Reasons behind management localization in MNCs in China

Abstract

During recent years, the Chinese market has witnessed a large wave of management localization in multinational companies established there. The current world economic crisis even accentuates this tendency. Management localization is not a random operation. Our empirical qualitative research indicates five categories of reasons why companies encourage this practice: to reduce management cost, to resort to local competences, to replace the lack of appropriate expatriates, to develop and retain local talents, and also to maintain good relations with local government. Corresponding partly to the results observed in previous studies, the five categories of reasons nevertheless reveal certain differences linked to the particularities of the Chinese context. The impact of each category of reason is not without importance, both for company performance and the motivation of local managers.

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