Compensation in Chinese Multinationals

Abstract

This study explores and conceptualizes international reward and compensation policies and practices in 10 Chinese multinational enterprises (MNEs). It reveals that the case Chinese MNEs adopt dual approaches to international reward and compensation toward different nationalities and different managerial status. The approach to international reward and compensation for nonexecutive host-country nationals is host-based and for executive host-country nationals is contract-based. The approaches for expatriates are classified into three categories: the diplomat-based, the host-based plus home salary and the contract-based. This study indicates that international strategy, reliance on international markets and senior management’s perception of the home reward and compensation system determine approaches to international reward and compensation. Other factors, including legal, economic and sociocultural and type or niche of industry influence the ways of implementing these approaches. Moreover, international human resource management policies and practices, including recruitment and selection, management development and performance appraisal, have a strong effect on international reward and compensation.

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