While the China-proposed "One Belt, One Road" initiative is motivating an increasing number of Chinese companies to expand overseas, the companies need to improve their human resources management in order to gain a better market share.
President Xi Jinping's visit to Warsaw in June has put spotlight on Chinese investment in Poland, the most populous country in Central and Eastern Europe and considered as China's gateway to the EU market.
However, local officials told me when I visited the country last month that the volume of Chinese investment in Poland is relatively small, despite a few big companies making news in recent years.
What are the reasons for the low level of Chinese investment in Poland? Looking back, among the projects that Chinese firms launched in the country after Poland joined the EU in 2004, a remarkable one was the mega construction project initiated by China Overseas Engineering Group (Covec), a subsidiary of China Railway Group in 2009, which was suspended two years later.
At that moment, Covec was the first Chinese company to win such a big motorway project in Europe, and the setback weighed on the business confidence of Chinese investors to Poland for years.
Today, some Chinese companies who have learned a lesson from the failed highway contract have taken measures to avoid committing the same mistake as Covec did.
For example, a chaotic management system was considered as the major issue in the Covec case. In Poland, working hours cannot exceed eight hours in a day or an average of 40 hours in a five-day working week, but in some leasing contracts, Covec had mistakenly listed working hours as 16 hours a day, which generated labor disputes, according to a book titled Challenges of overseas Chinese enterprises.
Some senior executives of Chinese companies in Poland told me during my trip to Warsaw that they pay much more attention to labor rights now and strive to better connect with local communities, as trade unions in workplace are very powerful as expected.
For example, the industrial center of Stalowa Wola in southeastern Poland has also been the hub of workers' movement after the World War II. How to deal with six unions is one of the daily duties of Guangxi LiuGong Machinery Co, a State-owned enterprise whose investment in the country has reached $200 million since 2012.
The key is to build trust between employees and employers through steps including multiple rounds of negotiations on payroll and benefits, information exchange and cultural communication.
It has even sent several delegations of union representatives to visit China in the past few years. The company, which had gone through merger and acquisition (M&A) procedures in the country, said it has hardly seen any anti-China sentiment in this Polish city.
Besides maintaining healthy relationship with trade unions, utilizing local labor force while helping them create more value is another question that Chinese companies in Poland should think about.
Poland has a talent pool of highly educated workers, and about 22 percent of Poland's population aged 24 or above has received university education, said a report published by global consulting firm McKinsey & Company in January 2015.
However, there has been an imbalance in labor supply and demand in the country since recent years as more and more graduates have moved to western European countries such as Germany and the UK.
Chinese telecommunication and networking services provider Huawei Technologies has learned that the way to attract more talents back to Poland is not only by offering considerable salaries but also giving them opportunities for personal development. That was the main reason behind its recent investment in Poznan Supercomputing and Networking Center, which will specialize in cloud computing research and development.
