Southeast Asian Studies, Vol. 22, No.4, March 1985 Japanese Management in Hong Kong Teruhiko TOMITA* "ethnocentric" hypothesis asserts that the management of corporations which are I Introduction wholly owned by foreign nationals is, in Being given no incentives for foreign effect, a cultural as well as an economIC investors but entirely freed from any extra extension of the parent corporation legal constraints specifically levied on [Perlmutter 1972: 21-50]. On the other foreign capital in terms of personnel assign­ hand, the "community-influence" hypothesis ment, taxation, and procurement and suggests that management has to adjust remittance of capital, foreign business its practices to the social and cultural enterprises in Hong Kong are in a position realities of the communities in which it to shape industrial relations practices along operates [Parker 1967: 65]. with their business objectives in their own way. This suggests that, among other II Unique Features of Hong Kong's countries, Hong Kong will provide us with Economy and People an invaluable laboratory for clarifying how Japanese management copes with different Hong Kong is a highly urbanized, densely locations and environmental settings. populated industrial, commercial and finan­ This may have some implications for the cial colonial port city with mInImUm flexible nature of Japanese management administrative intervention. Its economy, which, in Japan, varies significantly with with practically no natural resource endow­ size or type of establishment despite the ments, rests upon an extremely narrow base practically homogeneous socio-cultural en­ and is vulnerable to fluctuations in the vironment, and has been considerably world economy. Its population of nearly modified to adjust to environmental change five million are 98% Chinese with diverse through time to maximize economic ration­ geographical origins and background of ality. settlement. From these characteristics In addition to describing the findings of two features important for industrial rela­ our survey, it will be interesting to examine tions follow: the independent, individualis­ the explanatory value of the two conflicting tic nature of the people in terms of pursuing viewpoints concerning industrial relations economic gains, and involvement in the In overseas business operations. The interpersonal relations networks of Chinese communities. * MEE:J't~, Faculty of Economics, Shiga Uni­ versity, 1-1 Banba, Hikone, Shiga 522, Japan Of a working population of about 1.8 - 61- 391 million in 1980, 50.10/0 were engaged in see a major concern to pursue short-term manufacturing, 24.8% in the wholesale, rather than long-term gain, through indi­ retail, import/export trades, restaurants vidual, not collective, efforts. and hotels, and 6.5% in finance, insurance, While basically individualistic, people real estate and other business services. The in Hong Kong admit that interpersonal major industries were wearing apparel, tex­ relationships are an important societal norm. tiles, electric machinery, plastic products and Though it is said that about 60% of the fabricated metal products, which between population are of Hong Kong birth, their them occupied 75%) of the manufacturing parents' districts of origin differ considera­ labor force and 74.2% of total domestic bly, and most have an immigrant and/or exports (excluding re-exports) [Hong Kong, refugee character. "As the great majority Census and Statistics Department 1981: 16, came from K wangtung province, including 61]. In these industries entry is generally Canton and its environs, Cantonese was easy and competition keen, and to survive (and is) very much the predominant lan­ they must compete against the products of guage, but significant minorities spoke the rest ofthe world. "Industries which are Hakka, Hoklo, Sze Yap, Mandarin, easy to enter are abandoned just as easily Shanghainese, and other Chinese languages --without thought for the effect upon which are sufficiently different from each workers employed--if better opportunities other to create real barriers in communica- for profit present themselves" [England tion" [England and Rear 1981: 59]. and Rear 1981: 42]. Workers, on the Diversity of the district of origin and other hand, are also ready to move from one perhaps inherited societal values, plus firm to another, since there is little difference stage of settlement imply that the Hong in the skill-mix between workers in different Kong worker can hardly identify in a class industries and the manual dexterity required or occupational sense [Turner 1980: 13]. by one industry can easily be transferred to Counterbalanced by an almost complete another [ibid.: 40]. People are there to apathy towards community in a larger make money and buy freedom with it, sense, high "context" interpersonal rela­ hence consideration is given to their own tions do exist within family groups andior interests and not to corporate performance. groups of people with the same clan or These attitudes among both employers and regional affiliation [Redding 1982: 13]. This workers is further encouraged by a desire personalistic nature is not to be ascribed to make as much money as possible in case to group orientation within organizations China takes over. Reportedly China's they belong to but rather stems from the announcement in April 1984 that the status more or less cohesive nature of people who quo will be maintained for at least .50 years expect support from their kinship group after 1997 is by no means accepted by inhard times. In other words, the Chinese many people as a guaranteed commitment is so "situation-centered" that he seeks his [Nihon Keizai Skinbun 1984]. Thus, we appropriate place and behavior among his 392 - 62 T. TOMITA: Japanese Management in Hong Kong fellowmen [Hsu 1981: 12]. This phenom­ manufacturing. Most of them assembling enon is acute in firms which are run by standardized labor intensive products such groups of relatives, where an autocratic as watches and auxiliary goods, precision leadership style is said to be predominant. machinery, electric motors and electric plating. There were only three corpora­ tions which required considerable invest­ III Features of the Sample ment in plant equipment: two in textiles Surveys were conducted in November and one in lactic acid beverages. Seven 1983. Professor Kunio Yoshihara and I corporations were engaged in banking, visited 10 corporations (eight manufacturing finance, and security exchange. firms, one bank, and one sogo shosha) and interviewed top Japanese managers and one Number of Employees local middle manager. Meanwhile, the The number of employees varied con- Japanese Chamber of Commerce and siderably. All of the manufacturing firms Industry (Hong Kong) assisted us in send­ had more than 100 employees except one. ing and collecting questionnaires prepared Since only 3.2% of the total of 45,409 for top Japanese managers and local middle manufacturing firms employed more than managers. Forty-four top Japanese man­ 100 employees in 1980 [Hong Kong, Census agers from 44 corporations (valid replies and Statistics Department 1981: 18], most 42) and 36 middle managers from 35 of the Japanese manufacturing corporations corporations completed them. Some nota­ in Hong Kong can be regarded as fairly large ble features were as follows. by Hong Kong standards, although they are only equivalent to small to medium Types of EstabNshment sized companies in Japan. On the other Lines of business were diverse. Twenty­ hand, companies engaged in commerce four corporations were engaged In com­ and other business services were fairly merce and other business services. Of small, even by Hong Kong standards. these, 12 corporations confined their There were three firms which hired only business activities either to sales of their one or two local staff, namely, a secretary own products imported from their factories and/or a driver. Only 12 establishments in Japan and elsewhere, or to purchases could be regarded as medium to hHg~ firms of goods to ship to their Japanese counter~ by Hong Kong standards, i.e., employed parts for sale in Japan. The rest were more than 20 employees. The percentage more diversified trading firms, including two ofthe 68,055 firms engaged in the wholesale, of the nine sogo shosha, retailers, including retail, import/export trades, restaurants and one department store, and other service hotels of this size was 4.6% in 1980 [ibid.: companies such as forwarders, shipping 18-19]. At any rate the number of em­ agents, and ship repairers and leasers. ployees in our sample was the smallest of Eleven corporations were involved In our ASEAN and East Asian samples (see - 63- 393 Question 10 in the questionnaire for a Japa­ their business operations than otherwise. nese manager, hereafter referred to as QJ 10, In all corporations, the key middle manage­ in the Appendix at the end of this volume). ment positions were occupied by Japanese staff as a general rule. These features sug­ Ownership gest that Japanese corporations in Hong Thirty-one corporations were wholly Kong are typical of Japanese overseas owned Japanese subsidiaries and five branch operations with "direct" management by offices of Japanese corporations. Six cor­ Japanese staff who are closely connected with porations were joint ventures with Japanese their head office in Japan. This contrasts majority equity, except for one in which two with Western "indirect" management of Japanese corporations together owned 45%> overseas operations, in which not only the of the shares. But in this latter company key middle management personnel but even 25%> of the shares were held' by unspecified top executives are more often than not local shareholders who bought them in the stock people. exchange. According to the Japanese managers of this firm we interviewed, it is Procurement of Parts run by Japanese with the consent of the Since imports into Hong Kong are local partner. Accordingly, it is safe to say untaxed and no restrictions are imposed on that management authority in all of our procuring parts and materials, Japanese sample lies in the hands of Japanese staff.