Source: Journal of Management
Author: Sendy Thahir
Year: 2009
Introduction
On these opportunities, has come to us to begin and open a new business in Thailand and China, before it, we need to do some research and investigation on the economic, political, legal context, national cultures and workforce diversity in the new countries.
We are planning to build an office in China and Thailand as the international enterprise with the operations and strategy were based on the selected country.
After determining the culture, economic, political and work force factors, the risk management can be made to avoid the things that harm the company. The company will employ staff on the selected countries to operate the function of the company itself.
These topics are relevant because we can analyze the opportunities and threats that result on the security, profitability and values for our company in the future.
Thailand Situational Analysis
Employment Relation Structure
Labour Force
The total number of labour force in Thailand was approximately 37,780,000 (CIA 2009) every country have different cultures, and need a different behavioural strategies to interact with different cultures, the cultures of Thai society will result to an issue for the business to start a business in Thailand. More information will be explained on the next part.
Union Involved
There are union involved on the employment relation (Danwilaipitikool 2009). The unions and employee representatives surely protect the interest of the workers. They also protect the legal immigrant workers that come to the country to work.
Legal Frame works
Court
In Thailand, the court was known as Supreme Court or Sandika, the judges in that court are appointed by the monarch (CIA 2009)
Legal system
Thailand Legal systems were based on civil law system, with influences of common law, they have not accepted compulsory ICJ jurisdiction. (CIA 2009)
Socio
Pensions
When people reach their unproductive age, the people have to think about to earn money to fulfil their needs, that is why ‘pensions scheme in Thailand is applied to reduce the number of poverty among old people in the country’. (Danwilaipitikool 2009) the concern of the government would help for the wealth of their country society.
Family income
The family Income rate was 42 in the year 2002 (CIA 2009)
Unemployment benefit
Unemployment benefits are available in Thailand. They can obtain it if they are giving any contributions at least six month from the total fifteen month. (Anglo Info Bangkok 2009)
Political
The political background in Thailand is a Constitutional Monarchy with Abhisit Wetchachiwa as the prime minister. They do the election every five years to select the new prime minister. The political situation seems to be unstable because of the existence of anti Government group, that would result as a problem for us to start a business in Thailand, the more information will be explained on the next part.
Economics
The unemployment Rate in Thailand was 1, 2%, with the GDP U$ 8700, Inflation 5, 5%, Growth Rate 3, 6% and the exchange rate for the country was U$ 272, 1 trillion (CIA 2009) The economics situation seems to be very good, where as the touring sector keep developing.
China Situational Analysis
Employment relation structure
Labour force
The china that have the highest population in the world surely have a very big number of human resources, China have approximately 807,700,000 labour force that are ready to be employed by the company. (CIA 2009)
Talking about the Employers, this is one of the main issues that the business owners need to be aware before starting up to open a business in China. More explanation will be explained on the next part.
Union involved
There are union involved on the employment relation, the unions and employee representatives surely protect the interest of the workers, the labour compensation, work hours, rest, and work safety, insurance and training. The union offers a collective contract between all the companies and employees in the industry or region concerned regarding a binding between them. (Shira, D 2008)
Legal approach to employ
The legal approach to employ the workers in china has several steps. Since China has been adopting the Labour Contract Law, the company have to prepare the labour contract for the labourer that must be signed together. making the confirmation and agreement about the company name, address, legal representatives, employees name, address, personal id number, term, job description, working hours, rest and leave, compensation, working conditions, workplace safety / protection, protection for job related hazards and social insurance. The contract must be fulfilled; otherwise the company should pay compensation as much two times of salary for the employee.
(Shira, D 2008)
Legal Frameworks
Court
In China there are several court, which are, Supreme People's Court the judges on the court, were appointed by the National People's Congress, Local People's Courts that comprise higher, intermediate, and basic courts, Special People's Courts responsibly primarily military, maritime, railway transportation, and forestry courts. (CIA 2009)
Legal system
The legal system in China were based on civil law system, it derived from Uni-Soviet and continental civil code legal principles. The legislature retains power to interpret statutes, constitution ambiguous on judicial review of legislation, China has not accepted compulsory ICJ jurisdiction. (CIA 2009)
Socio
Unemployment benefit
In China there are unemployment benefit that is payable for the unemployment, if they have been registered for reemployment field. (Easy Expat 2009)
Pensions
The employee that is working in the big or multinational company, they should include the membership of a corporate pension scheme. It is advisable to save up some money routinely to allocate the money for the pension period. (Easy Expat 2009)
Family allowance
China family allowance is at 47 in the year of 2007. (CIA 2009)
Political
Communist’s state. Nowadays President and Vice President were Hu Jin Tao and Xi Jin Ping. The election was established every five years.
Economics
The business that plan to opened up in China need to consider the environmental factors, that is one of the reason why business owners need to select an appropriate business to be conducted in China and surely it would be an issue which would impact the economic factor, otherwise the business process can be established in a smooth way, if not there will be alternatives for it, more information will be explanation on the next part.
The Unemployment Rate in china was 4%, with the GDP U$ 6100, Inflation rate 6%, Growth Rate 9, 8%, the exchange rate for China was U$ 4, 222 trillion, the economic situations seem to be periodically improving.
(CIA 2009)
Several issues that the company would need to be aware on starting up a business in Thailand
There are several main issues that our company should be aware of, that would impact towards the selected country; one of it is a social issue, the drunken habit of the society of Thailand, (Media Contact Resources 2005)
Which would result the bad performance on their work activities, it can increase a high risk to their safety on performing their work, especially for those who are working in the factory or construction.
It can be solved by creating a rule, that are not allowing the employee to drink alcohol during or before work, if it is trespassed, they will be prosecuted. If it is questioned why do we have to be very strict, because any incident that happened at our premises will be also become the responsible of the managers. We have to avoid the factor that would harm the organization.
Business managers must appreciate the employees as their responsibility to earn the respect from their subordinates. Thai people have very high self respect, they can easily be angry when they are criticized, more over pushing their head with hand would result a disaster, they can fight us or harm the company as their feel to be insulted. (Visalo 2008) based on Visalo have mentioned, we can conclude that Thai are expecting the low power distance, they are expecting ‘the equality of power’ (Hostfede 1991)
Dale Carnegie tells that critics can be a heart pain for others where it is kicking down their pride, he has a tactic by giving an appreciation first before giving a critics, this had been done by him to his secretary, he tells that he is pretty with her uniform and then he continue to tell what things to be improved for the sake of the organisation. (Carnegie 1995)
This is a psychology ways to motivate subordinates to work effectively. By concerning on their culture, we can accomplish the cultural issues that emerge.
The turbulence's that happened because of the coup d tat between the anti-government group and the nation force that arise since the couple of years, it is the main issue that often happen in Thailand which need to be aware of. ‘This is the Political issues that are impacting the stability and economic environment’. (Kompas 2008) if the political situation are unstable, it would very hard for the business managers to make a decision for the company, where as everything seems to be really unpredictable.
The riots often result the public facilities be the target of their anger. The property of the people that are not related within the conflict are also might have a very high tendency to be accidentally or purposely damaged or robbed. We do understand that ‘Government political system and policies are not always stable, they can impact foreign organizations considering undertaking operations within potential or attractive international market.’(Cullen & Praveen Parboteeah 2005) We can take terrorism issue, economic upheaval, and frequent changes in political instability and etc as the example. According to Deresky, ‘a stable political situation is needed to do business with different country’ (Deresky & Christopher 2008) as it will support the fluent of the business process.
‘Anticipating political risk is a difficult task for experts to let alone business leaders’ (McFarlin & Sweeny 2006). Political situation are always unpredictable, everything changes on just a matter of time, determining the worst situation that probably happen would be very good to avoid the unexpected things for the organization.
We as the business manager have the solution to manage those issues, where as the demonstrate are targeting the government properties, we should avoid making a business together / joint venture with the Thailand government, unless they could
Guarantee the safety and security of the company. Moving the business to the place that is far away from the riot, can be the alternative ways to prevent the issues.
Several issues that the company would need to be aware before starting up a business in China
When starting to build up a business in China, there are several factors need to be considered as the issue, the countries have been experiencing. After determining the issue, the alternatives for prevention could be developed.
China have a very big number of human resources, the human quality and capability need to be consider before starting to employ the Chinese people. If we are planning to produce a prestige brand, we have to discuss also about the impact of Country of Origin. ‘Some hide the “Made in China” label in the bottom of an inside pocket or stamped black on black on the back side of a tiny logo flap.’ (Thomas 2007) The opinion from the New York Time journalist could represent that some of the people are avoiding the made in China brands. When it comes to the term ‘made in China’ people would think twice, even more to purchase it even though the Chinese people have a lower wages rather than other people, Some people feel the made in china product have no prestige to be shown of. A research had been conducted stating that ‘China workers' cognition to world quality standard is still catching up.’ (HKQCC 2007) That is one of the reasons why people would consider twice on deciding to buy brand that is made in China. If a business starts their production stages with low quality employees, we can conclude that we would have a low output.
Catching up doesn’t mean that there are no alternatives to prevent those situation, It can be improved in time when various quality control measures are enforced, such as having samples at the production line, and locate more Quality Control supervisions at different production stages. It is expected that the quality of the product produced can be reliable.
At this recent time we always listen about the effect of the global warming, where as it has a very bad impact for world and people itself. The Global Warming issues emerging which result the natural disaster in some country of the world, especially in China such as Flooding, Earthquake, Landslide and etc have pushed the society to take care of their environment, where as many of their society and relatives had died due to the bad impact. Spontaneous environmental activism and popular protest movements have emerged’ (Pomonti 2009) due to the tragic things that had happened. The company that plan to start their business in China have to follow their regulation regarding the environmental issues. The environmental activism start to announce to use paper bag rather than using plastics bags to reduce the effect of the global warming. We can conclude that society of China have a very high concern about it. The case that happened, pushed the business managers to thing about the acceptability of the business that opened up in China, the China would only welcome those investors that are willing to safe their country. The managers also must be ready to spend some amount of money to take a role to create a good impact for the country, by concerning about the eco friendly factors, purifying the waste water before it is thrown away, reduced the used of paper instead of using computer on the working activities, safe the energy when it is unused and plant trees as the good will for the China and world. If the business activities have no bad impact for the environment towards the country, China, then the stability of the company could be maintained.
Conclusion
The two country economic, social political background and structures, legal frame works and employment relations structures of the two countries, need a very high attention before starting up a business. Different countries have somewhat unique situation. After doing the research for it and the potential issues that may emerge, such as the Coup d etat by the anti Government group in Thailand, the habit and cultures of Thai people, China low quality employees until the regulation that would impact the business economic factor because of the environmental issues. We have to be ready for the consequences although we have been making an anticipative ways to reduce the unexpected things. Hopefully the managers, business owners, investors could create more effective strategies at China and Thailand for the success to attain the organization goals. By doing the very best preparation before, hopefully we have the very best result to be proud of.
Reference
Anglo info Bangkok 2009, ‘Job-Seeking & Unemployment in Thailand’ viewed 18 March 2009
Carnegie, Donna D & Carnegie, D 1995, ‘How to Win Friends and Influence People, 1st edn, Binarupa Aksara, Jakarta
CIA 2009, The World Fact Book, viewed 18 April 2009
Cullen, J & Praveen Parboteeah, K 2005, Multinational Management: a strategic approach, 3 rd edn, Thomson South-Western, USA
Danwilaipitikool, M 2009, ‘New working group will champion social pension for Thailand’, viewed 29 March 2009
Deresky, H & Christopher, E 2008, International Management: managing across borders and cultures, Pearson Education, Australia
Easy Expat 2009, Unemployment benefit, viewed 1 April 2009
Easy Expat 2009, Pensions, viewed 1 April 2009
HKQCC 2007, ‘Tips of China Product QC’, viewed 1 April 2009
Hofstede, G 1991, Cultures and organizations: software of the mind, Mcgraw-Hill, London
McFarlin, D & Sweeny, P 2006, International management, strategic opportunities and cultural challenges, 3rd edn, Houghton Mifflin, Boston
Media Contact Resources 2005, Beer in Thailand Become Social Issue, Entrepreneurs, 28 March 2005, viewed 2 April 2009,
Pomonti, V 2009, ‘Environment issues in China’, Beijing Chinese studies, Vol 1, No 5, pp.12
‘Protestant Neglect the Warning, Soldiers Moving’, Kompas Daily, 14 April 2008
Shira, D 2008, ‘Hiring Local Employees’, Trade mission to China, viewed 14 April 2009
Thomas, D 2007, Made in China on the sly (New york times 23 November 2007)
Visalo, Phra Phaisan 2008, ‘Buddhism for the Next Century towards renewing a Moral Thai Society’ 1st edn, Dian Dharma, Jakarta
Appendix: Economic Growth and Labour Market Issues
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Adopted from: (CIA 2009)
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Government Style
|
Constitutional Monarchy
| |
Population (Million)
|
65905410
|
1338612968
|
Urban Population
|
21748785,3
|
575603576,24
|
Current GDP per capita (US$)
|
$ 8700
|
$ 6100
|
GDP (US$ billion)
|
57000000000
|
7800000000000
|
Growth Rate
|
3,6 %
|
9,8 %
|
Inflation Rate
|
5,5 %
|
6 %
|
Unemployment Rate
|
1,2 %
|
4 %
|
Labour Force
|
37780000
|
807700000
|
Expenditure on Education
|
4,2 %
|
1,9 %
|
Literacy Level
|
15 <>
|
15 <>
|
Language Spoken
|
Thai, English, Ethnic, Regional dialects
|
Mandarin, Cantonese, Shanghainese, Hokkian, Fu Zhou
|
Religion
|
Buddhist, Moslems
|
Taoist, Buddhist, Christian, Moslems, Atheist
|
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