Kanchanit Bangthamai ID 660027554

Case study of The Wuhan Erie Polymers Joint Venture

The case study of Wuhan Erie Polymers joint venture discusses the situation and
obstacles of ERIE Specialty Chemicals Company, a multinational chemical company based in
the United States (Cleveland, Ohio). The company moved to China in 1980 because of the need
to expand to a new market to promote its chemical industrial capacity. Moreover, Erie Specialty
Chemicals has partnered up with a leading Chinese state-owned plastics factory in Wuhan, China
to form Wuhan Erie Polymers (WEP). This joint venture with Wuhan’s largest producer of
hard-plastic has greatly increased their production of performance polymers in China. The
manager, Mr. Stanley Wong​, negotiated the joint venture project with Wuhan Plastics Company.
Stanley Wong was the GM of ​Erie Performance Polymers and was recently promoted to
chairperson of this joint venture. Wong later ​received approval for his transfer request to Gary,
Indiana, USA, headquarters of Erie. Before leaving China, he was given a task to recommend ​a
suitable successor for his position ​to the board from a list of six candidates, which proved to be
difficult. ​Wong had tried to improve the thought process of his subordinates, which are mainly
Chinese, and also raise awareness of cultural differences between Western and Chinese cultures
as Wong aimed to build an organizational culture that is a combination of both cultures’ values.
It is an important that his successor must possess the right qualifications in order to achieve the
company’s goal and objectives, be sensitive to the existing differences in cultures and is
well-prepared to handle any conflicts which may arise from these differences.

Recommendation for Stanley Wong’s Successor

After reviewing the qualifications of the six candidates for Wong’s successor, it is clear
that none of them possess all the qualifications that are ideal for the position. As an international
manager, that person must be able to plan a company's global strategy, build up the organization
through recruitment, train employees, establish value systems, provide effective decision
making, possess interpersonal skills necessary to interact with multinational employees, vendors
and customers (Cox, 1994). Moreover, Bono (2008) stated that the sufficient manager in

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multinational firms should promote acceptance and respect of staff from various backgrounds. In
my opinion, Mr. Henri Boulanger would make the best candidate for this position with his 24
years of work experience - 16 years with Erie and 7 years as a marketing director for a Chinese
polymers business in Hong Kong and Shanghai. Boulanger, w​ho is 46 years old, is able to
command his lower level employees and will be respected by colleagues. It is also clearly shown
that Boulanger has proved productive in his current position and has demonstrated the
appropriate managerial skills through his past working experience. Boulanger showed
remarkable attributes in term of multicultural aspect as he is a European that graduated from
Canada, a multinational country, and has worked in the US. His experience as a marketing
director in China and Hong Kong has made him flexible, adaptable and sensitive to the cultural
differences in WEP. His knowledge of the Chinese culture and great people skills will help him
create good relationships with all parties including his subordinates and government officials.
Boulanger, by being the TCN, will also help equip and transfer the international perspective to
the firm. According to his personal qualities, Boulanger is a very intelligent and energetic
person, but also emotional and quick-tempered. Mustafa, Dimitria & William (2014) mentions
that leaders with high levels of management skill, multicultural awareness and interpersonal
skills are essential for an effective international management team. Although Boulanger lacks
Chinese language skills which limits his communication with staff at the plant, ​he is still able to
get along well with his Chinese subordinates. In term of Chinese language barrier, he should
attend Chinese language school in order to help the expatriate manager to better understand their
subordinate at the plant who have the difficulty in speaking English yet, having an
English-Chinese speaking assistance should also help the manager to understand their
employees. No one is perfect; the language barrier can be developed as long as one put enough
effort. Despite the language barrier, I believe that with ​the qualifications mentioned Mr. Henri
Boulanger will be able utilize his ability ​to coach leadership and adapt the principles, firm goals,
objectives and values in order to run the firm smoothly and efficiently​.

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Cross Cultural and Diversity Conflicts
Conflicts refer to a serious argument or disagreement, typically a protracted one
(Bernardin & Russell, 1993). Cross cultural conflicts in particular can complicate everyday
operations and management ​(Dowling & Welch, 2004). The bigger the cultural differences of a
firm the greater the difficulty in terms of group involvement and their understanding to each
other’s point of view. ​Earley (1994) ​mentioned that a partner of a certain joint venture has their
own culture according to their nationality. The cultures can make the joint venture vulnerable, if
those diverse cultures cannot cooperate.

Joint ventures with lack of cross-cultural understanding undergo several issues including
commitment, cooperation, communication and conflict resolution issues caused by behavioral
differences and difference in partners’ values which causes interaction problems that affect the
performance of the joint venture ​(Rees, 2013)​. Distance on behaviors and values among partners
in the join venture can lead to issues when interpreting and responding to strategic and
managerial issues which can ultimately lead to difficulties when sharing information and
processing transaction ​(Nilanjan & Mousumi, 2007)​.

In order to get an understanding of the differences of the two national cultures for this
case study (American and Chinese cultures in WEP), we need to apply Hofstede’s (1984)
research. Hofstede’s cultural Dimensions research is aimed at identifying the characteristics of
each national culture. The five dimensions consist of power distance, uncertainty avoidance,
individualism, masculinity and long-term orientation (Hofstede, 1984). These are important
factors that firms have to deal with and can be used to measure cultural differences between two
or more firms, which applies to the joint venture in the case study.

Misunderstanding in Communication
One of the significant issues that may occur regarding cross-cultural and diversity
conflicts is misunderstanding in communication between the two firms from different countries.
The first dimension that Chinese and Western cultures a very different is power distance, with

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the United State of America scoring a power distance score of 40 and China scoring a power
distance score of 80 (Hofstede, 2001). Chinese’s higher power distance suggests a more
hierarchical and centralized structure of the organization, while the Western’s lower power
distance means less hierarchy and a more decentralized structure. Compared with Western
cultures, Chinese people are significantly more respectful and afraid of elders and superiors,
which means they are less likely to give feedback or disagree on any matter. This culture also
translates into working place norms, which lower ranking employees are discouraged to express
their thoughts and opinions on work-related matters. This leads to a very high power distance
culture for Chinese firms. On the other hand, Western people are taught from a young age to
voice their opinion and stand up for what they believe in, which also reflects their attitude in
their workplaces. This leads to lower power distance and a flatter organizational structure, which
is very different from the ones present in Chinese cultured firms. When two firms with a huge
difference in power distance work together, problems in communication are very common. For
example, when employees from Western cultures move to work in high power distance Chinese
companies, Chinese employees may misunderstand that expressing their point of view or
confrontation as lack of respect even if their ideas prove to be beneficial. With high power
distance cultures tending to accept more ideas from higher ranking employees with longer work
experiences while ignoring ideas of the lower level employees, employees transitioning from a
significantly lower power distance work culture will have to put in a continuous effort to adapt to
the new firm. Moreover, high power distance could adversely affect the organization as useful
solutions or ideas could be ignored and be replaced by less effective solutions by the higher
management team.

My personal experience with communication conflicts at my workplace in the hospitality

industry is a great example of the effects of high power distance in an organization. Working in a
leading hotel like Four Seasons Resort in Thailand, the management team is sent from their
corporate office in Canada and the team consists mostly of people from the United States,
Canada and European countries. Thai employees have a culture that are similar to the Chinese in
several aspects, which includes high respect for older people, not outspoken and always trying to

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avoid conflicts​. During my time there, whenever guest complaints came up, the manager would
try to encourage the Asian subordinates to express their opinions and ideas so they can come up
with a better solution, but very few dare to express their thoughts and most would just agree with
any ideas offered by the manager. However, after the meeting with the manager is over, it is not
uncommon to see employees share their thoughts among themselves about how they would have
handled the situation and decided on a better solution. Asian people are better at generating and
expressing ideas on paper rather than when they are asked on the spot during a face-to-face
conversation. This show that when the two parties exchange signals between each other, staffs
from different cultures interpret signals not in the same way, negotiators may mislead the signals
or transmit an unmeant messages. Not only verbal communication, the body language and also
facial expression can lead to the conflicts (​Scullion & Collings, 2006).

According to several studies, workplaces with lower power distance tend to perform
better. Therefore, I believe the company should move towards a lower power distance culture
gradually by encouraging more upward feedback and promoting or compensating employees
based on their performance rather than their seniority. ​WEP can also avoid misunderstandings on
cultural diversity by implementing an efficient conflict management system and cultural
awareness value systems. The mentioned systems would enable partners involved in the joint
venture to better understand each other in terms of cultural differences ​(Scullion et al., 2007).
Organizing team building activities, conflicts coaching classes, leadership building session and
cultural education classes for employees can encourage more understanding among employees
within the joint venture. ​Choi & Beamish (2004) stated that ​the conflict management approaches
need be implemented within the joint ventures in order to reach common objectives which are in
the best interest of the joint venture.

Difference in Working Styles

Another dimension that may cause cross-cultural conflicts ​is individualism.
Individualism describes the extent of relationships that an individual has towards the company,
with the United States scoring an individualism score of 91 and China scoring an individualism

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score of 20 (Hofstede, 2001).These scores reflect the preference of people to work independently
or as a team.

Western culture shows a sense of high individualism that poses individualistic and
task-oriented behaviors which means they tend to work independently and are able to make
decisions on their own (Hofstede, 2001). Marchese (2001) also stated that employers in the US
that allow their employees to work freely ​and encourage personal initiative and achievement ​are
perceived as better employers. On the other hand, Chinese culture tends to show a group oriented
behavior ​(Thomas & Pondy, 1977), which is why ​Chinese people are naturally more confident
and comfortable when working in groups. Being part of a group is crucial for Chinese people,
hence interpersonal harmony and a smooth relationship are very important. For example,
Chinese people do not always express their own feelings and thought as people with distinctly
different opinions from the majority of the group has the tendency to be left out.

For a present day international joint ventures, individual values tends to be more
appropriate for than collectivist values. Individualism promotes a more efficient workplace by
increasing competition within the company as it encourages employees to be more confident in
taking initiatives and expressing their own ideas. Moreover, it ensures that employees will pull
their own weight and equally contribute on each assignment. However, the smoothest transition
for the organization would be to gradually combine the two values together, but leaning towards
the individual values. In order for the new organization to develop a more individualistic
mindset, managers can includes goals that are based more towards individual than team
performance. Moreover, each staff can be assigned individual tasks that they are solely
responsible for the outcome, which would teach each of them to be more independent and
responsible for their own work. Westerners would also need to allow time to develop a good and
trusting relationship with their counterpart, and once the Chinese feel that they can trust their
partner and accept them as a part of their group, the two working cultures can blend together
seamlessly.

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Wong’s Challenge of Finding a Successor
The critical role for human resources heads and organizational leaders is to further
develop valuable employees in order to enable the organization to operate effectively in the long
term while achieving competitive advantage in the international economy ​(Nickson, 2013)​. The
recruitment and retention of the management position is very crucial as the appointed person will
be in charge of the overall direction of the organization while having to manage the company’s
operations. Selecting the right successor with the ability to motivate and encourage the staff so
they feel they are an important part of the firm is essential. The case of Mr. Stanley Wong’s
transfer back to the United States is a good example of expatriate failure, which is mainly due to
distance between his family and him. It is important that Mr. Stanley Wong, the general manager
of WEP, meticulously considers his successor’s qualifications because living in China and
working with Chinese employees for expatriates can be difficulty and may force them to leave in
the future. The right successor must be able to lead the company efficiently, maximize its sales,
increase its productivity and adapt to Chinese culture. To evaluate Wong’s challenge for finding
his successor, the following aspects need to be taken into consideration.

During the recruitment process, the company needs to identify the most suitable
orientation that corresponds to its background, available resources and main objective. I believe
the geocentric approach is the most desirable as the company will be able to select the best
candidate from a large pool of talent that is not limited to their origins which will help the
company reach its international objective (​Mustafa, Dimitria & William, 2014)​. Performance
management should be a collective responsibility of employees and employers to achieve the
organization's vision, goals & objectives ​(Vincent et al., 2005). The effective multinational
manager must be highly responsible and be able to set agendas and create objectives for the team
and him or herself. He or she needs to develop a highly motivated mindset to cope with
ambiguity and stress associated with the management job. Moreover, the manager must know
how to effectively communicate and work with superiors, suppliers, customers and governmental
officials. The human resource manager, together with experienced individuals, would be
responsible for instructing and coaching the new manager in order to increase his or her thinking

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skills, knowledge of the organization, motivation and self-confidence. Moreover, secondment
programs can greatly increase the manager’s experience through jobs in other organizations for a
certain period of time, which creates an opportunity for the manager to get out from his or her
comfort zone by experiencing different ways of doing things and building up the ability to
manage people in different cultures.

Generally, companies spend a lot of time and resources during the process of recruiting
talent. After evaluating the behavior of Chinese firms, it is clear that they have undergone
significant problems concerning staff retention despite their economic growth (Barnett, 1995).
High employee turnover is both financially and socially costly, the company loses both human
capital and ability to operate the business when employees decide to leave. Therefore, the
process of rewarding and retaining employees must also be taken into careful consideration.
Reward systems play crucial roles in attracting, motivating and retaining both local and
international employees. In order for the employee retention process to be effective, it should
take into consideration the reward system in order to meet employees’ expectations and align
with the company’s overall strategy and structure (Jenkins, 2014). It should also balance the need
of PCNs, HCNs and TCNs. The rewards can be a combination of financial and non-financial
incentives (Milkovich & Newman, 2008). For the financial aspect, the fair base salary together
with allowances such as relocation allowances, education allowance for expatriates’ children and
spouse assistance allowance should be provided for expatriates. According to the case study,
Wong’s successor’s non-financial incentive is that he or she will be trusted and assigned higher
level of responsibilities. Other forms of intrinsic reward can be obtained through job enrichment,
job enlargement and job rotation according to ​Hackman & Oldham (1980) ​.

Conclusion

In conclusion, cross cultural conflict is normal in multinational enterprises and it is

crucial for these firms to blend their diverse values and cultural systems to ensure efficient
communication among all parties in the workplace. Wuhan Erie Polymers joint venture includes
workforces from both Western and Eastern culture which suggest potential multicultural

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conflicts that such as misunderstanding in communication and difference in working styles.
Moreover, Wuhan Erie Polymers joint venture may also undergo a short-term problem due to
Stanley Wong’s absence while his successor transitions into the firm and undergo challenges
dealing with cultural barriers and diversity conflicts. After careful consideration of the facts on
hand, ​Mr. Henri Boulanger would make the best candidate for ​Wong’s successor due to his
outstanding managerial skills, ​great interpersonal skills and experience in solving multicultural
issues. His skillset would enable him to overcome managerial problems and achieve goals set by
the joint venture, maximize the company's profits as well as retain good relationships among all
parties in the multinational environments. Furthermore, not only are recruiting and selecting the
right candidates important, but the process of retaining and rewarding talent is also key to retain
great employees. Hence, it is critical for all multicultural firms to take into consideration possible
conflicts and complications due to diverse workplaces, and proceed to take the necessary steps to
ensure a smooth integration between all parties involved.

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