Organisational hierarchies and decision making process of Chinese multinational enterprises in Vietnam

Abstract

This paper examines the organisational hierarchies and decision making processes of two Chinese multinational enterprises operating in Vietnam - China Luoyang Floating Glass Corp. (CLFG) and China TCL Holdings Co. Ltd. (TCL). For this study, research data were obtained from in-depth interviews of more than 20 government officials in P.R. China and Vietnam, and managers and staff of those two enterprises. Results indicate that the organisational structures of the two enterprises are still vertical but complex, although moderate changes made to them post the nationalwide economic reform of China. Consequently, decision making process follows a 'top-down' model, sometimes, with insufficient grassroots information. Findings are discussed in the light of political, social and cultural milieu, and implications are drawn for the management of Chinese multinational enterprises operating in overseas markets. Both CLFG and China TCL are structured on task specialisations. However, departmentalisation in TCL's overseas division in head office is not only based on products, but also on geographical regions of markets. The organisational structure of TCL in Vietnam is less complex than the international division, but it is more centralised. Decision making at TCL combines more traditional Chinese business philosophy with modern western organisational characteristics. TCL has a strong western influence in its management style. However, some traditional characteristics such as 'hero' leadership influence and political influence are involved with decision making at TCL. Amongst others, the transitional economy, social culture, poor management system and political sensitivity have been major elements influencing decision making. In the case of CLFG, some decisions have been made before proper information has been gathered and analysed.