Introduction
Among the opportunities to grow and ways to use an organization’s competitive edge is to conduct an international expansion. To succeed during expansion, it is necessary to pay attention to cultural aspects, such as language and people’s views, ethical factors, political and economic stability, employee preferences, and labor availability (Evans et al., 2016).
Before comparing Berlin and Hong Kong, one can believe that the latter can be more optimal due to its fast development. The HR procedures used by General Motors in Berlin and Hong Kong reflect the disparities between the two cities’ customs, company goals, and labor market laws.
Background: Hong Kong and Berlin
The countries that were picked for international expansion were Germany and China. The organization is General Motors’s (GM) production facility, founded in 1908 in Michigan, and it is focused on manufacturing and distributing vehicles and vehicle parts. Researching a new location for a new production facility and exploring different aspects of both Hong Kong and Berlin is vital. Since the company will be employing a significant number of employees from the new region, it is crucial to pay particular attention to such indicators as the labor market, wages, city economy, and various laws related to the working process. For example, Hong Kong has significant political and economic problems (Hohmeyer & Lietzmann, 2020).
Moreover, gender discrimination in this city is much higher than in Berlin (Women’s Commission, n.d.). However, as the advantage of Hong Kong, it is vital to the state that the labor in China is about three times less expensive compared to Germany (Berlin, 2022). As a result, one should highlight that Hong Kong has more disadvantages than advantages for the company’s new location compared with Berlin.
Laws and Regulations
A significant component of the legislation that controls employment practices in Hong Kong is the Employment Ordinance. It covers various topics, including working hours, permitted leave, severance pay, and termination. The Employment Ordinance includes provisions for required rest days and overtime compensation, which shield workers against abuse and overwork (Bratton et al., 2021). In addition to the Employment Ordinance, immigration and the use of foreign labor are governed by additional legislation in Hong Kong (Lumsdaine & Smith Freehill, 2021). General Motors follows the Employment Ordinance in Hong Kong, which regulates various employment practices such as working hours, allowed leave, severance compensation, and termination. Additionally, the company ensures that it abides by the laws governing immigration and the use of foreign employees.
Berlin’s labor regulations, in contrast, are centered on defending employee rights and advancing social justice. The German Labor Protection Act, which describes employers’ and employees’ rights and obligations, is a crucial legislation in this respect. The Act addresses working hours, break times, and workplace safety issues (OECD, n.d.-a). The idea of co-determination, which allows employees to manage their businesses, is another noteworthy aspect of German labor law. General Motors offers its workers options for training and development in Berlin and abides by the German Labor Protection Act and the co-determination requirement. Overall, the legal systems of Berlin and Hong Kong are reflections of their distinct historical and cultural contexts.
Mandated Compliance Issues
In Hong Kong, companies must make a minimum contribution to a retirement fund on behalf of their employees under the Mandatory Provident Fund (MPF), a government-mandated retirement savings program. To address the issue of an aging population and ensure that employees have enough retirement funds, the program was created in 2000. Employees must contribute to the fund, as well as employers, who must pay a minimum of 5% of each employee’s wage (Lumsdaine & Smith Freehill, 2021). General Motors adheres to Hong Kong’s Mandatory Provident Fund (MPF) requirements and makes a required minimum payment to a retirement fund on behalf of its employees. These contracts must provide details about starting times, pay rates, leave privileges, and termination provisions (Bratton et al., 2021). Within the first month of employment, employers must provide these contracts; failing so may result in legal repercussions.
Companies must comply with several labor laws in Berlin, such as those that control working hours, minimum pay, and vacation time. For instance, the Federal Employment Agency regulates working hours and overtime, and employers must give their employees at least four weeks of vacation time (Bratton et al., 2021). General Motors ensures that each employee has at least four weeks of vacation. Additionally, it gives the employee the notice and severance compensation that the law mandates. Overall, the problems with mandated compliance in Berlin and Hong Kong reflect these two cities’ distinct cultural and historical backgrounds.
Comparative Analysis
Talent, Reward System, and Salary
The first factor that required analysis was the overall availability of labor and candidates’ expectations. Over the past ten years, Berlin’s key labor market indices have consistently improved (Hohmeyer & Lietzmann, 2020). However, while it might seem that decreasing unemployment is a positive aspect, it can be risky for companies due to the inability to find employees. Therefore, when expanding to Berlin, it must be understood that time might be required to fill positions. The situation in Hong Kong is the same, with the city having poor availability of talent. In 2012, Hong Kong had a talent shortfall of 35%; after ten years, it had risen by approximately 138%, reaching 83% in 2022 (ManpowerGroup, 2022). Therefore, neither Berlin nor Hong Kong has a winning position in terms of talent.
Another aspect worth paying attention to involves ways to motivate and reward employees. According to Velocity Global, government-mandated compensation packages in Germany include health insurance, a pension plan, compensated days of leave, and unemployment compensation (Velocity Global, 2023). However, businesses must consider other benefits in their employee benefits packages to recruit and retain top talent in Germany. Similarly, Hong Kong has the same approach, and local laws mandate work conditions. The primary employment law in Hong Kong is the Employment Ordinance (Lumsdaine & Smith Freehill, 2021). It ensures a set of minimal advantages, and among them are paid vacation days, sick leave with pay, and paid parental leave (Lumsdaine & Smith Freehill, 2021). Thus, General Motors would have to consider additional bonuses when working in Hong Kong.
According to the facts, General Motors would encounter comparable difficulties regarding the talent pool in both Berlin and Hong Kong. A lack of experienced workers exists in both sites, which may make it challenging for GM to fill vacancies promptly. Berlin and Hong Kong have government-mandated compensation plans for specific benefits like health insurance and paid time vacation. However, GM would need to consider other incentives outside of the prerequisites to attract and keep top talent.
Cultural Dimensions and Language
The next part considers the cultural dimensions of both locations, the official languages, and the command of English. German workplaces are influenced by various social norms that strongly emphasize accountability, collaboration, timeliness, organization, efficiency, and accuracy (Staudacher, 2021). Furthermore, most Berliners can comprehend and use English when speaking languages. However, only 60% of people have a good command of English (Staudacher, 2021). Thus, the position and skills in foreign languages might improve.
However, compared to Berliners, their language skills and the value of personal space and time, employees in Hong Kong are more dynamic and proficient in English. Hong Kong residents are known for their hardworking nature, entrepreneurship, and capacity to generate possibilities (Chan & Chan, 2021). Working beyond normal hours in Hong Kong is typical (Chan & Chan, 2021). As for languages, in Hong Kong, English serves as one of the two official languages, with the other being Cantonese (Chan & Chan, 2021). Therefore, Hong Kong is better positioned in terms of employee skills and responsibilities.
General Motors may need to consider the importance of personal space and time for employees and offer language training to staff in Berlin to accommodate for cultural differences and language proficiency. General Motors may need to consider the common practice of working past regular hours and the requirement for communication in Cantonese and English in Hong Kong.
Political and Economic Stability
When considering political and economic stability, Germany is much safer for many international companies. Germany scored an average of 0.86 points over that time, with a low of 0.57 points in 2019 and a top of 1.41 points in 2000 (The Global Economy, n.d.). Overall, the country’s indicators demonstrate that its position is relatively safe. As for economic stability, according to forecasts, the economy will expand by 1.8% in 2022, decrease by 0.3% in 2023, and then rebound by 1.5% in 2024 (OECD, n.d.-b). Therefore, the economic position of Germany and its capital, Berlin, is safe.
However, the economic and political conditions in Hong Kong are unstable and unpredictable, making it less favorable for international companies. The fifth wave of the local pandemic initially slowed economic activity, followed by a worsening external environment and tighter financial circumstances (Hong Kong Economy, 2023). Thus, the economic position of Hong Kong and China is dependent on pandemics, and it can be seen in its GDP, which shrank by 3.5% in 2022 (Hong Kong Economy, 2023). As for political stability, the freedom of speech, the ability to assemble, political liberty, and rights in Hong Kong have been severely curtailed (Purbrick, 2019). Therefore, it can be risky to conduct business in China, especially in the administrative region of Hong Kong.
These demographic differences significantly impact the HR procedures at General Motors. Berlin and Hong Kong have distinct populations with diverse traits and demands regarding demography. Over 3.6 million people live in Germany, and their median age is 46 (OECD, n.d.-b). On the other hand, Hong Kong has a population of around 7.5 million people, with a median age of 45 (Hong Kong Economy, 2023). The Euro is Germany’s official currency, and it has a high value compared to many other currencies. The Hong Kong Dollar, which is pegged to the US Dollar and is more stable, is the currency used in Hong Kong.
Ethical Concerns
Finally, ethical concerns in both Berlin and Hong Kong involve bribery and discrimination. For instance, in Germany, Sec. 299 StGB forbids providing and receiving bribes in business transactions in Germany (Global Legal Insights, n.d.). Still, the bribery laws in Hong Kong are stricter due to the large classifications and definitions of bribery. An offense is committed if a proposal is made or an arrangement is established to give or receive a bribe, regardless of whether the bribe is ultimately accepted (Corruption Prevention Advisory Service, n.d.). Therefore, compared with Berlin, Hong Kong is more intolerant regarding corruption and bribery.
Lastly, when speaking about gender discrimination, Germany has a better position. The country scores 12th in the Eurozone on the Gender Equality Index with 67.5 out of 100 points (European Institute for Gender Equality, 2020). The opposite can be seen in Hong Kong, where the city has a higher incidence of discrimination. According to polls, more than 30% of respondents (33.4%) said that employees typically preferred not to be overseen by female supervisors or managers (Women’s Commission, n.d.). Thus, Hong Kong’s views on gender equality are different from its European counterparts.
This implies that GM must support workplace equality and give all employees the same opportunities, regardless of their gender. As a result, the business must ensure that all of its HR and labor processes are open to the public and devoid of any type of bribery. The business must also ensure that all of its workers are aware of the rules against bribery and the repercussions of breaking them.
Labor Relations and HRM Policies and Practices
The HRM rules and practices in Berlin and Hong Kong reflect the two cities’ attitudes toward employment and labor rights. The labor market in Hong Kong is exceptionally competitive, and businesses have much autonomy in deciding how to handle human resources (BBC, n.d.). Employment in Hong Kong frequently relies on individual contracts, and many businesses lack unionized staff. This implies that employers in Hong Kong have a great deal of discretion when deciding on salaries, working hours, and other employment arrangements, and employees there do not have robust collective bargaining rights or safeguards (BBC, n.d.). Due to this, Hong Kong’s HR regulations and practices frequently emphasize individual performance and results more than collective bargaining.
Berlin’s labor market, in contrast, is heavily controlled, and companies must adhere to stringent labor standards. Berlin has many businesses with unionized employees, and collective bargaining is a widespread practice (OECD, n.d.-a). General Motors must make sure that its HR policies and procedures encourage employee well-being and offer suitable salaries and benefits because collective bargaining rights and safeguards are restricted in Hong Kong. On the other hand, due to the high number of companies in Berlin with unionized employees, General Motors must adhere to strict labor laws and collective bargaining procedures. The business must make sure that its HR procedures and policies in Berlin provide proper job security, promote employee well-being, and adhere to the workforce’s collective bargaining rights and protections.
The Role of HR, International Business Ethics, and HRM Trends and Challenges
The differences in corporate priorities and cultural values between Hong Kong and Berlin are reflected in the HR trends and departmental features in both cities. HR tasks are increasingly being outsourced in Hong Kong, which enables businesses to concentrate on their core operations and cut expenses (Lumsdaine & Smith Freehill, 2021). The fiercely competitive labor market in Hong Kong, where businesses are pressured to maintain low costs and flexibility, contributes to this trend (BBC, n.d.). As a result, Hong Kong’s HR division is frequently small and concentrated on hiring and working relationships with employees. The significance of employee engagement and retention is also becoming more widely understood, and businesses are starting to invest in HR initiatives that help these objectives.
Due to the fierce competition in the labor market in Hong Kong, GM may have a small HR department that is concentrated on hiring and preserving positive working relationships with workers. Given that outsourcing HR duties is a typical practice in Hong Kong, GM may also consider this option to save costs and focus on its main business activities. Conversely, GM may have a larger and more varied HR department in Berlin, with specialist roles in HR analytics, compensation and benefits, and training and development. GM may prioritize employee participation and provide flexible hours and wellness programs to draw and keep talented employees.
According to what was found above, it seems likely that Berlin and Hong Kong will maintain their own HR rules and procedures. However, as businesses in both places work to recruit and keep competent workers in a competitive global labor marketplace, some areas may have convergence, such as talent management and development (Lumsdaine & Smith Freehill, 2021). There might be other HR areas where Hong Kong and Berlin interact in addition to talent management and development. The expanding role of technology in HR is one such area. A convergence in the methods used to formulate and practice HR policies and practices may occur if businesses in both nations adopt more technologically oriented HR solutions, such as HR analytics and artificial intelligence.
The adoption of flexible work arrangements is another area where convergence may happen. There may be a convergence in policies relating to work-life balance and remote work as more businesses in both countries understand the advantages of enabling employees to work remotely or on flexible schedules (Shackelford et al., 2021). However, other reasons could contribute to the continued discrepancy in Berlin’s and Hong Kong’s HR practices. For instance, the two countries’ various legal systems and social standards might result in enduring variations in topics like employee benefits and labor relations.
Conclusion
Multinational corporations in several nations must navigate a complicated network of laws, rules, and cultural norms that impact their HR policies and procedures. In this instance, the report evaluated and contrasted the HR policies and practices of two production facilities, one in Berlin and the other in Hong Kong. The legal system of Hong Kong is founded on English common law, and it has a highly competitive labor market and liberal labor rules. Hong Kong’s HR trends are distinguished by outsourcing HR duties and a concentration on hiring and employee relations. The Berlin legal system, on the other hand, is based on the German Civil Code and features stringent labor laws and a tightly controlled labor market. Focusing on talent management and development, having a more extensive and more varied HR department, and having a long history of vocational training are the characteristics of Berlin’s HR trends.
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