In the quest to find low-cost manufacturing outposts, multi-national corporations, including U.S. companies, have found China to be an attractive market. Recent Chinese social and economic reforms have made it easier for foreign companies to invest in and develop manufacturing facilities in China. But building and maintaining a manufacturing facility in China is more than bricks-and-mortar, and machinery and systems; it's also about people, employees in particular.
Human resources - and programs for training, empowering and retaining employees - are becoming an important part of the manufacturing focus in China, both for state-owned enterprises and multi-national corporations. The successful development and execution of training and HR programs will help determine China's ability to compete in the global manufacturing sector.
At the moment, multi-national companies "import" quality HR practices to train and empower the Chinese nationals they hire.
"Multi-national companies, just as they do in their home facilities, focus on empowerment, leadership and developing skills in employees," said Rich Wellins, senior vice-president at Development Dimensions International, a global human resource consulting firm. "But state-owned companies are behind the eight-ball on HR practices. There is not yet a high degree of concentration on empowerment and leadership training for employees, even if skills' training is provided," explains Wellins.
A basic piece of the HR puzzle, which most U.S. companies understand, is that an organization can teach skills and provide training, but if employees are not empowered - made to feel they are important to the overall functioning of the company - it will have little effect on an employee's loyalty.
"Chinese workers do not yet have a value system that encourages empowerment," said Wellins. "The typical Chinese employee is not encouraged to maintain their self-esteem or show responsibility in their jobs."
This is in large part because China is still an autocratic society, where workers simply do what they are told. Even if they are well trained, the Chinese worker is not expected to develop leadership qualities. Wellins contrasts that attitude to that of American workers, who are expected to meet continuous improvement goals and to be responsible for the production demands of a job.
But as things are changing in China, including the political system, so too are attitudes towards workers.
"They will have to spend more money on HR development if they are to move to the next level of high-performance manufacturing standards," said Wellins, "Even if this means raising the prices of goods produced and paying higher salaries due to the dollar investment."
And as Chinese companies begin to empower their employees, multi-national companies and state-owned business are finding that they are competing for the same Chinese workers. While multi-national corporations are seen as a lucrative job opportunity for the Chinese citizen - offering better training programs, higher salaries and more empowerment - the gap is closing between state- and foreign-owned companies.
"After a Chinese worker is trained by a multi-national company, he might choose to leave and work for a state-owned company that is looking for skilled employees," said Wellins. "And once at the Chinese company, these same workers will start to expect higher salaries and more empowerment."
In relation to manufacturing, China is still in an evolutionary stage. The typical Chinese worker is not yet motivated enough to increase his or her well-being by searching for another job, and is not as eager to change jobs just for a salary increase, compared to their American counterparts.
"The multi-national companies in China do a good job of training and empowering their employees," Wellins said. "They are willing to spend money to ensure a good supply of labor."