Identity challenge in China

March 30, 2010 was a defining moment in Australia and China’s growing business relationship, with Australian Rio Tinto executive Stern Hu sentenced to 10 years in prison for corruption and industrial espionage. While then Foreign Minister Stephen Smith described the sentence as ‘harsh’, he was at pains to point out that the case would not affect relations between the two countries, having as they do “a strong economic and broader relationship.”

But does the case highlight a growing tension between the Asia-Pacific region’s two biggest economic powers?

In some regards, yes, says Shea Fan, a PhD candidate in the Faculty of Business and Economics Department of Management and Marketing.

“Many Australian organisations have established branches operating in China, and to ensure the success of the operation, many companies employ Australian-Chinese to work there,” says Ms Fan. “However, ethnic identity can sometimes lead to an escalation when business tensions arise, the Stern Hu case being just the most famous example.”

“Effective knowledge transfer between local headquarters and overseas units has always been a challenge for multinational corporations (MNCs). Expatriates are expected to facilitate much of this knowledge transfer and since there are many challenges for expatriates who work in foreign countries, individuals who are originally from the host country of MNCs and share the same ethnic identity with host country employees (HCEs) are increasingly seen as ideal candidates for overseas assignments.

“However there is conflicting evidence whether or not these expatriate employees are, indeed, effective in knowledge transfer.”

For Ms Fan, trust is the key determinant in whether effective knowledge sharing takes place.

“Trust between people obviously encourages knowledge sharing and knowledge acquisition. However, if there is relationship conflict, this can discourage the sharing of information. So while Stern Hu’s former boss John Dougall may believe his former employee had been “thrown to the wolves”, it is perhaps little wonder that his convicted breach of trust was so harshly dealt with.”

However the issue is not just about successful knowledge transfer, but also one of perception and, more broadly, identity – how do Chinese people view Australian-Chinese workers who are employed by Australian organisations in China? And how is this trust earned or lost?

For Ms Fan, it has meant taking a deeper look at how two different societies approach identity and social behavior: two terms she refers to as ‘ethnic identity confirmation’ and ‘social categorisation’.

“Identity is developed in social interactions,” she says. “We know who we are through others’ appraisal. After an identity is formed, we tend to maintain it.

However, because the views of others are involved in our identity development, we may feel frustrated when there is a discrepancy between how we view ourselves and how others view us.”

“On the other hand, categorisation is a cognitive activity which can help us use existing knowledge to infer unknowns and then reduce uncertainty. However, it also causes problems in social interactions. Once a categorisation is formed, people tend to generalise group characteristics to individual members, and more than that, tend to favor their ‘in-group’ members over ‘out-group’ members.”

Explaining the relationship between such categorisation and ethnicity Ms Fan says when people categorise others, they tend to use simplified criteria.

“For example, some people use physical characteristics to categorise others. Once we put others in a category, we generate expectations accordingly. For example, if someone (could be either Chinese or Australian) sees an Australian-Chinese person as Chinese, he/she may expect this person to favor the Chinese in-group. If this Australian-Chinese person cannot meet the expectations, he/she may lose trust, or upset people.”

In social interactions, bicultural people can be categorised as members of either social group. The ambiguity of this type of identity increases the difficulty for identity confirmation.

“When we categorise ourselves, we base our own identification with a certain group or our own motivation. So our own classification is more flexible and dynamic than the categorisation of ourselves that comes from other people. For example, an Australian-Chinese person may not view his/her Chinese identity as very important at work but others may believe it is important. That is why a discrepancy can happen between how we view ourselves and how others view us.”

Both of these elements were apparent in the Stern Hu case above, says Ms Fan.

On one hand, Australian people viewed him as an Australian, and believed he should be treated according to the Australian standard. However, many Chinese people showed no sympathy to Mr Hu, and, indeed, criticised him for betraying ‘his own country’.

“What role did his Chinese background play in the process? Three other senior managers of Rio Tinto in Shanghai also received sentences, longer than Mr Hu’s, but because they are Chinese nationals, they did not receive equal attention from the media and the public. So it appears that Mr Hu’s identity did have some effect on the process.”

While her research is ongoing, Ms Fan says that ethnic identity, and the associated confirmation process, does require further consideration as Australia increases its business dealings in China.

“A lack of ethnic identity confirmation can inhibit the knowledge exchange between local and expatriate employees and this obviously poses a unique challenge when doing business. More than this, it could also stop people from finding solutions to resolve conflicts that may arise,” she says.

www.fbe.unimelb.edu.au