China, over the last 30 years or so has achieved extraordinary economic growth, leading to gradual market liberation. Despite this China remains a one nation state with HR practices steeped in Confucianism, however The Chinese government is committed to supporting outward investment for companies looking to expand overseas. (IBM, 2006). There are many influences to consider when deciding which country to invest in, this essay will consider the cultural, economic, political, and industrial relation factors a Chinese steel factory must consider in deciding whether to open a new production facility in Britain or Sweden. After considering these issues, based on the evidence the essay will conclude with a recommendation on which country is the most viable to invest in.
Chinese steel producers are predominantly government owned, it is also highly subsidised, contrary to basic market forces. Any new production facility would elicit concerns that the company would be operating at the behest of the Chinese government rather than market principles. (Industry Today, 2011). If this were to happen, the Steel Company would fall foul of UK anti competition laws, which prohibit anti-competitive practises (Smith, 2012). Despite this, the UK has few barriers to FDI; also, the UK is currently well served in the steel industry by Tata steel, a large multinational Indian company that has recently opened a new production plant in the UK to deal with rising demand (BBC, 2014). This is in contrast to the Sweden steel industry, which currently operates at under capacity due to subdued demand. (SBWire, 2014) although similar to the UK, Sweden has few barriers to FDI and have similar anti competition laws. (State.Gov, 2014).In view of this, anti-competition regulations must be considered in both countries, although given the subdued demand in Sweden, the UK may present a better investment opportunity at the current time. However investing in either country would open up access to European markets. Which is seeing demand slowly recover after a period of decline. (OECD, 2014).
When considering which country to choose, the steel company must consider the national culture as this shapes values and behaviour and can directly influence organisational culture. National culture also influences employment relations and the way in which it is managed in the host country. (Wilton, 2013), Managers in the UK are more democratic and although they operate a hierarchical management system, it is not restrictive and employees are encouraged to contribute and take decisions. (Taylor, 2011). This is far removed from the Chinese model of HRM, which is authoritative and directive, managers are expected to make the decisions and delegate from the top down. Unlike the Anglo –Saxon model, Chinese management style is based on respect, hierarchy and discipline which is central to Confucian philosophy. (Gallent M, 2010)
Sweden, on the other hand takes a more egalitarian approach, which attempts...