of a state-owned enterprise (SOE) were not well suited for private
ventures. In response to this many SOEs reduced their workforces
to a minimum and preferred younger employees as replacements.
Newly arrived Sino-foreign ventures and foreign ventures sought
to hire Chinese without SOE experience. For example, in our MBA
investigation we found a clear preference for younger managers
without SOE experience. This preference in hiring was based solidly
on the incompatibility between the roles of managers in SOEs and
private enterprise. This can be seen in the results of our early three-
year investigation of an SOE that was being privatized into a Sino-
British venture. We were brought in to recommend procedures for
transferring the informal systems from the SOE to the private com-
pany. Our findings regarding the SOE are shown inTable 9.3.
Table 9.3.Ten limiting characteristics of a traditional SOE.
- When you hire a Chinese employee you have to accept his or her family’s
interest. One employee was fired for good cause after a lengthy procedure
and his family appeared at the company gate until the individual was
reinstated. - Appointed committee leaders are obeyed. Small groups of managers would
not begin problem-solving on their own, but waited until their leader
told them what and how to proceed. - All Chinese employees work for the Party and are contracted to the
Sino-Western company to do as they are instructed. The Party provides
them room and board, health care, education, and an income. They obey
the Party first. - Chinese managers are not expected to innovate but to follow specific
orders, forcing Western managers to micromanage or fail. - Western managers can only reward with praise, special assignments, and
promotions. Punishments are only verbal. - Western managers are contract term limited, but Chinese employees are
employed for life. - Western managers are paid much more than Chinese doing comparable
work. - Chinese employees do not question their Western managers except to
their countrymen. - Chinese employees will do nothing without instructions, no matter how
long it takes. - Employees only get promoted when someone leaves.
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