Welcome to China… enjoy your stay!

Published: 
June 2016

From socialising with staff to devising strategies to save face, the latest article in our ‘Asian century’ series explores the challenges facing Western managers in China’s hotels.

With Chinese families now joining international visitors on the sightseeing trail, tourism has become one of the most promising sectors in the country’s booming economy.

The fast-growing market has proved a magnet for international hotel chains which, having established a presence in the key Chinese cities, are now embarking on the next phase of their expansion. Hilton Worldwide, for example, already operates from 71 sites in China and recently announced plans to open more than 200 new hotels in the coming years.

The growth in hospitality is creating unprecedented demand for staff. With a shortage of experienced local talent, international operators are having to rely on managers from Western countries to fill the gap.

However many such assignments fail said Dr Kelly Virginia Phelan, a tourism expert at UQ Business School. “China is one of the most challenging destinations for Western managers. While they may be successful at home, they often have difficulty adapting to the local business culture, and each failed assignment costs the company anything from US$200,000 to US$1.2m.”

In a research project, she set out to discover the challenges expat managers face – and why some succeed in overcoming them when others return home in despair. The team – which included Cynthia Mejia of the University of Central Florida and James Aday of San Francisco State University – interviewed successful managers from the US, Germany and Holland who were working in top hotels in Hong Kong, Shenzhen, Shanghai, and Beijing.

Competition for staff

They found that recruiting and retaining staff was clearly one of the biggest problems for managers. Competition for labour is so strong that rival hotels often try to poach workers by offering them up to $100 per month more and ‘job hopping’ has become commonplace amongst the younger generation of Chinese who can move from one hotel to another in search of better pay.

In contrast to traditional Confucian values, these line-level employees display little or no loyalty. Most were born during the ‘one-child policy era’ and managers felt they were overprotected by their parents, who prefer them to work in an office rather than the service industry which is perceived as lower status in China. In an attempt to retain staff, some hotels promote employees beyond their capabilities, resulting in weak management.

Dr Phelan says: “Expat managers had clearly tried different strategies to overcome the problems of recruitment and retention. Some had tried taking on workers from rural towns, though found they were often less educated, harder to train and would frequently return home.

“They also had carefully considered back-up and succession plans in place to deal with staff departures, and sought to build relationships with more junior employees to retain them following the person’s departure. One of the most insightful strategies for worker retention was to create a “home culture” and engender a sense of family and unity – in line with the Chinese concept of guanxi or relationship building.”

Shortage of management talent is a particular problem where chains are looking to expand. A common strategy is to create a task force consisting of key people from existing hotels who can set up and launch any new hotels before returning to their regular position.

Saving face

While all the expat managers were aware of the importance of ‘face’ in Asian culture, it took them a while to fully understand the implications. “People don’t like to lose face and that’s another reason why you must respect everybody,” one explained. “If you have a problem with the staff, you never tell them in front of everybody... Everything is about image and face here.”

One surprise was that staff would refuse to put forward ideas or opinions in meetings because they felt the need to ‘give face’ to the manager, rather than submitting their own suggestions.

Dr Phelan says: “This lack of feedback can be frustrating but over time, the managers succeeded in building trust and creating an environment where employees felt they could share ideas freely. In part this was about training staff members not to be afraid and to take risks, which is a challenge to the Chinese who tend to be risk averse.

“Overall the managers agreed that the best way to encourage free and open communication was to start by one to one meetings with each worker.”

Another implication of the importance of ‘face’ is that Chinese workers find having to serve fellow Chinese as belittling, and view hospitality as a servile industry and not a long-term career. Managers felt dismayed that workers lacked a passion or pride in their work. Again, one to one meetings and leading by example was seen as a way to encourage them.

Building trust

Cultivating good relationships is imperative in China where, as one manager put it, “guanxi rules everything”. Building a relationship with the team is critical to ensuring service standards and achieving the company’s strategic objectives.

Similarly, observing the protocols of guanxi and ‘face’ and the practice of giving gifts is important to cement business relationships. For Western managers, such customs are not only hard to understand but may feel distinctly uncomfortable or even unethical.

“In the Chinese workplace, the relationship between supervisor and subordinate evolves over time into a family relationship,” Dr Phelan explains. “In Western cultures, this would be considered inappropriate as it could give rise to allegations of favoritism and discrimination. Similarly, giving gifts could be linked with corruption.

“The Western managers told us they struggled to combine their personal and professional lives. However they found that slowly building relationships in this way and creating good guanxi with subordinates was essential to success. One advised, ‘Really invest in your team first’. Managers who did this felt more connected to their workers and found they were able to accomplish goals more easily.”

Some managers cautioned against making the same mistakes as unsuccessful expatriates who had tried to implement big changes too early in the job. As one put it: “You cannot walk in there and say, ‘I want to change everything on day one’. That is the absolute, number one way to never get them [the Chinese workers] to listen to you. If you walk in on the first day and say, ‘I know everything about what you guys are doing and I’m going to fix it’, that shows a level of disrespect... They immediately feel shame and they feel like they have to be on the defence.”

Other managers confirmed this, adding that once the relationship was broken, it was almost irretrievable. One noted: “If for some reason there was a conflict in a relationship, even between yourself and another in management, it is very difficult to restore. If your political skills are not that good, you will not survive.”

Openness and tolerance

All the managers in the study had grown up exposed to different cultures or lived in multiple countries, and thus were more aware of cross-cultural issues. Most did not have any formal cross-cultural training - their approach was to be open and quickly adapt to local culture. They cited this openness to other cultures as the reason for their success.

One said: “I’ve seen people who failed here... They didn’t respect the culture. I keep on saying to people that we are guests in their country and we have to respect that. You’re not going to change a country. You’re not going to change a culture. You have to accept it.”

According to Dr Phelan, previous research has shown that managers who lack this ‘learning orientation’ or propensity to adapt to uncertainty are those who are likely to fail.

She added: “All the managers we spoke to had a tolerance and respect for other cultures, especially Asian cultures, and a positive outlook for addressing the challenges. Perhaps it was this attitude which enabled them to develop unique strategies for navigating the cross-cultural managerial issues.”

However managers cited the language barrier as the biggest obstacle to full integration. While speaking Mandarin is not essential for work – senior staff can rely on assistants or translators – they felt it would help them assimilate and some had started lessons.

Dr Phelan believes that while attitude may be central to an individual’s success, companies could do much more to prepare them to work in China. “Western managers would certainly benefit from information about the practical implementation of face and guanxi, the strategies others use to overcome challenges and knowledge of appropriate management styles. They should also be offered language training. Given the high cost of failed assignments, companies need to do more to help managers improve their chance of success.”