Culture Clash


Sunday, November 10, 2002

Non-family members
at a disadvantage in
Chinese family firms

After three years of 70-hour weeks, Xiaojing Liu felt that she was ready for a promotion. Xiaojing had been hired by a family-owned business in Taipei, Taiwan. Not a family member herself, she had received an MBA from an American university and was hired because of her expertise in accounting and information technology systems.

The family business produced high-end women fashions that were sold at boutiques around the world. Xiaojing applied for a position that would have substantially increased her salary. Instead, the position went to the niece of the company president. "I know that I shouldn't be surprised," Xiaojing told a friend. "But it still stings after all the contributions I have made to the company."

Xiaojing is facing problems encountered by many "outsiders" who work for Chinese family businesses. On the one hand, they are part of the company and often can become quite close to its executives. On the other hand, there are people whose family ties make them closer to executives: sons, daughters, nephews, nieces, and cousins. Non-family members are confronted by many difficult decisions. They constantly debate whether to tell the truth about company performance, or to tell what the family members want to hear. At times, non- family members have a difficult time knowing how the company is doing. Financial information is often tightly controlled by the family. If the information would embarrass a family member, it is even more likely to remain unreleased. Non-family members wonder why some people are hired. It often seems that people are in certain positions because of their kinship connections instead of their capabilities.

Executives face pressures when making promotion decisions. If they promote outsiders such as Xiaojing, they must be prepared to explain their decisions to irate family members. They must deal with comments such as, "You didn't chose your niece! Don't you remember that she has worked for the company since she was 14 years old and still going to school full time? What sort of message are you sending to other family members who have shown such loyalty to the company?"

This incident and analysis developed from conversations with Julie Haiyan Chao, general manager and chief representative of China operations for Momentrends in Shanghai. While recognizing difficulties, she points to positive aspects of Chinese family businesses. Family businesses control a large portion of the world's wealth, so they must be carefully analyzed and understood rather than dismissed as hotbeds of nepotism. Family ownership contributes to the stability of businesses over multiple generations. If people can accept the downsides, company executives take good care of employees who they trust and value.

The purpose of this column is to increase understanding of human behavior as it has an impact on the workplace. Special attention will be given to miscommunications caused by cultural differences. Each column will start with a short example of such confusion. Possible explanations will be offered to encourage thought about these issues.

Richard Brislin is a professor in the College of Business Administration,
University of Hawaii. He can be reached through the
College Relations Office:

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