Faced with practical challenges such as the weakening cost advantage of labor dispatch, cross-country cultural differences, and institutional distance, how Chinese enterprises can achieve deep development of human capital and unlock the strategic support value of state-owned enterprises is a highly challenging topic in their internationalization.
As China's "Going Out" strategy continues to advance, Chinese enterprises' overseas operations, represented by international engineering contracting and focused on outbound investment projects, have achieved unprecedented growth. In particular, with the implementation of the Belt and Road Initiative as a national strategy, the content and characteristics of enterprise internationalization have gained new dimensions. Facing practical challenges such as the weakening cost advantage of labor dispatch, cultural differences across countries, and institutional distance, how Chinese enterprises can achieve deep development of human capital and unlock the strategic support value of state-owned enterprises constitutes an extremely challenging topic in enterprise internationalization.
Localization of state-owned enterprises is the practical choice of Chinese enterprises' internationalization at the current stage, yet the theoretical connotations behind it have rarely been explored. The scattered and piecemeal summaries that can be found have not formed a systematic theory, and there is even less research exploring the key factors influencing enterprises' implementation of SOE localization management and the decision-making mechanisms involved. It is precisely based on this status quo that this paper, employing research methods including literature research, survey research, interview research, and case study research, comprehensively utilizing quantitative and qualitative analysis, and combining normative and empirical research approaches, attempts to construct an explanatory framework from the perspective of economics and sociology theories, analyze the main factors affecting the effectiveness of localization of Chinese enterprises' overseas SOEs, and establish a theoretical model for decision-making on implementing SOE localization, with a view to providing reference for enterprises' SOE localization practices.
This paper first analyzes the theoretical foundation of SOE localization management, holding that the introduction of embeddedness theory serves as the basis for constructing localization management, and establishes a decision-making model for overseas enterprises' SOE localization management. Secondly, it analyzes the external elements of implementing SOE localization management, conducting qualitative analysis of the external influences on enterprises' implementation of SOE localization from three aspects—economic factors, cultural factors, and political factors—and identifying 11 external environmental sub-factors. Thirdly, it analyzes the internal elements of implementing SOE localization management, identifying the advantageous factors, insufficient factors, and key internal influencing factors for Chinese-invested enterprises implementing localization management; it constructs mathematical models of internal and external influencing factors for SOE localization management, uses linear programming methods to calculate weights for each influencing factor based on expert evaluations, employs grey evaluation models to evaluate external influencing factors, and uses grey models combined with neural networks to predict the values of each influencing factor, determining the degree of influence of different factors.
1 Introduction
1.1 Research Background
1.1.1 Economic Globalization and Chinese Enterprises "Going Out"
Economic globalization is an inevitable choice in the process of world economic development. With the continuous development of productive forces on a global scale, the transmission of production factors between countries has accelerated, global economic ties have become closer, and the world economy is no longer an independent undertaking but an integrated one in which "you have me, and I have you." Improving the global allocation efficiency of production factors has become an important feature of global economic integration in the 21st century [1]. With the development of economic globalization, China's outbound investment projects have also achieved considerable and rapid development.
1.1.2 Four Features of Economic Globalization
Economic globalization is mainly manifested in four aspects: trade globalization, investment globalization, financial globalization, and the globalization of multinational corporations' production and operations [2]. Trade globalization is mainly reflected in: first, the growth rate of international trade is higher than the growth rate of global GDP; second, the scale of international trade is enormous, and the degree of trade dependence between countries is high. Investment globalization is manifested in the fact that the growth rate of international direct investment is higher than the growth rate of international trade and the global GDP growth rate [3]. Financial globalization means that a country's financial activities transcend national borders and become increasingly integrated with international financial activities, allowing the raising, allocation, and use of funds to be conducted on a global scale beyond national boundaries.
1.1.3 The Strategic Opportunity of the Belt and Road Initiative
In September and October 2013, during his visits to Central Asian and Southeast Asian countries, Chinese President Xi Jinping successively proposed the Belt and Road Initiative, first putting forward the idea of building a "Silk Road Economic Belt" and subsequently proposing the construction of a "21st Century Maritime Silk Road," which received great attention from the international community [4]. In the same year, Premier Li Keqiang, when attending the China-ASEAN Expo, proposed paving a maritime Silk Road facing ASEAN, thereby forming a strategic support driving the development of the eastern and western regions.
(1) Key Areas of Belt and Road Cooperation
The countries along the Belt and Road have diverse resource endowments and strong economic complementarity, with great potential and space for cooperation [5]. Comprehensive cooperation with Belt and Road countries should be strengthened in five aspects: policy coordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bonds.
① Policy Coordination.
Strengthening policy coordination is an important guarantee for the Belt and Road Initiative. It is essential to strengthen intergovernmental cooperation, actively build multi-level mechanisms for macro-policy communication and exchange among governments, deepen the integration of interests, promote political mutual trust, and reach new consensus on cooperation. Countries along the route can conduct full exchanges and alignment on economic development strategies and policies, jointly formulate plans and measures to advance regional cooperation, consult on solutions to problems in cooperation, and jointly provide policy support for practical cooperation and the implementation of major projects.
② Facilities Connectivity.
In the process of Belt and Road construction, priority should be given to the development of infrastructure connectivity, strengthening the comprehensive alignment of planning and technical standards involved in infrastructure construction in countries along the Belt and Road, jointly advancing the construction of international trunk corridors, and gradually establishing infrastructure networks that connect regions such as Asia, Europe, and Africa [6]. In addition, the impact of climate change should be fully considered, and green, low-carbon construction, operation, and management should be strengthened.
③ Unimpeded Trade.
Investment and trade cooperation is a key component of Belt and Road construction. Efforts should be focused on resolving issues of investment and trade facilitation, eliminating investment and trade barriers, creating a sound business environment within the region, actively working with countries and regions along the route to establish free trade areas, stimulating and releasing cooperation potential, and making the "cake" of cooperation bigger and better.
④ Financial Integration.
Financial integration is an important pillar of Belt and Road construction. It is essential to deepen financial cooperation, advance the development of an Asian currency stability system, and cultivate a stable investment and financing system and credit system. The scope of bilateral local currency swaps with countries along the Belt and Road should be expanded, and the scope and scale of international settlement should be increased. The opening and development of the Asian bond market should be promoted. Efforts should be made to jointly advance the preparation of the Asian Infrastructure Investment Bank and the New Development Bank of BRICS countries, with relevant parties conducting consultations on establishing a Shanghai Cooperation Organization financing institution [7]. The establishment and operation of the Silk Road Fund should be accelerated. Financial cooperation should be promoted through syndicated loans, thereby deepening practical cooperation among various banking consortia.
(2) The Significance of the Belt and Road Initiative
Exploring the path of economic growth. The Belt and Road Initiative is an innovative move in which China, as the locomotive of world economic growth in the post-financial-crisis era, transforms its production capacity advantages, technological and capital advantages, and experience and model advantages into market and cooperation advantages, implementing all-round opening-up [8]. Through Belt and Road construction, the dividends of China's reform and development, as well as China's development experience and lessons, can be shared. China will endeavor to promote cooperation and dialogue among countries along the route, establish a new type of global development partnership that is more equal and balanced, and consolidate the foundation for long-term, stable development of the world economy.
(3) Opportunities Brought by the Belt and Road Initiative to Outbound Investment Projects
At the 2014 APEC and G20 summits, governments of various countries had already made strengthening infrastructure "connectivity" and unimpeded trade important agenda items. Under the leadership and organization of the Chinese government, the preparatory work for the Asian Infrastructure Investment Bank was completed in 2015, and the international investment market continues to expand [9]. At the national level, great importance has been attached to the "Going Out" strategy, elevating the Belt and Road Initiative to the level of national strategy and actively organizing its promotion. High priority is given to "connectivity," actively promoting "Chinese high-speed rail" and "Chinese standards" going global, advancing advantageous industries "going out," carrying out advanced technology cooperation, steadily promoting the internationalization of the RMB, and accelerating the pace of establishing the "BRICS Bank" and the "Silk Road Fund," providing financial support for international investment projects and creating conditions for outbound investment cooperation.
1.2 Research Questions and Approach
Domestic and international scholars have conducted relatively little research on SOE localization management, and existing research and analysis can basically be summarized into two aspects. On the one hand, SOE localization management is discussed primarily from the perspective of localized operations; on the other hand, it is discussed primarily from the perspective of localization management. "Localization" (本土化) is more commonly applied to strategies implemented by foreign enterprises in China, while "localization" (属地化) refers more to strategies implemented by Chinese enterprises in host countries. Domestic scholars' research on localization management tends to lean toward the field of localized operations research.
1.2.1 Brief Analysis of the Concept of Localization
(1) Statistical Analysis of Papers on Localization, Indigenization, and Internationalization
With the continuous advancement of globalization [10], disciplines such as international trade and international engineering have developed rapidly, and scholars from various countries have successively devoted themselves to research on the internationalization, indigenization, and localization of state-owned enterprises. Compared with other management research topics, enterprise SOE management activities are in a state of continuous development. In particular, for Chinese enterprises, there are considerable differences in the terminology used for SOE indigenization and localization involved in conducting business in host countries.
(2) Views of Domestic and International Scholars on "Indigenization" Research
Currently, domestic and international academic circles have not yet unified the definition of transnational corporations' implementation of localized operations and localization management. There are mainly the following representative opinions on "indigenization" research: Li Xiaojian holds that indigenization of transnational corporations refers to the developmental strategies adopted by transnational corporations to take root in local markets, catering to host countries' customs, habits, and religious beliefs in the process of production management or international marketing, promoting transnational corporations to become part of the host country's economic system and enabling enterprise marketing to conform to the requirements of the local cultural environment.
(3) Views of Domestic and International Scholars on "Localization" Research
SOE localization can be described as replacing national employees with capable local employees [11]. In an article published by Ramudu Bhanugopan and Alan Fish (2007, p. 366), it is written: "Localization is a continuous process of improving the work capabilities of local employees, with the main purpose of training and enhancing their work ability and efficiency so that they can replace national employees in working for the company." According to the definition by Xue Jun (2008), localization can be divided into localization in a broad sense and localization in a narrow sense.
Localization in a broad sense generally refers to the local operating strategies adopted by the overseas subsidiaries of transnational corporations in host countries during foreign direct investment, including content such as R&D localization, production localization, marketing localization, service localization, and personnel localization. Localization in a narrow sense specifically refers to the localization of transnational corporations' state-owned enterprises.
(4) Distinction between Localization (属地化) and Indigenization (本土化)
Although the same English word is used for localization (属地化) and indigenization (本土化), there are in fact considerable differences between them. Localization (属地化) has more Chinese characteristics and is a proprietary term recognized within companies with overseas business in recent years, reflecting the stage-specific characteristics of Chinese enterprises' internationalization. It encompasses both strategic intent and specific management processes.
1.2.2 Research Questions and Objectives
With regard to the issue of localization of Chinese enterprises' overseas state-owned enterprises itself, existing theories have deficiencies in terms of directiveness, logic, and systematism [12].
(1) Theoretical Research Lags Behind Practical Development
Localization is the development trend of Chinese companies against the backdrop of economic globalization and an effective means for Chinese companies to realize their globalization strategies [13]. At present, most Chinese-invested engineering contracting enterprises have integrated into localized operations and localization management, strengthening their degree of localization through various channels to achieve sustained profit growth.
(2) Single Research Content and Lack of Systematism
An ideal study of localization of transnational corporations should include content at four levels [14]. First, whether localization management exists for Chinese enterprises "going out" and how to decide whether to implement localization; second, what factors influence the localized operations of Chinese-invested enterprises and how to scientifically and reasonably define the internal and external influencing factors of localized operations; third, what the philosophy of localized operations of Chinese-invested enterprises is and what management measures should be adopted; fourth, how effective the implementation of localized operations by Chinese-invested enterprises is and how to evaluate the effectiveness of localization. However, most current research is mainly concentrated on analysis and discussion at the third level, while research on the decision-making mechanisms for implementing localization by Chinese enterprises, internal and external influencing factors, and evaluation of localization effectiveness is relatively scarce.
(3) Predominantly Qualitative Analysis with a Lack of Quantitative Research
Existing literature exhibits the characteristics of more theoretical analysis and less quantitative research. Chen Mingsen once mentioned using the localization rate of production to measure the degree of indigenization of transnational corporations, but this indicator is rather one-sided and cannot express the degree of R&D localization or marketing localization, and is not representative.
2 Review of Relevant Theories
2.1 Enterprise Internationalization Theory
Western enterprise internationalization theory first went through the traditional "four major multinational corporation theories" of the West, which became the foundation of all enterprise internationalization theories; later, Dunning proposed the "eclectic theory of production," which gradually developed into a relatively complete internationalization theory [1]. The "eclectic theory of production" holds that for an enterprise to fully possess the conditions for foreign direct investment, it must possess not only ownership advantages but also internalization advantages and location advantages [2]. Global economic integration has accelerated the process of enterprise internationalization. Combined with theories such as network technology, enterprise internationalization theory has developed a diversified pattern of development.
2.1.1 Internationalization Advantage Theory
Transnational operations can bring positive impetus and comparative advantages to enterprises implementing internationalization strategies. This comparative advantage laid the core content of enterprise internationalization theory and was later organized into the enterprise advantage theory, whose main content is:
(1) Monopolistic Advantage
Hymer, known as the "father of multinational corporation theory," put forward the main argument of monopolistic advantage in his article "The International Operations of National Firms," which was further developed and refined by Kindleberger to form the theory of monopolistic advantage, which has now become a classic theory of overseas investment. The monopolistic advantages of multinational enterprises include four aspects: first, core asset advantages; second, economies of scale advantages; third, capital and currency advantages; and fourth, organizational management advantages.
(2) Comparative Advantage
The theory of comparative advantage was first proposed by the Japanese scholar Kiyoshi Kojima, which holds that foreign direct investment should follow two principles: on the one hand, it should follow the principle of international division of labor, and on the other hand, it should be conducted in accordance with the principle of comparative advantage. Kojima pointed out that other scholars' analyses of monopolistic advantage focused more on the microeconomic behavior of enterprises and less on the analysis of macroeconomic factors [3].
(3) Ownership Advantage
Professor Dunning pointed out in his eclectic theory of international production that an enterprise must possess three conditions to conduct outbound investment activities, and elaborated on the three aspects of ownership advantage. The first aspect is locational ownership advantage: within a specific region, a multinational enterprise possesses core advantages that other enterprises do not have, and the scale and marketing capabilities of the multinational enterprise constitute its locational ownership advantages. The second aspect is first-mover entry advantage: through localized operations, overseas subsidiaries of multinational enterprises gain various advantages over local enterprises or new enterprises. The third aspect is globalization cost advantage: making full use of factor markets and resource conditions of different countries to reduce the risks of globalized operations and gain competitive advantages [4].
2.1.2 Internationalization Stage Theory
Domestic and international scholars have conducted thorough research on the stage theories of enterprise internationalization. Nordic scholars proposed the "four-stage theory," Japanese scholars proposed the "five-stage theory" of internationalization, and Chinese scholars mainly divide internationalization into "gradual" and "leapfrog" types.
(1) The "Four-Stage" Theory of Internationalization
Two Nordic scholars, Johanson and Vahlne, conducted empirical research on four Swedish manufacturing enterprises and, based on this, divided the process of enterprise internationalization into four stages: the first stage, sporadic product exports; the second stage, exports through agents; the third stage, establishment of overseas subsidiaries; and the fourth stage, engagement in overseas production.
(2) The "Five-Stage" Theory of Internationalization
Through empirical research on 100 multinational enterprises, the Japanese scholar Norio Kobayashi proposed the "five-stage" theory of enterprise internationalization. First, internationalization centered on the marketing of the parent company of the multinational enterprise, mainly adopting export methods to enter and capture international markets [5]. Second, placing emphasis on international operations in host country markets, with local production of import substitutes. Third, investing in plant construction and engaging in overseas production.
2.1.3 Strategic Management Theory of Internationalization
The strategic management of enterprise internationalization not only focuses on which overseas businesses multinational enterprises engage in but also on the reasons for the existence of multinational enterprises, with the initial point being the determination of the company's core mission. During the process of strategy implementation, the company will periodically evaluate the progress of strategy implementation and make necessary modifications to the original plan.
Formulating a strategic plan includes three processes: first, evaluating the external operating environment and internal core advantages of the multinational enterprise, systematically assessing the enterprise's financial and human resource strengths and weaknesses, accurately evaluating the enterprise's investment capability, and formulating cost management plans and asset divestiture plans [6]. Second, confirming the long-term and short-term operating objectives of the multinational enterprise, and finally formulating work plans for achieving the sub-objectives. In short, multinational companies should attach great importance to and rely on the strategic planning process. A good strategic plan establishes the operating direction and implementation path for the multinational enterprise and also provides guidance for specific business activities.
2.2 Cross-Cultural Management Theory
2.2.1 Overview of Cross-Cultural Management
(1) Cross-cultural management is an emerging interdisciplinary discipline
It mainly studies how to conduct effective management under cross-cultural conditions and how to overcome multicultural conflicts. It involves designing organizational structures and operating mechanisms suitable for international operations in different cultural environments, emphasizing the rational allocation of enterprise resources, thereby exploring the potential value of enterprise human resources and improving the enterprise's comprehensive benefits [7].
(2) The Laws of Cultural Selection Have Two Forms of Expression
First, low-position cultures gradually evolve toward high-position cultures; second, there is generally a tendency to select those cultural factors that are compatible with the structure of one's own national culture [8]. Management theories and methods from different countries will inevitably be constrained by the laws of cultural selection under different cultural backgrounds. When countries with relatively backward management levels introduce management theories and methods from advanced countries, the issues of cultural selection and compatibility need to be considered in enterprise management practice.
2.2.2 Cross-Cultural Analysis Models
In terms of cross-cultural analysis models, the earlier and more representative Western figures include House, Hofstede's (1980, 001) dimensional theory, Kluckhohn's (2000) value orientation model, and Trompenaars and Hampden-Turner's (1998) cultural analysis model.
Through extensive data analysis, Hofstede summarized the four aspects of cultural factors involved: power distance, uncertainty avoidance, individualism versus collectivism, and masculinity versus femininity [9]. Hofstede also collaborated with Professor Michael Bond of the Chinese University of Hong Kong, conducting research on 22 Southeast Asian countries based on Confucian culture.
2.2.3 Comparative Research on Cross-Cultural Management
Domestic and international scholars have conducted relatively little research on organizational internal management issues in cross-cultural enterprises; therefore, some scholars have conducted systematic research on management from the internal perspective of cross-cultural enterprises. Starting in the 1970s, American academia formed cross-cultural management studies, focusing on resolving multicultural conflicts under cross-cultural conditions and achieving high-performance enterprise management [10]. Multinational enterprises should design adaptive organizational structures, optimize the allocation of enterprise resources, and explore the value of human resources in multinational enterprises. Major research findings include: O.T. Stervens proposed the organizational model theory, holding that power distance is highly correlated with centralized decision-making.
2.2.4 Internal Management of Cross-Cultural Enterprises
Phatak (1983) believes that cross-cultural human resource management requires integrating three elements of human resource management: first, the element of human resource acquisition; second, the element of allocation; and third, the element of utilization. "Although uniformity in the business sphere has contributed to globalization, many multinational enterprises face cross-cultural ethical conflicts that make their business practices quite different from those in their home countries."
(1) Cultural Conflict Issues in Human Resource Management
Gary Dessler (2008, translated by Zeng Xiangquan) believes that international differences in culture, institutions, laws, and industries directly affect the efficiency of human resource management. Among these, institutions and laws are important forms of expression of cultural conflict. In the research of Wayne F. Cascio (2006, translated by Wang Zhongming), the cultural variables in human resource management are summarized as language communication, dietary preferences, belief motivation, and psychological processes.
(2) Approaches to Handling Cultural Conflicts
Some scholars have pointed out that there are mainly three methods for handling conflicts in cross-cultural contexts. The first is transplanting the parent company's cultural system to the subsidiary. The second is grafting the cultural system of the country where the subsidiary is located onto the parent company, with the subsidiary's host country as the main body and the parent company's culture providing guidance. The third is organic cultural integration, which is a relatively effective but complex operational approach that requires careful design and a certain amount of testing time.
2.3 Institutional Theory
Research on the international operations of enterprises has been flourishing since the 1980s, and scholars' research perspectives have undergone several shifts, with research from the perspective of institutional theory receiving increasing attention. As new economic sociology advocates, all economic activities are embedded in social institutions.
2.3.1 Overview
Institutional theory originated in sociology and provides a detailed explanation of the institutional dependence of organizations and individuals, with an emphasis on explaining the relationship between organizations, individuals, and the institutional environment from an embeddedness perspective. Because of this embeddedness dependence, both economic activities and technological activities are constrained by the institutional environment, affecting decision-making processes and outcomes. However, institutions do not only have a constraining role; they also provide opportunities for organizations and individuals to optimize actions and decisions.
2.3.2 The Influence of Institutional Factors on Multinational Corporations' Choice of Host Countries
For enterprises "going out," whether it is overseas investment behavior, overseas operations, or localization management, they must face the institutional constraints of host countries. Shi Niaoyun believes that institutional factors are significantly correlated with the strategic choices and overseas operating performance of multinational corporations [11]. If the dimensions of institutional constraints are deconstructed, at least positive solutions can be found from the temporal, spatial, and cultural aspects.
2.3.3 The Influence of Institutional Distance on Localization of Multinational Corporations
In the mid-1990s, Kostova (1996), based on institutional theory, focused on the issue of gaps between countries and proposed the concept of "institutional distance." The concept of "institutional distance" is an excellent tool for understanding transnational operating behavior in the field of international business. In the research of institutional theory, Kostova (1996) made significant contributions.
3 Qualitative Analysis of Internal Environmental Influencing Factors
Miliken (1987) provided a general definition of environmental uncertainty as "an individual's perceived inability to correctly predict the (organizational environment)," and this "inability" partly stems from information asymmetry or the inability to effectively identify information. For overseas enterprises in host country markets, due to information asymmetry and rapid changes in the operating environment, the internal environment of the enterprise will also undergo corresponding changes.
3.1 Survey and Analysis of Advantageous Factors in Overseas Enterprises' Implementation of Localization Management
3.1.1 Overall Survey and Analysis
This survey provided respondents with seven main advantageous factors of enterprise localization management, among which the highest average scores were, in order, "having strong cross-cultural management capabilities," "having established close relationships with various local organizations," "having a mature human resource management system," "being familiar with local country markets," "having a strong diversified management team," "having management personnel with strong communication skills," and "having strong crisis management capabilities."
3.1.2 Analysis of Management Advantage Factors
According to the conclusions drawn from the overall survey and analysis, the ranking of advantageous factors in the localization management of Chinese-invested overseas companies' state-owned enterprises is: degree of strong cross-cultural management capability, degree of established close relationships with various local organizations, degree of mature human resource management system, degree of familiarity with local country markets, degree of strong diversified management team, degree of strong communication skills of management personnel, and degree of strong crisis management capability.
(1) Strong Cross-Cultural Management Capability
Chinese-invested enterprises undertaking international engineering business have gone through the process from "going to sea by borrowing a boat" to "going to sea by building a boat." Enterprises that "went out" earlier have accumulated 30 years of overseas engineering experience. Especially in the past decade, with the strengthening of policies such as China's foreign aid and financial support, more Chinese-invested enterprises have undertaken projects in regions such as Asia, Africa, and Latin America, accumulating strong cross-cultural management capabilities.
(2) Degree of Established Close Relationships with Various Local Organizations
Chinese-invested overseas companies establish reporting relationships with Chinese embassies and economic and commercial counselor's offices stationed in host countries, and important matters are implemented under the leadership of the embassies and economic and commercial counselor's offices. This is an advantage that distinguishes Chinese overseas enterprises from those of other countries. In the project development process, overseas enterprises have established good relationships with host country presidents, ministers, and agents, and relationship marketing determines the success or failure of projects. In the project implementation process, good relationships have been established with project supervision departments, trade union organizations, and subcontracting units.
(3) Mature Human Resource Management System
Overseas enterprises with better business performance are mostly central enterprises and outstanding provincial and municipal foreign economic cooperation enterprises, which basically inherit the complete human resource management system of the group headquarters. They have issued rules and regulations that meet the policy requirements of host countries in areas such as recruitment, deployment, training, compensation, and assessment, laying a foundation for standardizing the localization management of state-owned enterprises.
3.2 Survey and Analysis of Deficiencies in Overseas Enterprises' Implementation of Localization Management
3.2.1 Overall Survey and Analysis
Assuming that Chinese-invested overseas enterprises implementing localization management of state-owned enterprises have problems such as extensive management, a lack of compound management talent, unclear corporate culture, a low proportion of localized employment, administrative management methods, a low proportion of third-country labor, limited use of local management talent, and other issues, this survey was conducted for this project.
3.2.2 Analysis of Management Deficiency Factors
Through questionnaire survey analysis, the ranking of management deficiency factors in Chinese-invested overseas enterprises' implementation of localization management of state-owned enterprises is, respectively: lack of compound management talent, extensive localization management, low proportion of localized employment, unclear corporate culture, administrative management methods, limited use of local management talent, low proportion of third-country labor, and others. These factors are the problems hindering the effective implementation of localization management of state-owned enterprises. Only when overseas enterprises attach great importance to and effectively solve these short-board factors can they achieve better management benefits.
3.3 Survey and Analysis of Key Management Elements in Overseas Enterprises' Implementation of Localization Management
3.3.1 Overall Survey and Analysis
Assuming that the key management elements that Chinese-invested overseas enterprises need to focus on in implementing localization management of state-owned enterprises are recruitment and selection, employment relations, allocation and utilization, training, compensation management, performance evaluation, people-oriented management, and other issues. Questionnaire statistics show that in the process of implementing localization management of state-owned enterprises, the key management elements that overseas enterprises are most concerned about, ranked by mean value, are: allocation and utilization, recruitment and selection, training work, compensation management, employment relations, people-oriented management, performance management, and others.
3.3.2 Analysis of Key Management Factors in Chinese Enterprises' Implementation of Localization Management
(1) Allocation and Utilization
Among the various functional tasks of localization management of state-owned enterprises, allocation and utilization has become the most critical management factor, which is inseparable from its own functional role and from the concepts of "performance orientation" and "result assessment." Whether focusing on the recruitment link or the training link, the purpose is to best allocate and utilize talent. Position allocation must be carefully planned and scientifically evaluated, avoiding both shortages and redundant staffing, and reasonably controlling labor costs.
(2) Recruitment and Selection
Recruitment is the first step in the localization management of state-owned enterprises. The concepts, methods, and planning of recruitment have a significant impact on the quality and quantity of recruited personnel. Generally speaking, Chinese employees are recruited by the domestic parent company on their behalf. For recruited foreign management employees, their match with the position is basically assessed through resumes, interviews, professional capability tests, and of course, short-term probation may also be used.
(3) Training Work
Localization management of state-owned enterprises is also an important component of cross-cultural management. For the host country management personnel, technical personnel, and general labor personnel who are recruited and deployed, targeted whole-process training must be implemented. The corporate image and philosophy, as well as relevant rules and regulations, should be actively promoted so that employees have a unified action program. For specific projects, training should be conducted for different categories of personnel in stages, and the training responsibilities of each department should be clarified.
4 Empirical Analysis of the Evaluation of Internal and External Influencing Factors in Localization Management
4.1 Value and Basic Principles of Evaluating Internal and External Influencing Factors
Outbound investment enterprises face more complex and severe internal and external conflicts that are objective, complex, and controllable when deeply exploring international markets. Managers of such enterprises have profoundly recognized in management practice that implementing localization management of state-owned enterprises requires embedding the enterprise into the external environment of the local country. If the enterprise cannot effectively evaluate and understand the external influencing factors of implementing localization management, it cannot accurately judge the degree of implementation of SOE localization and will find it difficult to avoid failure in project operations and implementation in local country markets.
4.2 Background Information on the Venezuela Día Railway Project
Through research and interviews, the CRECG enterprise's overseas project, the Venezuela Día Railway Project, was selected as the empirical analysis object to test the rationality and applicability of the model construction in Chapters 4 and 5, to judge the internal and external influencing factors of implementing localization management of state-owned enterprises in the Día Project, and to indicate the direction and path for the enterprise to do a good job in localization management.
4.2.1 Basic Information on the Día Railway Project
The Día Railway Project is a project under the "Framework Agreement on Railway Technology and Investment Cooperation in the Bolivarian Republic of Venezuela" between China and Venezuela. It is a major engineering contracting contract obtained by CREC over five years in the Venezuelan market, with a total contract value of US$7.5 billion. The project contract was signed on July 30, 2009, and the project owner is the Venezuelan Railway Authority.
4.2.2 Characteristics and Difficulties of Localized Employment Management
(1) Compared with its economic benefits
The Día Railway Project is more of a "strategic" project, heavily imbued with political overtones by the government and carrying excessively high expectations from the ruling party. Its political significance is more important and far-reaching. The Venezuelan government hopes that this railway can serve as a transportation link, but the political demands of solving employment and improving people's livelihoods are even more urgent.
(2) Continuously Increasing Labor Welfare
Workers in Venezuela's local construction industry enjoy numerous benefits. In addition to wages, they receive a monthly attendance bonus equivalent to 6 days of basic wages, an annual paid vacation equivalent to 17 days of basic wages, a vacation allowance equivalent to 63 days of basic wages, and a year-end bonus equivalent to 100 days of average wages. Trade union organizations and community representatives exploit legal loopholes to force branch companies to pay benefits outside the scope of the law, threatening strikes or violence otherwise.
(3) Difficulties in Obtaining Evidence for Dismissing Workers
According to Article 102 of Venezuela's national Labor Law, enterprises have the right to reasonably dismiss workers who violate discipline. However, Chinese-invested enterprises, particularly those in the construction industry, operate in open work environments, making it difficult for the Chinese side to obtain evidence of disciplinary violations by Venezuelan workers. Consequently, the dismissal of workers who violate discipline cannot proceed normally, causing losses to enterprise interests.
4.2.3 Characteristics of the External Environment for Human Resource Management in Venezuela
Venezuela is located in the northern part of the South American continent, with a population of approximately 29 million and an economic output ranking fifth among Latin American countries. Venezuela has very abundant natural resources such as oil, natural gas, and bauxite, with oil reserves ranking first in the world. Due to long-term reliance on the oil industry, the development of other industries in Venezuela has been very slow, with a single industrial structure, backward technological levels, and weak international competitiveness.
Text | He Yuxiang (Yunnan Energy Investment Foreign Energy Development Co., Ltd.)