Understanding identity is the key to succeeding in China

The conviction of Rio Tinto executive and Australian citizen Stern Hu for industrial espionage in 2010 highlighted the importance of managing issues of ethnic identity in China. AAP

The 21st century is predicted to be Asia’s century. As the leading economic power in Asia, China has become a popular business partner for many countries notably Australia. With increasing business interactions between Australia and China, many Australian companies have established branches in China. But are Australian companies ready to succeed in China?

Managing cultural differences has become something of a cliché for many multinational companies operating in China, but managing identity has received little attention. There is a lack of awareness on the importance of identity in the workplace. If multinationals are to succeed in China, identity dynamics need to be considered.

We know that cultural differences are often a major challenge in preventing corporate expatriates from being successful in China. Australian employees of Chinese descent are becoming ideal candidates to work in China as expatriates, such as Stern Hu, the former general manager in China employed by Rio Tinto.

But this practice is not limited to Australian firms. The employment of expatriates of Chinese descent is a common practice elsewhere. The current United States ambassador to China, Gary Locke, is American Chinese. However, multinational companies may not always benefit from such employees if the importance of their Chinese identity is neglected, such as in the Stern Hu case. Had Rio Tinto employed a Caucasian Australian to work on the same task, would his sentence have been less severe? Companies need to gain more insight about this type of employee when they work in China representing their companies.

My ongoing PhD research investigates how Chinese ethnic identity affects the performance of expatriates of Chinese descent in multinational company branches in China. It focuses on how this type of employee builds relationships and exchanges information with local Chinese employees. Special attention is given to benefits — as well as the challenges — posed by their identity.

Currently, there are no statistics on the number of expatriates of Chinese descent employed by multinational corporations in China. My field research in early 2012 found this type of employee in almost every Australian, European and American corporation I contacted, ranging from companies in agriculture, architecture, consulting, energy, IT, mining, and NGOs.

Many believe having Chinese ethnicity is an advantage for expatriates of Chinese descent over other expatriates who do not have this identity when working in China. For example, expatriates of Chinese descent can be seen as “one of their own (in-groups)” by local Chinese employees, but other expatriates are often seen as “foreigners (out-groups)”. This in-group categorisation can make local Chinese employees feel closer to expatriates of Chinese descent than to other expatriates, thereby helping communication and interaction between them. Many expatriates of Chinese descent admit their Chinese colleagues feel comfortable asking them questions and sharing feelings, for example, complaints and feelings of unhappiness with them that they may be reluctant to share with out-groups. This helps expatriates of Chinese descent to understand what is happening in the organisation.

However, this identity can be a double-edged sword. It can create special challenges for expatriates of Chinese descent other expatriates do not have to face. A visible Chinese ethnicity can trigger certain psychological effects among their local Chinese colleagues. For example, local employees may form higher expectations towards ethnically similar expatriates than towards ethnically dissimilar expatriates, expecting them to be familiar with Chinese culture and social norms, to identify with the ethnic group, to value their Chinese ethnic identity, or to treat local Chinese employees favourably.

Attention given to this visible ethnic similarity can exceed invisible dissimilarities. After living outside of China for a prolonged period of time, many expatriates of Chinese descent are different from their Chinese colleagues in a variety of ways. Not everyone can meet these expectations. Nevertheless, if local employees firmly believe expatriates of Chinese descent are still Chinese, expectation violation can trigger the “black sheep” effect. Based on this effect, people tend to evaluate in-group members demonstrating deviant behaviours more harshly than out-groups doing the same. For example, expatriates of Chinese descent may suffer more negative evaluations than other expatriates when they both make a cultural error, or when they both make a decision that unfavourably affects local employees.

This research also highlights an important factor that affects relationships between expatriates of Chinese descent and their Chinese colleagues. What is damaging to the relationship is not simply how local employees view expatriates of Chinese descent or how expatriates of Chinese descent view themselves, but the failure to reach an agreement between these two views. If these two parties can agree that Chinese ethnic identity is important in their relationship, their shared ethnicity can facilitate their interactions. If expatriates of Chinese descent disagree with their Chinese colleagues on the importance of the shared ethnic identity, their relationships may suffer. The ethnic identity of expatriates of Chinese descent can, thus, become a liability.

Companies need to develop a thorough understanding of identity dynamics among their ethnically diverse employees worldwide. As for expatriates of Chinese descent, companies not only need to know the benefits they can gain from their ethnicity, but also the challenges they face in order to provide them with necessary support. Additionally, identity management needs to be included in expatriate training programs, by helping them understand how their identity might affect their interactions with local employees. Finally, expatriates of Chinese descent need to understand the influence of their ethnic identity and actively manage it to enjoy a successful working relationship with local Chinese employees.