As China becomes more transparent, Western countries investing in its progress have an opportunity to broaden their perceptions of diversityThe Former People’s Republic of China remains an enigma because the government is usually not willing to publicly discuss social and political issues. Instead, the country privately deals with its internal issues and does not spend time much time comparing itself to other economies or workplaces except in terms of GDP. China takes pride in its cultural purity and largely homogenous population, so the outside world tends to view the country as lacking diversity, which is not true. China has a large number of ethnicities and extends its definition of diversity to include factors like class, education, political associations and religious beliefs.
People’s Republic of China (PRC) President, Hu Jintao, introduced the concept of a harmonious society (hexi shehui). This concept was a vision for a country that was rapidly becoming a global business partner and world participant and was added to the 2006-2010 five-year plan and the Chinese Communist Party constitution. It is necessary to understand the concept of harmonious society to appreciate how China views diversity and how it deals with diversity tension. The concept is broad and inclusive and says a harmonious society is, “Democratic and ruled by law, fair and just, trustworthy and fraternal, full of vitality, stable and orderly, and maintains harmony between man and nature.’’ As a social, cultural, environmental, political, and geographic, as well as an economic concept, harmonious society is designed for a China that is converting from governmentally planned to market based.
Though the Chinese are homogenous as Asians, they are as diverse as other countries with open immigration policies. However, diversity is not based on race but rather in the different ethnic groups residing in the provinces and regions and these differences can be stark. The Hans account by far for most of China’s population, but there 56 ethnic group officially recognized by the government. Forty-four (44) of the 56 groups are a majority in their respective regions, and there are regions given recognition through the government designation of Minority Autonomous Status. The largest ethnic minority groups are the Zhuangs, followed by the Manchus, Huis, Miaos, Uyghers, Yis, Tuhias, Mongols, Tibetans, Buyeis and Koreans. The diversity extends throughout this massive country except on the eastern coast.
Interestingly, driving interest in diversity has been the emergence of the ‘fifth generation’ professionals of varying backgrounds that make up a collective leadership form in the government. The first four generations represent the rigid governmental dynasties. This has led to a less structured decision making process as various factions representing the diversity of China participate in government, and in effect, lesson the power of the ruling elite. This is a factor in the ongoing tension between the government and the military – a tension that democratic nations do not really understand.
As in business, leadership flows downward to influence how its constituencies respond. The people now ruling China represent a variety of sociological, professional and economic backgrounds. Diverse political and demographic leadership acknowledges the need to be a more inclusive society in which various geographic and social constituencies need representation to make the country more innovative and accepting of the market economy requiring complex changes on all level.
As you can imagine, the changing economy is leading to workforce and foreign investment changes. The sweeping changes have implications for managing competitiveness and managing the diversity tension that comes from ethnic groups rushing to the big cities where most of the higher paying jobs are found. Private enterprise is booming but mostly in the cities along the coastal provinces. This has led to income inequality between the richer coastal areas and the minority provinces.
The economic growth in the cities has required that state ownership of businesses shrink, foreign investment grow, labor contracts guaranteeing lifetime employment be displaced, and a more vibrant and dynamic approach to free enterprise encouraged. Rural farmers are moving to the cities in large numbers to access manufacturing jobs. However, these rural Chinese are less educated and less skilled than their city counterparts. Also influencing worker inequality is their hukou status, which is the household registration system that has been in place for centuries and has become a type of class system over time.
Leaving Foreign Cultural Perceptions Behind and Adopting Patience
In the ten years since its introduction, the harmonious society concept and the scientific development concept are growing components of the five-year plans. The scientific development plan is the means for achieving the harmonious society. It focuses on putting the country’s peoples first, promoting sustainability, and doing both in a coordinated and comprehensive manner. The sheer complexity of the process requires addressing rural vs. urban, coastal vs. the rest of China, social vs. economic, human vs. nature, and domestic development vs. foreign investment.
There are implications for the workforce and thus foreign investors as China moves to a market based economy. The Han ethnic group favors workers from majority ethnic group for high paying jobs. The government tends to direct the resources to those areas where the majority ethnic group resides on the eastern coast. Social conflict remains a serious problem. Tolerance for ethnic, political and religious diversity remains low in many less-developed areas where minorities are the majority. In addition, there is still no assurance the government will address conflict in a fair manner. There is a shortage of skilled labor due to China’s history as a mostly rural economy, which makes typical workplace issues of finding, attracting, training and retaining workers challenging. The challenges are made even more difficult by the fact that attracting diverse ethnic groups is necessary to adequately staff businesses. There is an increasing migrant worker sector consisting of people seeking to reduce inequality in areas like compensation and training.
Western countries doing business in China must learn two things quickly – tolerance and patience. There must be tolerance of ethnic customs and patience with the country’s transitional status. State companies are slowly converting to a market orientation, but the Chinese government continues to control the rate and location of progress. However, China also realizes that it needs assistance tackling the wide range of problems connected to diversity. Chinese non-governmental organizations (NGOs) are working more closely with NGOs from other countries to bring about reform, particularly in the rural areas. The foreign NGOs bring new perspectives and shared ideas in a way that is acceptable to China. Pushing the models of diversity typically found in countries like the U.S., Canada and Great Britain would not work in the Chinese culture. Instead, the NGOs share democratized concepts that are then passed to the ethnic grassroots communities to bring about social and political change.
Major Progress in a Short Time
China is faced with the need to attract foreign investment to generate new business in order to tackle provincial inequalities. Foreign investment is an important factor in China’s pursuit of a harmonious society. However, once operating in China, foreign companies can expect to find that as a country it is ethnically diverse but not always ethnically tolerant or equal despite a constitution giving all of its citizen equality under the law. It is a reflection of a country in transition and China is to be admired for its ability to plan for a long term shift in its political, economic and social arenas.
It is easy to be critical of such a closed society, but foreign investors need to understand that China is trying to change the cultural attitudes and practices that took thousands of years to develop. Considering the current transition from that perspective, ten years is a very short time to have achieved the progress made to date.