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Human Resources Challenges in China: Providing International Levels of Service in the Hospitality Industry

Human Resources Challenges in China: Providing International Levels of Service in the Hospitality Industry

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Published by Tatiana Ferreira
Presented at “The Globalization of Chinese Enterprises: The Advent of a New Age Multinational Enterprise” Conference 2006, and published in the conference proceedings.
Presented at “The Globalization of Chinese Enterprises: The Advent of a New Age Multinational Enterprise” Conference 2006, and published in the conference proceedings.

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Published by: Tatiana Ferreira on Apr 01, 2010
Copyright:Attribution Non-commercial


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Page 1 of 11
Tatiana Ferreira, MBAtatigf@hotmail.com Suggestion for short running title: Human Resources Challenges in China
Page 2 of 11
The purpose of this study is to underline some of the distinctive situations the hospitality industry is faced with in China, as it relates to its Human Resources, and it attempts to prove that luxury hotel properties utilizemodified hiring and training practices to achieve international levels of service. Furthermore, it offers insight onbest practices, as well as pitfalls to avoid, when utilizing Chinese workers to expand globally.
Human Resources; China; Hotels; Hospitality; Hiring; Training
With growth slowing down in Europe and the United States, international hotel chains aretargeting China for their future expansion
(Hoshiko, 2005). Shanghai is one of the most desiredlocations, as it is seen as the main city in Asia where the high level of established businesses willcontinue to grow, fueled in large part by Foreign Direct Investment (FDI). Chinese provincialcities such as Hangzhou, Hannan and Shenzan are seen as underdeveloped and have growthpotential as they become key markets for the World Expo in 2006 and the Asian Games, whichwill be held in Guangzhou in 2010 (Manson, 2005). Leading European luxury hotel operatorAccor recently announced its plans to open three premier hotels in 2007 (AsiaPulse News, 2005).Marriot International plans to have 30 Chinese Hotels and over ten thousand rooms under itscontrol by the end of 2007 (SinoCast, 2006). Since Human Resources plays a critical role in thesuccess of a services oriented business venture, a better understanding of the human resourcesdynamics in China can contribute to the success of the companies investing there, includingChinese companies looking to compete with their Western counterparts.In many Chinese cities, a stay at a foreign-managed luxury hotel is comparable to a stayin a hotel of the same category in any major city in the United States. On the other hand, thehotel industry in China has suffered over the years from inadequate infrastructure, lack of aservice-oriented mentality, political issues, high turnover, health-related issues (SARS, the BirdFlu), and the Asian financial crisis. China also presents some unique challenges regardinghuman resources management, and more than ever, western companies have an increased stakewhen trying to understand how they can best manager their properties within the Chinese culture(Ford and Magnini, 2004).The purpose of this study is to underline some of the distinctive situations a luxury hotelproperty is faced with in China, as it relates to its Human Resources, such as hiring and trainingits employees to provide international levels of service. The use of organizational practices inseveral countries is a fundamental way in which Multinational companies seek to leverage theirknowledge to establish competitive advantage (Jensen and Szulanski, 2004). Data was collectedin an attempt to prove that luxury hotel properties in China use modified hiring and trainingpractices to achieve the same level of service guests expect to receive in a comparable hotellocated in any Western country. Personal interviews were conducted with the management staff of the Grand Hyatt Shanghai to determine the methods of hiring and training employees.This analysis will help create a better understanding of the human resources situation thehospitality industry currently faces in China, and its implications to the globalization of both
Page 3 of 11Chinese and International companies. Furthermore, it offers insight on best practices, as well aspitfalls to avoid, when utilizing Chinese workers to expand globally.
A lot has been written regarding the overall development of the hotel industry in China,with most studies looking at the industry from a financial/growth perspective. In addition to that,some research has been done on the challenges facing the hotel industry, as human resourcesbecome one of the most difficult aspects to replicate in a cross border knowledge transfer.The literature review underlines that one of the major challenges encountered by luxuryhotel properties in China is the lack of qualified professionals, especially managers, creating aneed for highly intensive training programs at all levels of the organization. According toHospitality Magazine, the industry is hampered by a lack of qualified staff, a high turnover rateand university graduates not willing to join the industry. In addition, there is a big gap betweenwhat is taught in schools and what is happening in the real world
(Zhang and Wu, 2004). One of the challenges facing the hospitality schools is that many of the textbooks are simply translatedfrom English and other languages, without adapting the contents to the Chinese values, culture,and modern issues (Ford and Magnini, 2004). According to Stella Hou, the Shanghai-based salesand accounts leader for Hewitt Asia Pacific, China’s educational system focuses too intently onby-rote learning, rather than creative problem solving (Clouse, 2006).Currently, expatriates occupy the majority of managerial positions in hotels in Chinabecause of the shortage in qualified local personnel. In the annual member survey conducted bythe American Chamber of Commerce-People’s Republic of China, human resources surpassedcorruption, bureaucracy and intellectual property rights, ranking as the number one concern forAmerican firms operating in China (Clouse, 2006). Studies indicate that hotel training programsin China emphasize hands-on experience, but managerial training programs are rarely given tolocals. The particular shortages mentioned most often are lack of creativity, aptitude for risk-taking and, of an ability to manage other people (The Economist, 2005). About thirty to fortyexpatriates are hired to open an international luxury chain hotel in China, and those expatriatescost a lot to the companies, since their packages generally include costs of living, as well as amuch better salary than that paid to a Chinese citizen employed in the same position.Another important factor to consider is the high turnover rates. Until 1983, the Chinesewere not allowed to select their career. After the economic reform, they were free to choose theirown jobs. Economic growth and new government policies have given Chinese workers moreoptions, and some companies have to pay more and offer better conditions in order to recruit andretain workers (Clouse, 2006). The lack of employee culture seems to motivate them to leavetheir employer, even for a small increase in salary, and work for another company. A study in theHeilongjiang province adds that almost all general managers of state-owned hotels had beenassigned their jobs by the state. The study also concludes that is difficult to hire people to work in hotels, since the hotel industry, does not appeal to young graduates of high schools andvocational training schools, or even to tourism graduates from the universities. Many peoplebelieve careers in hotels are short and that the jobs require no skills, but demand intense physicalwork 
(Lam and Qiu, 2004). It is noted, however, that the situation is very different at hotelswhich are a part of international chains. In those, the most advanced management styles and

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