Is Guanxi still working, while Chinese MNCs go global? The case of Taiwanese MNCs in the UK

Abstract

Guanxi has been well studied in Chinese management as a vital factor associated with business strategy and HRM in Chinese communities. However, Guanxi may not be crucial anymore, because Chinese MNCs are rapidly becoming global players since they have started to merge with and acquire Western MNCs, but not through the guanxi related to international strategy. Recently, “a Chinese company bought IBM Personal Computers lock, stock and barrel. Chinese corporations have bought Thomson and RCA televisions, Dirt Devil etc.” (James Dyson, 2005). This paper investigates Taiwanese MNCs pursuing an internationalisation strategy, and discusses implications for the way third world MNCs manages their international employees. Interview data from twenty four Taiwanese-owned companies are used to identify how the Chinese cultural value of guanxi, underpins their management style in the British context. The paper finds that there are sectoral differences between the IT and financial service industries in terms of the way guanxi affects recruitment and company location decisions. It is concluded that national culture is still an important factor to influence the international strategy and HRM practice in MNCs of third world origin.