Cultural differences are what you should care about the most when entering the Chinese market

Casappa is a parts manufacturer based in Italy. Founded in 1952 by Roberto Casappa, it began its
business by making hydraulic pumps. The company, which currently manufactures gears, piston pumps, motors, and filters for trucks and construction machinery, now operates not only in Italy but also in the US, Germany, France, Korea, China, Brazil, and India, supplying parts worldwide. It is a leading company in its industry, partnering with a whole list of big-name global corporations such as Caterpillar, Daimler, and Komatsu and Yanmar of Japan. Its management policy is to create a business network that covers the entire world and to make customer satisfaction its primary mission.

It entered the Chinese market in July 2005 for the purpose of identifying and incorporating local needs and feedback, and established the Casappa Shanghai Office in a joint venture with one of its group companies, Walvoil. The company then established CASAPPA HYDRAULICS (Shanghai) Co., Ltd. in 2008 as a manufacturing base from which it planned to expand its Asian market. It now has approximately 150 employees. It was harder than the company had initially imagined to operate its business in China, whose culture, values, work methods, management style, etc. differs from Italy, and to establish its business with stable product quality.

Andrea Amaini, who assumed the post of general manager from after the Chinese corporation was established until October 2013, looks back on that time. "Before I took over, my predecessor didn't explain anything about how I should keep up with manufacturing information or manage the accounting, and only told me I just needed to worry about cultural differences. Also Mr. Renato Casappa, our president before I left for China, handed me a book about Mannerisms in China. I read it, and my impression of it at the time was that it was a fitting book for people in service and marketing, but didn't apply to me, since I would only need to do what I had done in Italy in terms of running our manufacturing business and carrying out our manufacturing plan.

Headquarters of Casappa Shanghai

"But that idea was completely turned on its head after I took over. Today, if someone asked me what's difficult about running a company and doing business in China, I would immediately say, 'Cultural differences,' " Amaini laughs, indicating how difficult cultural differences can be in China.

A cultural difference that values the "individual" over the "team"

What was different in particular? That the Chinese tend to prioritize the individual over the group or team. "In Europe and every other country I've had experience with, the team would always deal with a problem and discuss it together," recalls Amaini. "But in China, that's very difficult. The Chinese members weren't used to working as a team."

A common story we hear in China is that Chinese employees will ask, "Why is it important to work with other people in a team?" or "Why is teamwork important?" As in the Chinese proverb, "A single Chinese person is a dragon; a group of Chinese people is an insect," we must run our business with the understanding that the Chinese don't really get the concept of working on something as a team.

Shortly after assuming his post, Amaini noticed several Chinese managers quit the company. One of them quit when Amaini relocated an employee that wasn't suited to his position.

In order to restructure the Chinese managerial positions, Amaini needed to recruit people and develop
an organization where practical managers could work as a team. Facing the situation in China, Amaini sought a partner with whom he could tackle this issue. One potential company that the Italian headquarters brought up was JMAC. The criteria they looked at were the company's record of supporting manufacturing businesses, its ability to provide the same service in any region around the world, and its competitiveness in China. The deciding factor was JMAC's knowledge of how to improve the productivity of a manufacturing plant, which was the next item on their list, and in particular, its expertise on Lean Production and its ability to offer solutions that connected these two issues.

The reforms are launched! The key is to innovate Chinese managers

In April 2012, Amaini started his reforms with JMAC. He first conducted workshop-style training sessions on
Lean Production, followed by practical training on lean management, both supported by JMAC. He also began reforms on human resource management at the same time. This human resource management reform used JMAC's human resource management (HRM) diagnosis program to clarify company's current state of HRM through questionnaires and interviews with Chinese managers. The results showed that while topics such as the company's human resource training system and compliance were highly rated, issues came to light concerning trust between Chinese employees and Italian top management. Specific important issues included management's not delegating enough authority to Chinese managers and the unclear career prospects of Chinese managers. The Chinese managers' disappointment in the fact that management didn't delegate enough to them, and their concerns regarding their unclear future, had led them to distrust management.

Andrea Amaini
Lean Manufacturing Accounting Manager Casappa S.p.A

In response to this evaluation, the company launched an Empowerment Project for all Chinese managers. This project aimed to making managerial-level Chinese employees think and work together as a team while improving the individual capability of Chinese managers.

Each Chinese manager conducted JMAC's self-evaluation, while Amaini, with JMAC's support, interviewed each and every manager to identify which skills the manager had and which needed improvement. Individual action plans were also drafted, aimed at developing capability. At the same time, managers were given goals and responsibility in their roles. "We gave all Chinese managers--including new ones--a goal, and by teaching them how to review their subordinates' work, we helped them to understand their responsibilities. And we shared the awareness that it is by achieving these goals and responsibilities that they would prove that they have done the job of a manager. We also set a common goal for all Chinese managers," Amaini says, explaining one of his solutions.

But things wouldn't be so easy in this formidable Chinese culture. "What we found difficult was getting them to realize that they too were part of the problem. They were extremely critical of the company at first, and in order for them to talk more frankly, we started by listening to the many things they were dissatisfied with about the company."

One division made an effort to draft rules and guidelines for managing the production of products of a certain level of quality, managing costs, and taking control. "We want you to do this." "We don't know why it has to be that way..." "Don't worry, just do as you're told." Everything initially seemed to go well after these conversations. But problems arose later on.

Amaini explains, "The Chinese managers weren't convinced. Not only didn't they understand why they had to do the work, they didn't know why they even had to manage people. Once they did their job, that was it; when they were done, they waited for the next command and simply did what they were told to. This was one of the biggest differences between the Chinese and Western managers. Managing the results of their work is common practice for Western managers. It is a PDCA (Plan/Do/Check/Action) cycle of sorts. When you do your job, you have to check whether the results were good or not. But in China, there was no concept of managing." Here again, Amaini suffered the effects of cultural differences. These were cases where he learned that simply applying his native country's methods to China doesn't work.

JMAC CHINA consultant Lin Huiqi says that "Empowerment" is a sensitive topic capable of significantly affecting not only human resource management, but also corporate management as a whole. "As a consultant, I tried to handle matters calmly so that the project always remained on track, and particularly to avoid emotional conflicts. Sustaining the project members' passion was also an indispensable driving force of the project," he says.

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