x Abu Dhabi, UAESaturday 22 July 2017

China's growing investment in Brazil reveals vast culture gap in attitudes to work

Huge rise in business between two of the world¿s fastest-growing economies highlights totally different approaches to workers and regulations.

Cars made by the Chinese manufacturer JAC on display at a car dealership in Sao Paulo, Brazil. Chinese companies' direct investment in Brazil jumped to $17bn last year. Andre Penner / AP Photo
Cars made by the Chinese manufacturer JAC on display at a car dealership in Sao Paulo, Brazil. Chinese companies' direct investment in Brazil jumped to $17bn last year. Andre Penner / AP Photo

SAO PAULO // Stocking shelves in a Chinese grocery store, Thiago warned that he did not want to be caught chatting during working hours. Within seconds, however, the Brazilian unleashed a pent-up flood of complaints about the owners, who lingered just beyond hearing distance.

"My bosses have never heard of a day off," said Thiago, 20,, who would only allow his first name to be used, for fear of losing his job. "Vacations? Forget it. They pay well and they pay for extra hours, but they don't understand that some things are more important to Brazilians than money. I've seen many workers walk in, see the Chinese way of doing things, and quit the very same day."

Such cross-cultural tensions have become a stumbling block in an otherwise meteoric rise in business ties between China and Brazil, two of the world's fastest-growing economies.

Chinese companies' direct investment in Brazil jumped to US$17 billion (Dh62bn) last year, nearly 60 times the investment the previous year, according to Sobeet, a Brazilian economic think tank. At the same time, more Chinese companies are hiring local workers rather than following their old practices of bringing in Chinese labourers.

That new reality has meant frequent contact between two cultures that hold vastly different expectations about the role of workers, government regulations and unions.

Brazilians enjoy some of the most labour-friendly protections in the world, with guarantees such as one-month annual bonuses and stipends for meals and transportation.

China, on the other hand, has quickly become the world's second-biggest economy on the strength of a low-paid workforce and, in practice, virtually nonexistent labour protections, according to the US-based nonprofit Global Institute for Labour & Human Rights. Brazil's strong independent labour movement also clashes with a centralised Chinese system of company unions without collective bargaining power.

"You're looking at a whole different model of how society operates," said Charles Kernaghan, the institute's director. "That means no rights to organise, virtually no labour protections."

Chinese companies are attempting to export that model and, at least in Brazil, have been finding it difficult to retain workers, even in management positions.

A survey of 500 Brazilian executives working for Chinese, North American and European companies recently conducted by the Michael Page International recruitment firm for the newspaper Folha de S Paulo found that four out of 10 Brazilian executives working for Chinese companies left their jobs within a year, a turnover rate more than two thirds higher than found in the other firms studied.

Brazilian workers complain that their Chinese employers do not understand the country's culture of developing personal relationships among co-workers. Brazilians also bristle against a centralised office hierarchy that puts little trust in local executives.

"The cultural misunderstandings are going to frustrate the development of Chinese business in Brazil," said Marcelo de Lucca, director of Michael Page's Brazil operations. "Multinational companies, when they arrive in Brazil or any country, have to adapt to the local culture. But the Chinese, with their old culture, being a country ruled by a strong Communist party with extreme levels of hierarchy, for them this process will take longer."

The global accounting firm KPMG, whose specialists help Chinese companies get started in Brazil, say about 30 of China's big state-run companies with annual revenues above $1bn are now in the country, more than three times the number five years ago.

China and Brazil's bilateral trade surpassed $56bn last year, up from $2.3bn a decade earlier. In 2009, China replaced the US as Brazil's biggest trading partner.

Brazil is not China's first foray into Latin America: Chinese companies have a strong presence across the region, from mining operations in Argentina to manufacturing in Mexico. China has bilateral trade agreements with Peru, Costa Rica and Chile.

Zhang Jianhua, the chief of the Bank of China's operations in Sao Paulo, said Chinese companies have been enticed by Brazil's wealth of iron ore, soy, oil and other natural resources, and many companies are finding it more cost-effective to move closer to the commodities. Chinese companies also see Brazil's booming middle class as a lucrative market.

Chinese companies' experience elsewhere in Latin America, however, has not helped them avoid problems in Brazil.

A former top executive for the Chinese computer maker Lenovo said most Brazilians at the company's local offices were frustrated by demands to come up with almost immediate results in a country with some of the world's worst red tape. Even seemingly mundane tasks, such as getting a phone line or renting an apartment, can require trips to the notary and stacks of paperwork.

Brazilian workers also balked at what they saw as their Chinese superiors' suffocating management style, said the executive, speaking on condition of anonymity for fear of putting in jeopardy the jobs of other Brazilians at Lenovo.

"It was not the quantity of work - we're all chained to our BlackBerry, working 24 hours a day, seven days a week," she said. "But the Chinese bosses wanted people physically in the office 100 per cent of the time so they could control them. That's definitely not how deals are closed in Brazil. It's over dinner, at lunch, having a drink. You cannot keep your workforce locked up in an office and expect to make headway in Brazil."

Calls to Lenovo were not returned.

Asian executives have had their own complaints about what they see as the lax work ethic of Brazilian employees, but are up against laws that require all foreign companies in Brazil to hire locally.

Despite efforts to build better working relationships between the two countries, distrust was still rife in the Liberdade neighbourhood of central Sao Paulo.

Celio Lin, 29, sat by the till of his family's restaurant complaining about the Brazilian staff. "Brazilians want vacations for I-don't-know-what, they want a day off for I-don't-know-what, they want to go to the beach, to relax. The beach is obviously pleasant, but if you send a Chinese man to the beach, he'll go there to sell something!"