Expatriate assignments vs localization of management in China: Staffing choices of Australian and German companies

Abstract

Purpose – The purpose of this paper is to explore the specific difficulties that senior managers face when employing expatriate, Chinese and local-hired foreign managers in China-based subsidiaries of Western multinational companies (MNCs). Furthermore, it aims to examine the resultant coping strategies to overcome identified weaknesses.

Design/methodology/approach – This research adopts a qualitative approach, using semi-structured interviews with key-informants from senior management in 44 Australian and German companies operating in China.

Findings – The study identified specific difficulties associated with the employment of expatriate, local Chinese, and local-hired foreign managers in Australian and German subsidiaries in China. The interviewees indicate a widespread intention to replace expatriate managers with Chinese managers and local-hired foreign managers. The striving for localization of staffing is more pronounced in German than Australian MNCs. German companies offer more comprehensive development activities for the Chinese talent than Australian companies.

Research limitations/implications – The small number of participants and the restriction to one key informant per company limit the generalizability of the findings. The effects of different staffing options still need to be researched in longitudinal studies and in varied contexts.

Practical implications – Localization of staff suggests the need for specific, culture-sensitive approaches to personnel development. The findings also suggest that the knowledge transfer between expatriate and local managers deserves more attention. Finally, the return on investment that companies receive from differing staffing options should be assessed using a multidimensional set of success criteria.

Originality/value – This paper has two main contributions to existing research. First, it links academic discussion about the options of international staffing with the experience of practitioners from Western MNCs operating in China. Second, it provides further support for the existence of country-of-origin effects in international staffing.