’s as temporary or
part-time after-school jobs. In order to keep employees at McDonald’s longer, the
company offers extensive training and an impressive operational system that
encourages crew members to aspire for higher positions within the company.
Seventy percent of managers started as crew and were subsequently promoted.
97
McDonald’s training strategy in China is first to establish “the culture of
learning.” The company encourages trainees to evaluate classes they have taken, and
to reflect on what they learned. The theory behind McDonald’s extensive training
program is that it helps new crew members to migrate into the McDonald’s corporate

96
Employer Profile – McDonald’s: Flipping tasty perks. (2006, December 6). Employee Benefits, 40.
Retrieved February 22, 2007, from ProQuest database.
97
Bingham, T., & Galagan, P. (2006). Training: they’re lovin’ it. T + D, 60 (11), 29-33. Retrieved
February 22, 2007, from ProQuest database.
37
culture, and encourages promotion by equipping employees with better operational
and management tools.
Employees love working at McDonald’s because they have a feeling of
accomplishment and of continuously improving themselves, which is the
“differentiator from other choices” employees might find.
98
Employer Brand
In recent years, McDonald’s has recreated its employer brand and eliminated
former stereotypes of McDonald’s employees as “burger flipper[s] paid close to the
minimum wage.” The company rolled out a “Not Bad for a McJob” campaign in
Europe in spring 2006. The campaign promoted the “pay and perks” for numerous
positions at the company, and also presented an image of a manager with a good
compensation package to show the competitive salary one can earn at McDonald’s.
McDonald’s created another worldwide campaign in response to UK and US
employees’ feedback that they appreciated the training and career development
opportunities at the company. In the summer of 2006, McDonald’s launched a series
of video podcasts on YouTube.com, with the title “The McDonald’s You Don’t
Know.” The videos depicted real-life stories of crew members moving up to become
McDonald’s storeowners as a result of the opportunities and support their parent
company provided.
99

98
Ibid.
99
Berta, Dina. (2006, December 18). Chains build employment brands to compete for workers.
38
These video podcasts were a novel way to promote the employer brand, and
helped to redefine McDonald’s as a desired employer – one that offers upward career
mobility. Using multimedia Internet tools like YouTube.com also helped
McDonald’s position itself as a young, up-to-date employer brand.
The company’s benefits and compensation manager, Neal Blackshire, pointed
out that the salary and benefits package the company currently offers is alone a
strong pull factor for job seekers. The training and learning opportunities it offers
add to its attractiveness as an employer. McDonald’s has been in the Times’ Top 100
graduate employers list for the past six years.
100
Encourage Dialogue
McDonald’s understands that its frontline employees are the ones who engage
in day-to-day interaction with customers, and that their feedback is tremendously
valuable to the improvement and continuous success of the restaurant chain. As an
incentive for employees to voice their opinions, crew members are offered cash
vouchers for any suggestions that receive serious consideration. The more
constructive and more profitable the suggestion, the greater the reward amount
employees receive.
101

Nation’s Restaurant News, 40 (51), 10-11. Retrieved January 22, 2007, from ProQuest database.
100
Employer Profile – McDonald’s: Flipping tasty perks. (2006, December 6). Employee Benefits, 40.
Retrieved February 22, 2007, from ProQuest database.
101
Ibid.
39
Chapter Five: An Interview With Ah Ye – Grandpa – of
McDonald’s China
102
Ah Ye is the Chinese way of referring to a grandfather; its secondary meaning
denotes a sign of respect. The Ah Ye of McDonald’s China, James Chu, was given
this name as an honorific title as the founder of McDonald’s in Hong Kong and
China. Top executives look up to him as “the teacher’s teacher.”
James Chu opened the first McDonald’s in Hong Kong, and served as the
general manager and Vice President of McDonald’s Hong Kong for 15 years. He
then opened the first store in Mainland China – in Shenzhen in 1990 – and served as
the Senior Vice President of McDonald’s China for 16 years. Prior to leading the
team that opened McDonald’s first store in Hong Kong, Chu was the principal of a
renowned high school in Hong Kong. He began his McDonald’s career by receiving
intensive training in the United States. His training program included directing traffic
in the parking lots of McDonald’s locations, and cleaning the bathrooms. This is the
typical training program for McDonald’s executives. McDonald’s believes that in
order for its management staff to understand crew members’ needs, they must
understand the day-to-day work of frontline employees by being trained in their
roles.
Chu is most proud of McDonald’s success in bringing the American model of
internal communications to local Chinese staff. When people walk into McDonald’s
stores in China, they find energetic, enthusiastic employees serving customers with

102
James Chu, personal interview, July 27, 2006.
40
bright smiles on their faces. Chu is one of the McDonald’s converts who has
“ketchup in his veins”
103
and is spreading this belief to the massive crew in China.
“Success of a corporation or a product launch is not a one-man business of
the CEO, but is dependent upon the lowest level, who delivers your dream at
the frontline. Therefore, internal communications should be the top most
valued ideal.” – James Chu, former Senior Vice President, McDonald’s
China.
(Following is the interview with Mr . Chu. The interview was conducted in Chinese
and translated into English.)
Corporate Culture
What corporate beliefs are shared among employees of McDonald’s China?
McDonald’s China closely adheres to the corporate culture of McDonald’s
headquarters, and places the utmost importance on educating new employees in
founder Ray Kroc’s beliefs. The first lesson that employees learn on their first day of
work is QSC and smiling. QSC means Quality Service Cleanliness. McDonald’s
strictly enforces the cleanliness rule and delivers the highest quality of fast food to
customers with a smile. QSC is carried out at all levels of the corporation, even
McDonald’s top management staff, who had to learn to clear trash cans and clean
bathrooms before reaching the top. Ray Kroc believed that in order for executives to
understand employees and customers, they must personally experience the day-to-
day operation of local outlets.

103
Ibid.
41
The QSC belief centers on customers, who are McDonald’s most valued asset in
building the restaurant empire. McDonald’s wants to offer the best service to
customers, who are more likely to return for tasty food, a clean environment, and an
energetic crew. Therefore, if employees at the frontline do not understand
McDonald’s beliefs and values, what they deliver to customers would not match the
company’s intended messages.
Keeping its crew happy is one of the top items on McDonald’s agenda. The
management team maintains a close, friendly relationship with the crew by
constantly sending personal e-mails to crew members, asking for feedback.
Whenever a corporate employee enters a McDonald’s store, they try to speak with
local employees to get their feedback. What makes crew members feel that
management staff are sincere in gathering their opinions is the common frontline
experience. Crew members can easily relate to corporate staff because they know the
executives in suits had once worn their crew uniform. The personal connection and
encouragement between executives and frontline employees also serve as a pull
factor for crew members to stay with McDonald’s and aspire to move up the career
ladder.
Customer at Every Level
How do you ensure your employees work towards a common goal?
Every level of employee has a customer they need to serve, and the arrow
pointing to the customer points downwards or outwards. The executive management
42
board’s customers are department heads. Department heads’ customers are store
managers. Store managers’ customers are crew members. Frontline crew members’
customers are external customers. McDonald’s employees do not need to worry
about pleasing the CEO, but they need to focus on serving their level of customer.
This corporate culture sharply contrasts with Chinese employees’ working pattern of
pleasing the boss. At McDonald’s, when the customer is happy, the CEO is happy.
This is what distinguishes McDonald’s from other restaurant chains.
Buddy System
When you first brought McDonald’s to China, the Chinese business community
was not accustomed to an open and interactive communication mode between
executives and subordinates. What methods did you employ to facilitate the frank
and unconstrained kind of communication McDonald’s China has today?
McDonald’s created a buddy system to help new employees learn about
corporate culture. Every junior associate is paired with a senior associate as his or
her mentor. The mentor guides the new employee through 19 posts in the store and
also leads them through training and lap sessions. When I first introduced the buddy
system, many senior associates doubted they could reap any benefits from teaching a
subordinate. However, that doubt faded away when they saw the positive impact on
overall employee productivity. The buddy system has been very successful in
helping new employees get on their feet, and has altered the rank distinction deep-
rooted in many Chinese employees’ hearts.
43
Happy McPride
How does McDonald’s communicate with employees to keep them motivated?
At McDonald’s, uniformity is very important, and every burger needs to go
through 40 steps before it reaches a customer’s hands. Therefore, it is important to
ensure our employees keep an upbeat attitude at work and serve our customers with a
consistent level of service. McDonald’s believes it is management staff’s
responsibility to create a positive atmosphere at work. McDonald’s crew shares a set
of slogans to keep them motivated at work. They call out phrases like “meat down”
and “bun down” to maintain a united spirit in the kitchen. McDonald’s understands
that employee smiles do not come easily, so it creates an enjoyable work atmosphere
to make its crew fall in love with their work. When its employees breathe and feel
McDonald’s, they truly live a life with “ketchup in their veins.”
104
McDonald’s also keeps its employees motivated by recognizing and rewarding
their great work. Each month the company gives recognition to employees who clean
the toilets, and there are contests to elect the Toilet King and Queen of the month.
McDonald’s wants to make its employees proud of what they do, even if it appears
to be a menial job. Every task the crew completes is a service to customers, and the
company wants employees to do it for the glory of serving customers.
McDonald’s China grades each store every month according to the Quality
Service Cleanliness assessment scheme, and announces each store’s rating to the
entire greater China region. The grading system serves as an incentive for stores to

104
Ibid.
44
improve. The restaurant chain also takes care of employees’ needs outside of the
work environment through team building time at monthly employee meetings that
stress Food, Folks and Fun. Activities include, but are not limited to, picnics,
bowling matches and karaoke contests.
Fun Engagement
As the largest fast-food chain in the world, the messages and strategies from the
top can easily get diluted by the time they reach frontline staff. How does
McDonald’s China communicate with employees to ensure consistent messages
are presented to customers when introducing new marketing or communications
campaigns?
McDonald’s believes that employees must first love the new strategies it is
introducing to the market and they must have fun while learning about these new
messages. When the company rolls out a new major campaign, it has kick-off parties
for our entire crew in a region. At the parties, McDonald’s aims to help employees
understand the overall brand strategy behind the campaign, and to make them fall in
love with the program by letting them have fun while learning about it.
Recently, McDonald’s China had a new marketing campaign called FANtastic,
which highlighted its new rice burgers. Chinese employees had an internal tasting
event that helped them pair up messages with different burgers using an entertaining
and interactive game. By presenting the marketing events clearly to its employees
and allowing them to have fun while learning about these campaigns, McDonald’s is
45
able to keep morale high. McDonald’s views these internal marketing
communications events as an excuse to charge up employees and bring fun to their
work.
Another example is the introduction of the “I’m lovin’ it” program, which
targets a younger audience. The company invited thousands of employees to a party
held at the Hong Kong Convention and Exhibition Center. Employees had a chance
to sing and dance while Huang Lee Hom, a popular artist from Taiwan, led the crew
in learning the new “I’m lovin’ it” song. To make employees more engaged,
McDonald’s always gets management-level staff and department heads involved in
doing skits or singing songs, as a role model for its employees to follow. At the kick-
off party for this campaign, McDonald’s CEO sang, “I’m lovin’ it,” while the entire
crew danced to the song with a series of steps. The kick-off event helped
McDonald’s crew understand what “I’m lovin’ it” means, and led many of them to
sing it proudly at the counter with their fellow crew members.
Chinese vs. Western Work Attitudes
As a top executive in China working for a foreign-invested company, how do you
compare the Chinese and Western work attitudes?
In Chinese culture, employees naturally have great fear for the boss. The boss is
almost like God in the company, and employees merely obey orders from the top.
Work status and level distinction is also very evident in the Chinese work
environment.
46
Chinese employees seldom receive praise from their supervisors, and seeing the boss
is only an annual event.
When I first brought McDonald’s from the United States to China, I found it
very challenging to establish a friendly, supportive work environment, where all
levels of staff in the company work as a team. Crew parties we often have at
McDonald’s are extremely helpful in instilling this western work value in our
Chinese employees’ minds. The fun and interactive ways of communication help
Chinese employees deal with their fear of the boss and help them understand
everyone in the company is part of a team. “At McDonald’s, we win together
collectively as a group, and there is no such thing as I win, but only we win.”
105
Ultimately, the partnership attitude within McDonald’s has led to employees
becoming accustomed to proactively voicing their opinions and sharing their
viewpoints with their managers. McDonald’s China evolved from a shy internal
culture to a proactive one. McDonald’s even extended this attitude to serving
customers by approaching them first, instead of waiting for them to contact
employees.
Many local competitors attempted to imitate the McDonald’s way of
communicating with employees; however, those companies do not understand that
merely copying tactics is different from establishing a corporate culture of open and
honest communication. Many companies made attempts to hold employee meetings

105
Ibid.
47
or kick-off parties just for the sake of having an internal event, without
understanding the beliefs and goals behind such events at McDonald’s.
Another challenge for other Chinese companies in keeping employees engaged
and motivated through communication efforts is lack of maintenance and
continuation. Chinese companies focus on immediate investment return and expect
employees to be motivated through a stand-alone motivation event. An example to
illustrate the idea is the establishment of new hotels in China. New six-star hotels in
China are usually very grand at the opening ceremony, to please their investors, but
after a year of wear and tear, the service level and interior decoration might fall
below that of a three-star hotel. The only way to change this kind of short-term
management perception is through western management training.
Tips for Western Executives
Do you have any suggestions or tips to offer to top western executives entering the
Chinese business environment and learning how to communicate with Chinese
employees?
First and foremost, one needs to sincerely care for one’s people because they
are the ones to make your dreams come true. Yi Ren Wei Ben, seeing people as the
basis of work, has long been a valued ideology in China. One needs to learn how to
apply this concept to the work environment and to show respect for every employee.
Even the government is showing signs of adopting internal communications
measures and showing more concern for the personal betterment of employees. The
48
administration now organizes more outings with employees, like picnics, which were
never evident in China a couple years ago.
It is also important to understand the power of making employees feel important
and valued. The regional director of McDonald’s occasionally sends e-mails to
different crew members to ask for feedback and suggestions for changes. This makes
the crew feel honored, and generates excitement among the entire local store of the
crew who got the e-mail. In the beginning, when Chinese employees first got e-
mails, they questioned whether they were part of a conspiracy to test their loyalty to
the company, but when they found out that it was a sincere gesture they were very
happy to give honest opinions.
There is a common tendency among many Chinese managers to be calculative
and cautious when training the next generation of staff. When a Chinese Kung Fu
master teaches his apostle, he only passes on 90% of his expertise. The master saves
10% as a last resort in case his apostle betrays him; therefore, the trade keeps
degrading as it is passed along. The same effect applies to Chinese corporations, and
explains why many local firms can’t grow big. Managers find it difficult to fully trust
employees, and don’t want their subordinates to surpass them.
A manager is actually more successful if he is able to find capable people who
could replace him because that’s the best way for him to get a promotion. Knowing
how to use people with MBAs or PhDs is better than having the degree. Management
is all about finding and trusting people who share your dream.
49
It’s very challenging to find talented people and let them progress, but that’s the only
way to make a company successful.
Crisis Mechanism
Do you recall any internal crises that happened at McDonald’s China, and how
they were resolved?
McDonald’s hasn’t had any major crises in our history of service in China. The
company has had some complaints from customers. Employees involved in
complaint cases are usually very frustrated at first, and think it’s their fault.
McDonald’s seldom penalizes employees. It tries to calm them down and debrief
them. The company understands that employees need to come back to work the next
day, and it doesn’t want to embarrass them further. McDonald’s wants its employees
to come to work with pride and joy. The case is immediately forwarded to its
external relations department to handle the customer complaint. Internally,
McDonald’s requires the store manager to debrief the crew to ensure concerns are
addressed.
50
Chapter Six: Case Study: Disneyland Hong Kong. Instilling
Disney Core Values in the Chinese Crew
Disney Corporate Culture
The first Disneyland in China opened its doors in Hong Kong in September
2005. Since then, it has faced many challenges in internal communications and in
keeping employees happy. Disney is a company that stresses an “Emotional Engine,
not Economic Engine,” and relies heavily on employee creativity and a high level of
customer service to deliver this belief. Disney didn’t want employees who merely
took orders from above and delivered commands robotically. The company places
stress on providing a supportive, encouraging internal culture through “Training,
Communication and Caring.”
106
Bill Ernest, Executive V ice President and Managing
Director of Hong Kong Disneyland, explains that the 5,000 employees of the theme
park were “…selected based on their ability to demonstrate a passion for Disney, a
great service attitude, a love of people, and the ability to smile – a lot.”
107
The new
employees were invited to participate in a two-day training process that helped them
better understand Disney’s corporate culture, founding mission and park
operations.
108

106
Hung, H. L. (2005). Management Intelligence of the Chinese. Hong Kong: SCMP Book Publishing
Limited.
107
Cafolla, Liana. (2006). Investing in HR is no Mouse feat. China Staff, 12 (8), 8-10. Retrieved
March 10, 2007, from ProQuest database.
108
Hung, H. L. (2005). Management Intelligence of the Chinese. Hong Kong: SCMP Book Publishing
Limited.
51
Lunar Problems
The chaos that took place during the Lunar New Year holiday in 2006 revealed
Hong Kong Disneyland’s failure to understand local culture and prepare its
employees for a crisis. The Lunar New Year holiday is the peak holiday season in
China, but the theme park did not anticipate a need to make those days black-out
days with special ticket requirements. As a result, the number of people who wanted
to get into the park far exceeded its the maximum capacity. Many people with valid
tickets were refused admission at the gates. Tourists from Mainland China had come
a long way and didn’t want to disappoint their children. They literally threw their
kids over the fence to get them into the park. Angry tourists screamed at employees,
who appeared helpless and were not prepared to respond to this crisis situation.
109
Workers’ Complaints
In April 2006, the Hong Kong Disneyland Cast Members’ Union publicly
criticized management for making employees work in stifling character costumes for
excessively long work hours and paying them poorly. At the time, Disney
immediately took a defensive position and argued that the employee claims were an
“inaccurate representation” of the working conditions at Disney. They also said that
employees in Florida wore the same costumes in hot weather. Later, Disney agreed to

109
Schuman, Michael. (2006, May 15). Disney’s Hong Kong Headache. Time International, 167 (19),
34. Retrieved March 10, 2007, from ProQuest database.
52
grant cast members extra rest days after the company communicated with employees
and gained a better understanding of their needs.
110
Employee Integration
Negative media coverage of poor employee relations urged Hong Kong
Disneyland to adopt better internal communications measures.
Disney’s company policy requires managers to be on theme park grounds to
monitor day-to-day operations. At Hong Kong Disneyland, managers also need to
“serve food, sell promotional products and dress up in costumes” like any other
employees, and managers’ work is video-taped as educational management training
material. Putting managers in employees’ positions helps them better understand
their subordinates’ work conditions.
111
Bill Ernest decided to change management’s way of communicating with Hong
Kong Disneyland’s staff because of Walt Disney’s belief that: "You can dream,
create, design and build the most wonderful place in the world, but it requires people
to make the dream a reality." He wanted to ensure that every customer receives
quality service from happy cast members who love their jobs. Ernest believes
“…guests must experience the Disney magic each and every time they visit.”
112
In order to help employees understand how to genuinely care for Disney’s
customers, Disney management first gives employees a chance to experience the

110
Ibid.
111
Cafolla, Liana. (2006). Investing in HR is no Mouse feat. China Staff, 12 (8), 8-10. Retrieved
March 10, 2007, from ProQuest database.
112
Ibid.
53
same degree of love and attention.
113
Hong Kong Disneyland managers contact sick
or injured employees within 24 hours of notice to explain medical benefits and the
assistance the company offers. Also, employees are invited to bring their families to
the park at least once a year to let them experience a day of the “Disney way of
hospitality.”
114
Hong Kong workers are skillful at gaining media attention to help them in
employment disputes, especially when their employer is a well-known brand like
Disney. The improvements in internal communications have contributed to enhanced
internal relations at Hong Kong Disneyland. This is evident in the disappearance of
negative media coverage of employee relations.

113
Hung, H. L. (2005). Management Intelligence of the Chinese. Hong Kong: SCMP Book Publishing
Limited.
114
Ibid.
54
Chapter Seven: Research on the Degree of Internal
Communications Application in China
Background
The purpose of this study was to examine the degree of internal
communications application in China. Very little primary research has been done in
Asia, specifically in the field of communications within a corporation. The primary
goal of the research was to analyze the internal communications practices of
companies doing businesses in China, and to evaluate such practices according to the
tools companies employ and the kinds of information disseminated to employees,
focusing on the correlation between the communication frequency from a company
to its employees and the degree of employees’ trust in the company. The
questionnaire used also ascertained the kinds of information that employees prefer to
hear from their companies, and their degree of job satisfaction in relation to their
companies’ communications policies. A better understanding of employees’
perspectives will help communications specialists working in China gain a more
complete picture of how to address Chinese employees’ needs. Key areas of inquiry
include:
• Measuring the Frequency of Corporate Communications Efforts
• Ascertaining the Content of Corporate Communications Efforts
• Identifying the Most Common Corporate Communications Tools
• Evaluating Employee Trust in Company Disseminated Information
• Determining Employee Preference in Communications Methods and
Tools
55
Methodology
The survey consisted of 14 questions. The survey questionnaire was distributed
via e-mail to 50 people currently working in Hong Kong and Mainland China.
Survey respondents first arrived at a welcome page with briefing instructions to
ensure that only people currently working in Hong Kong and Mainland China
responded. The questionnaire was composed of a combination of multiple-choice,
preference-ranking and open-ended questions. The online survey software
randomized the choices for multiple-choice and preference-ranking questions, so
responses were not biased by question order.
Results
The survey questionnaire was distributed online to 50 people currently working
in Mainland China and Hong Kong, and was completed by 30 respondents. All
respondents work for different companies. Survey respondents completed ten
multiple-choice questions, one preference-ranking question and three open-ended
questions. Survey results are included in the appendix (Figures 3 to 13). The results
were anonymous.
Analysis
The most prominent finding of the survey was the correlation between the
frequency of internal corporate communications efforts and employees’ trust in
56
company disseminated information. The research showed that the more frequently a
company communicates to its employees, the more likely it is that employees trust
the information provided by the company. Of respondents whose companies
communicate with their employees every day, all (100%) strongly or somewhat trust
the information disseminated by their employers. Of respondents whose companies
communicate with their employees weekly, 26.6% strongly or somewhat trust the
information disseminated by their employers. Conversely, of respondents whose
companies communicate with their employees monthly, only 20% strongly or
somewhat trust the information disseminated by their employers. The following chart
(Figure 1) is a graphical display of the correlation between internal communications
frequency and employee trust in the company.
57
Strongly
Trust
Somewhat
Trust
Neutral
Somewhat
Distrust
Strongly
Distrust
Once a day
Once a week
Once a month
Once every six months
Once every year
0
1
2
3
4
5
6
7
Internal Communications Frequency and
Employee Trust in Company
Figure 1
The Correlation Between Internal Communications Frequency and
Employee Trust in Company
The results demonstrate the importance of continuous communication between
a company and its employees. The respect for and trust in company-disseminated
information is built upon a frequent communication base, which requires time to
58
establish. Therefore, corporations should construct a regular dialogue with their
employees to gain better employee trust.
Of the 30 survey respondents, 80% reported that their most trusted person in the
company is either their direct supervisor or the director of the business unit that they
work in. These findings are a good indicator that employees feel most comfortable
seeking information from their familiar figure of authority. Supervisors or unit
managers are probably better internal spokespersons for employees in China than the
CEO during a crisis, when gaining employee trust is of paramount importance.
Participants reported that the most frequently used employee communications
media are e-mail (100%), intranet (73%), staff meetings (70%), newsletters (53%),
face-to-face meetings (50%), other internal publications (46%), and phone calls
(46%). When respondents were asked for their most preferred form of
communication, however, only one preferred the intranet and no one preferred
internal publications and newsletters. Employees in China preferred e-mail (60%)
and interactive communication media such as staff meetings (13%) and face-to-face
meetings (13%). The preference for in-person interaction could be attributed to the
fact that many forms of communication in Asia are subtle and unspoken, and require
a face-to-face meeting. The two sets of data have been plotted against each other in
the graph below (Figure 2).
59
Limitations
This survey had a small respondent pool of 30 participants, so the conclusions
drawn are not comprehensive and cannot be generalized to the entire Chinese
workforce.
The design of questions also had limitations in yielding comprehensive results,
since they touched only briefly on the topics of corporate communications duration
and frequency, trust and job satisfaction. Therefore, the data do not indicate a strong
correlation between these aspects.
60
Company Communications Tools and Employees' Preferred
Communications Tools
0
5
10
15
20
25
30
Phone
Face-to-Face Meetings
Advertising
Intranet
Other Internal Publications
Notice Board Screens
Screensaver Information
Blogs
Employee Conventions
Staff Meetings
Emails
Newsletters
0
5
10
15
20
25
30
Communications Tools
Currently Used by
Corporations
Employees' Preferred
Communication Tools
Figure 2
Communications Tools Most Frequently Employed by Companies and
Employees’ Preferred Communications Tools
61
Chapter Eight: A Guide to Effective Employee
Communications in China
This chapter outlines communications recommendations for global corporations
doing business in China. It serves as a guidebook for communications specialists
when they design internal communications programs specifically targeted towards
Chinese employees. It also represents a collection of global firms’ internal
communications best practices in China, which could be used as evidence to
demonstrate the value of employee communications to senior executives who aren’t
convinced about the impact effective internal communications have on employee
engagement and shareholder value.
Talk to the Chinese in Chinese
Management localization is a hot topic for many foreign-invested firms with
business ties in China. Corporations have either hired local management talent to fill
its leadership positions, or have introduced plans to localize expatriates by offering
them benefits packages closer to the local Chinese standard of living. The
localization trend came about as a result of the financial crisis in Asia and heightened
expectations from investors for profits.
115
The change in business strategy also came
about as a result of complaints from local management, who claimed it was unfair
for companies to offer extravagant employment packages to expatriates, but not to

115
Caplan, Jessica. (2004). Engage your employees, energise your business! China Staff, 10 (11), 8-9.
Retrieved March 1, 2007, from ProQuest database.
62
them. Local workers believe they can fill positions held by expatriates, and might
even perform better because of their local knowledge.
116
Corporations show signs of listening to local concerns and understanding
regional needs. This is evident in the training and compensation package of the
French company Carrefour, Wal-Mart’s biggest competitor in China. Carrefour
understands that Chinese people live a very different lifestyle from Europeans or
Americans. Chinese employees expect corporations to take care of their families and
their futures, and, in return, offer loyalty and hard work. As a result, Carrefour
proposed a deal to take care of “[employees’] training and their future;”
117
in return,
employees signed a three to five year contract, which requires them to repay
Carrefour the cost of training if they decide to work for a competitor within five
years. Through the program, the company is able to keep a low turnover rate, and
well-trained Chinese managers now head up 50 of the 73 Carrefour outlets. As a
token of appreciation for employees’ commitment and loyalty, the company offers a
“super bonus” – two, three or five months’ salary – for employees who stay with the
company for more than five years.
118
Siemens China also devised innovative ways to keep the turnover rate low in
the competitive Chinese business environment. The company aimed to make each
employee feel special and important by offering individually tailored career plans.

116
Ibid.
117
Child, Peter N. (2006). Lessons from a global retailer: An interview with the president of Carrefour
China. The McKinsey Quarterly. Retrieved January 13, 2007, from the McKinsey Quarterly database.
118
Ibid.
63
The plans incorporate an employee’s “career interests and aspirations, as well as his
or her performance.”
L’Oréal’s one-year training program, which assigns a mentor to each new
employee to help them “learn the ropes,” also demonstrates to the new employee that
the company is committed to their career success.
119
These companies’ commitment to the development of employees’ careers
shows that they care about their workers’ future, and appeals to Chinese workers
who are accustomed to being taken care of by the Communist government. The
Chinese business environment is currently facing a shortage of talent; providing a
comprehensive training program for employees is a competitive advantage that
addresses the needs of ambitious managers who aspire to reach the top. A training
program is a way by which a company can communicate to employees that it is
concerned about their career development, which helps raise overall company
productivity.
Corporations should consider showing more appreciation and encouragement to
employees for the hard work they have done to communicate the message that the
companies offer upward mobility to employees with good performance. In Chinese
culture, workers are accustomed to “high power distance” between managers and
subordinates. It is rare for employees to communicate with top executives in
traditional Chinese local firms. Therefore, when Chinese employees receive praise or

119
Dessler, Gary. (2006). Expanding into China? What Foreign Employers Should Know About
Human Resource Management in China Today. S.A.M. Advanced Management Journal, 71 (4), 11-26.
Retrieved January 22, 2007, from ProQuest database.
64
feedback from high-level executives, they view it as a particular compliment and as a
sign that their good work has been noticed. This serves as a motivating factor for
many Chinese employees.
120
New Ways of Communication
Global companies are trying to keep up with technology trends by using
innovative multimedia tools to communicate with employees. IBM chief executive,
Samuel S. Palmisano, was the first CEO of a major corporation to appear in the
virtual world Second Life. He appeared virtually at China’s Forbidden City on
November 14, 2006, to speak to his Chinese employees.
121
In addition to two-way communication between a company and its employees,
some corporations are suggesting a third way – lateral communication between
workers – to help increase productivity and employee morale. Xerox China noticed
that many employees face similar issues while using office equipment, and that they
go through the same processes and ask similar questions when solving such
problems. As an effort to expedite work processes, Xerox set up an intranet database
with different topics, addressing problem-solving issues. Xerox encourages
employees, and especially maintenance workers, to keep a working log, which is
posted on the company intranet as an office equipment problem solving guidebook

120
Fields, D., Chan, A., Akhtar, S., & Blum, T. C. (2006). Human resource management strategies
under uncertainty. Cross Cultural Management, 13(2), 171-186. Retrieved March 10, 2007, from
ProQuest database.
121
Hamm, Steve. (2006, November 20). Palmisano Gets A Second Life. Business Week, 4010, 47.
65
for other employees to reference when they encounter similar problems.
122
This may
seem like a minor internal communications initiative, but it contributes to
minimizing employees’ time wasted on fixing malfunctioning office equipment, or
waiting for technicians to come. Such lateral communications platforms could be
extended to cover a wide variety of topics, such as tips and tools on how to do
business more efficiently, and could contribute to increasing productivity.
In the United States, many corporations’ employees blog about their work and
their company, and some CEOs also have their own blogs as a way to communicate
with employees. Blogs are “are a powerful new medium for sharing opinions and
disseminating views,” and could be used as an effective and honest communications
tool for companies to gather instant opinions from employees. Companies must
understand, however, that the content of blogs is difficult to control or monitor, and
that negative news can spread quickly. Companies cannot neglect the fact that blogs
are up and coming, but Chinese employees are slower to respond to this trend. Of the
respondents to the survey presented here, only 2% view blogs as a trustworthy
source of information.
Managing Expatriates
Expatriates, although expensive, are a great management resource in helping
companies establish their business presence in China. In order to “[demonstrate]

122
Chen, Guoquan. (2005). An organizational learning model based on western and Chinese
management thoughts and practices. Management Decision, 43 (4), 479-501. Retrieved October 12,
2006, from ProQuest database.
66
respect to local employees and their culture,” some expatriates make an effort to
learn the Chinese language. Even though very few expatriates are successful in
mastering this difficult language, local employees regard expatriates’ efforts as a
sign of respect and an attempt to better communicate with Chinese subordinates.
123
Expatriates might also minimize the social and cultural distance between them
and local employees through unspoken methods of communication. An anonymous
expatriate tried to create a team atmosphere on his first day of work by writing “we,
us, our” on the board in Chinese at a welcoming meeting. He also abandoned the
common classroom setting in the meeting room and invited his team to sit in a circle
to enhance the idea that everyone on the team was equal. This manager also
reformed the seating assignment in the office to avoid reflecting hierarchy; this has
proven to facilitate better communications across all levels of staff. In addition, he
paid attention to the physical difference between his staff and himself. He noticed
that his height made him “physically [look] down” on his shorter Chinese
employees, so he tried to sit down to chat with his employees whenever possible. He
also tried to slant his body so that his eyes were at the same level as those of the
person he was talking to.
124
The attention to these seemingly minor details showed
local employees that he was making an effort to make them feel more comfortable
while working with him.

123
Lyons, Tess. (2005). Where East meets West. China Staff, 11 (9), 34-36. Retrieved October 12,
2006, from ProQuest database.
124
Tsang, Eric W. K. (2001). Managerial learning in foreign-invested enterprises of China.
Management International Review, 41 (1), 29-52. Retrieved September 25, 2006, from ProQuest
database.
67
Senior Executives’ Role
Chinese people have traditionally grown up in a society which stresses
hierarchy, and which has a rigid set of rules governing interaction between social
strata. When a person receives attention from a respected individual of high ranking,
they feel honored and take suggestions seriously. President and managing director of
L’Oréal China, Paolo Gasparrini, understands the power he has in motivating his
staff, so he communicates directly with employees in China in order to evaluate their
work satisfaction and performance.
125
Although this may be very time consuming,
the positive effects such meetings have on improving productivity outweigh the time
spent. Furthermore, such meetings need not happen every year, so long as the
manager maintains a good flow of communication through emails or intranet
announcements. General Electric employees receive regular emails from the CEO
discussing company development, changes, and his personal experience in managing
the company, which make them feel respected.
126
Top Chinese executives question whether communicating with employees on a
one-on-one basis might reduce their authority; it seems clear, however, that the
image of a manager is actually fortified through such meetings because employees
respect managers who take the time to genuinely care about them.
127

125
Hung, H. F. (Ed.). (2006). Voices of Experience from 20 International Business Leaders. Taiwan:
Wealth Press.
126
Kong, Wei Man. (2004). Employee Management Master. Hong Kong: Chung Hwa Book.
127
Ibid.
68
Attract Locals
Local Chinese enterprises are less developed in their employee training
programs and performance assessment measures; foreign companies therefore have a
competitive edge over local companies in retaining employees using comprehensive
training programs and a well-established corporate culture.
128
Local Chinese are
attracted to companies that care about long-term employee career development and
upward mobility.
Hewitt Research conducted a study in China, which found a correlation between
excellent business results and a company’s emphasis on caring about the long-term
career development of individual employees.
129
Chinese employees also view a
company’s emphasis on training as “a symbol that the organization is taking steps to
fulfill its moral obligations to employees.” Training programs are a way to
communicate the message to employees that they are a valued asset to the
development of the company and that they are accepted as “part of the collective
unit.”
130
Chinese employees consider training a reward for their capability and
contribution to the company because they believe a company wouldn’t waste its
resources on training an employee who doesn’t make a positive contribution.

128
Hung, H. F. (Ed.). (2006). Voices of Experience from 20 International Business Leaders. Taiwan:
Wealth Press.
129
Caplan, Jessica. (2004). Engage your employees, energise your business! China Staff, 10 (11), 8-9.
Retrieved March 1, 2007, from ProQuest database.
130
Fields, D., Chan, A., Akhtar, S., & Blum, T. C. (2006). Human resource management strategies
under uncertainty. Cross Cultural Management, 13(2), 171-186. Retrieved March 10, 2007, from
ProQuest database.
69
Additionally, Chinese employees are eager to receive training because they are
aware of the “limitations of their educational system and [are] keen to acquire
marketable skills.”
Senior human resources manager for General Electric Consumer Finance Asia,
Ping On Mak, says that many Chinese employees aim to attend extensive training
sessions while working for multi-national firms, but that after three years they’ll
leave to work elsewhere. Companies like General Electric and L’Oréal are trying to
retain employees longer through their “In-house University” and one-on-one
mentoring.
131
To many local Chinese employees who have had little chance to travel
outside of China, overseas training and assignments are attractive features of working
for a foreign company. HSBC offers new managers 10 weeks of intensive training in
the United Kingdom, followed by additional training in Hong Kong over the course
of three years. This comprehensive training program has attracted some of the best
people to HSBC, and is a way to communicate to potential employees the company’s
emphasis on people.
132
Hilton Hotel Shanghai also understands the attractiveness of
offering overseas training to its employees. It selects two or three candidates each
year to take hotel management training classes at Cornell University. Participants of
the program have never subsequently left Hilton.
133

131
China's people problem: Human resources. (2005, April 16). The Economist, 375 (8422), p. 60.
132
Melvin, Sheila. (2001). Retaining Chinese Employees. The China Business Review, 28 (6), 30-36.
Retrieved September 10, 2006, from ProQuest database.
133
Hung, H. F. (Ed.). (2006). Voices of Experience from 20 International Business Leaders. Taiwan:
Wealth Press.
70
Another way for companies to train Chinese managers is to communicate their
expectations, and then to lay out the ways they will help managers achieve those
goals. A company might select specific employees and say: “I want you to be
regional general manager in two years,” then offer continuous feedback and
suggestions while they reach for the goals.
134
This method of encouragement could
be communicated to Chinese employees as a mini-promotion, in recognition of their
talents, with the strong implication that the company’s extra support will lead them
to an actual promotion. Such motivation also communicates to local employees that
they have an equal opportunity to attain top management positions mostly held by
expatriates.
135
In addition to offering training programs to general employees, companies
should also pay attention to specialized training for communication specialists. To
help communications professionals better understand the culture, structure and
internal dynamics of each business unit, companies could adopt a “rotation
program.”
136
Such a program lets employee communications specialists work at a
position for two weeks, and then switch to a different department, until they have
visited all business units. It helps communications specialists to become fully
immersed in the cultures of different departments, and to attain a more

134
Melvin, Sheila. (2001). Retaining Chinese Employees. The China Business Review, 28 (6), 30-36.
Retrieved September 10, 2006, from ProQuest database.
135
Chen, Guoquan. (2005). An organizational learning model based on western and Chinese
management thoughts and practices. Management Decision, 43 (4), 479-501. Retrieved October 12,
2006, from ProQuest database.
136
Zheng, Zhonghai. (2005). Overcoming the system-first mentality in China HR. China Staff, 11 (6),
15-16. Retrieved October 1, 2006, from ProQuest database.
71
comprehensive understanding of employees’ concerns. When a company designs an
employee communication program, it should incorporate campaigns that address
such specific needs.
Building an Employer Brand in China
The basis and philosophy for many Chinese employees’ strong preference for
companies that offer extensive training opportunities is the traditional belief that
“one must first contribute something (including knowledge) to other people before
taking it from them.” Chinese employees evaluate companies according to their
willingness to first contribute to their employees and business partners. Motorola
China offers “internal quality management, six sigma and business development
training” to its employees, and it extended all these programs to employees of its
suppliers. Motorola China believes that “the quality of its products could not be
guaranteed unless the quality of its suppliers’ products is guaranteed.”
137
This kind of
gesture shows that Motorola is a sincere and giving company; it appeals to Chinese
employees who favor those who are willing to contribute to the betterment of
relationships before asking for anything in return.
Every altruistic initiative a company performs for its employees contributes to
the establishment and consolidation of an employer brand, which is “what your

137
Chen, Guoquan. (2005). An organizational learning model based on western and Chinese
management thoughts and practices. Management Decision, 43 (4), 479-501. Retrieved October 12,
2006, from ProQuest database.
72
company stands for: its unique value proposition to potential and existing
employees.”
138
“Employer brand is about choice. People have the choice to join the
company, and once they join, they have other choices: whether to stay, grow
and contribute to the organization. Building a strong employer brand helps to
ensure that employees will make the right choices when the time comes.
Employees who have a stronger sense of belonging to the company perform
better and are less likely to leave. Moreover, a strong employer brand will
also attract the right talent to the company.”
139
Speak Up, China!
In the Analects of Confucius, a book of conversations between Confucius and
his students, Confucius says: “He who keeps reviewing the old lessons and acquiring
the new is fit to be a teacher. Learning without reflective thinking is fruitless;
reflective thinking without learning is perplexing.”
140
Many studies have shown that
Chinese employees are more reluctant to share opinions or suggestions with
companies; however, that does not mean that they don’t reflect on business
development or evaluate work processes. Confucius’s teachings stress the
importance of reflective thinking in order to make room for improvement.
Companies should try to devise ways that make employees feel more at ease in
sharing their thoughts on issues they have been considering on their own.

138
Caplan, Jessica. (2004). Engage your employees, energise your business! China Staff, 10 (11), 8-9.
Retrieved March 1, 2007, from ProQuest database.
139
Ibid.
140
Chen, Guoquan. (2005). An organizational learning model based on western and Chinese
management thoughts and practices. Management Decision, 43 (4), 479-501. Retrieved October 12,
2006, from ProQuest database.
73
Motorola China puts its employees in Teaming for Excellence groups to
evaluate work processes and identify ideas to increase quality and productivity.
Motorola China’s efforts to help employees become accustomed to working as a
collective group and to sharing ideas and suggestions have helped the company make
tremendous achievements in its business.
141
At Motorola’s Tianjin manufacturing
plant, the company has set up an “I Recommend” committee, which meets on a
monthly basis to evaluate employee feedback and to offer responses to and
suggestions concerning their group reports. Motorola’s two-way communication
system has been highly successful in enlisting employee feedback and support.
142
The business model of General Electric incorporates a continuous flow of
communication between its management staff and its 300,000 employees worldwide.
The company organizes an employee convention every two months via video
conferencing, and hires a third-party research firm to regularly assess employee
satisfaction.
143
General Electric has a unique employee feedback debate forum called
“Work Out.” A debate seminar could involve anything from ten to 100 participants,
and is moderated by a professor or professional who acts as host. Employees openly
discuss amongst themselves in the absence of supervisors. At the end of the
discussion, one employee presents the discussion conclusions to a manager, who
responds immediately. “Work Out” sessions have proven to be a great way to gather

141
Ibid.
142
Ibid.
143
Kong, Wei Man. (2004). Employee Management Master. Hong Kong: Chung Hwa Book.
74
employee feedback. They also give employees a chance to discuss any problems they
face. Just talking about problems helps to ameliorate employees’ dissatisfaction.
144

144
Ibid.
75
Conclusion
In recent years, China has transformed from a confined Communist country to a
land of hope for new businesses and investment opportunities. China’s landscape
changes from every sunrise to sunset. New skyscrapers are built everywhere to
accommodate the high demand for quality office space from corporations wishing to
establish their businesses in China. Shanghai alone, “China’s largest city, is the Asia
headquarters of more than 150 multinationals, including GM, IBM, and Alcatel-
Lucent.”
145
While major corporations are eager to share a piece of this expanding
market, local Chinese employees are also ambitious to reach the top at multi-national
corporations’ Asia headquarters. Global corporations have an opportunity to utilize
local workers’ upward aspirations to build successful companies with talented
personnel.
The results of the survey presented here show that continuous, two-way
communication between a company and its employees is a critical factor in building
a trusting relationship. Training opportunities and individual feedback and
encouragement are ways to communicate a company’s commitment to building a
long-term relationship with its employees. They are appealing factors to Chinese
employees, who value mutually beneficial Guan Xi because these gestures make
employees feel important to the company’s development, and serve as excellent
retainment tools.

145
Balfour, Frederik. (2007, February 19). Shanghai Rising. Business Week, 4022, 50-55.
76
Western corporations must understand local needs and speak to Chinese
employees in a language they respect and prefer. Chinese are taught to remember
those who have given them favors, and are brought up to be loyal to a good boss.
Companies’ efforts to establish long-term relationships with Chinese employees
through committed communication and provision for their future will win their
hearts.
77
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Appendix: Survey Results
What is the nature of your company's business?
21
2
5
2
Corporation
Non-Profit
Government
Agency
Figure 3
Respondents’ Company Business Nature
Is your company foreign-invested, local-based or state-owned?
9
15
6
Foreign-Invested
Local-Based
State-Owned
Figure 4
Respondents’ Company Origin
83
What is the size of your company?
4
4
2
10
4
6
1 to 50
51 to 200
201 to 500
501 to 2000
2001 to 5000
5000+
Figure 5
Respondents’ Company Size
What are the forms of communications your company employs to
disseminate corporate news to employees?
14
15
6
22
14
6
0
0
3
21
30
16
0 5 10 15 20 25 30 35
Phone
Face-to-Face Meetings with Supervisor
Advertising
Intranet
Other Internal Publications
Notice Board Screens
Screensaver Information
Blogs
Employee Conventions
Staff Meetings
Emails
Newsletters
Figure 6
Communications Tools Currently Used by Companies
84
What kind of information does your company disseminate to
employees?
17
18
16
12
7
10
21
20
23
15
2
0
5
10
15
20
25
Organization Future Development
Corporate Strategy
Financial Results
Feedback from the Board of Directors
Responses to Media Attention
Crisis Situation
Personnel Changes
Structural or Organizational Changes
Employee Benefits
Employee or Division Recognition
Other
Figure 7
Corporate Communications Content
How often does your company disseminate information to
employees?
4
15
10
1
0
Once every day
Once every week
Once every month
Once every six
months
Once every year
Figure 8
Corporate Communications Frequency
85
To what degree do you agree with the following statement?
"I trust the information my company disseminates to employees"
Strongly Agree
Somewhat Agree
Neutral
Somewhat Disagree
Strongly Disagree
Figure 9
Respondents’ Trust in Company Disseminated Information
What is your most preferred way of communicating with your
supervisor?
2
1
13
12
5
16
23
0 5 10 15 20 25
Indirect Communication through Third Party
Blogs
Phone
Instant Messaging
Written Notes
Emails
Face-to-Face Meetings
Figure 10
Respondents’ Most Preferred Way of Communication with Supervisor
86
What is your most preferred form of communication from your
company?
4
1
1
0
0
0
2
0
4
18
0
0
0 5 10 15 20
Face-to-Face Meetings
Advertising
Intranet
Other Internal Publications
Notice Board Screens
Screensaver Information
Blogs
Employee Conventions
Staff Meetings
Emails
Newsletters
Phone
Figure 11
Respondents’ Most Preferred Form of Corporate Communications
How important is it to you for your company to speak to you?
Very Important
Somewhat Important
Neutral
Somewhat Unimportant
Very Unimportant
Figure 12
Importance of Corporate Communications to Respondents
87
How satisfied are you with your job?
Very Satisfied
Somewhat Satisfied
Neutral
Somewhat Dissatisfied
Very Dissatisfied
Figure 13
Respondents’ Job Satisfaction Level

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Asset Metadata

Creator Lung, Winvy (author)

Core Title Guide to corporate internal communications in China: a policy handbook

School Annenberg School for Communication

Degree Master of Arts

Degree Program Strategic Public Relations

Publication Date 04/19/2007

Defense Date 04/02/2007

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag Chinese employees,corporate communications,employee communications,internal communications,OAI-PMH Harvest

Language English

Advisor Floto, Jennifer D. (committee chair), [illegible] (committee member), Riley, Patricia (committee member)

Creator Email wlung@usc.edu

Permanent Link (DOI) https://doi.org/10.25549/usctheses-m412

Unique identifier UC1479878

Identifier etd-Lung-20070419 (filename),usctheses-m40 (legacy collection record id),usctheses-c127-476659 (legacy record id),usctheses-m412 (legacy record id)

Legacy Identifier etd-Lung-20070419.pdf

Dmrecord 476659

Document Type Thesis

Rights Lung, Winvy

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Repository Name Libraries, University of Southern California

Repository Location Los Angeles, California

Repository Email cisadmin@lib.usc.edu