The International Journal of Human Resource Management 8:5 October 1997 An empirical study of human resource management policies and practices in foreign-invested enterprises in China: the case of Shenzen Special Economic Zone Daniel Ding, Dail Fields and Syed Akhtar Abstract Infonnation about human resource management (HRM) practices in foreign- invested enterprises (FIEs) in China has been limited to studies involving a small number of cases. This study provides an empirical assessment of HRM practices used in 158 FIEs operating in Shenzen Special Economic Zone (SEZ) of the Guangdong Province in southem China. Results suggest that FIEs have moved awayfiromcentrally planned job allocation, life-time employment and egalitarian pay towards open job markets at management and non-management levels, contractual employment where pay and longevity are based on individual worker and company performance and compensation plans that recognize differences in skills, training and job demands. These practices seem to reflect the influence of the economic reform in China. Other aspects of HRM practices used by FIEs, such as approsumate equality of pay for men and women, limited differences between management and non-management salaries and widespread pro- vision of housing and other benefits for employees, seem to reflect the influence of the Chinese socialist ideology. Keywords Human resource management, foreign-invested enterprises in China, economic reform, joint ventures, state-owned enterprises Introduction Over the last decade, China has actively sought foreign direct investment (FDI) in its economy. By the end of 199S, the total number of FDI projects approved had reached more than 259,4(X), with committed investment of more than $395 billion (Han's Chinese Cultural Development Co., 1996), approximately three-quaiters of which was in the form of joint ventures between foreign firms and Chinese state- or collecdve- owned enterprises and one-quarter in the form of wholly owned foreign ventures. These joint ventures and wholly foreign-owned companies, referred to hereafter as foreign- invested enterprises (FIEs), may represent diverse goals of foreign investors, ranging from capitalizing on China's low labour costs today, to establishing a 'toe-hold' in China in order to realize gains later as incomes rise in the enormous Chinese population (Ding, 1993; Pearson, 1991; Shenkar, 1990; Yan and Gray, 1994). Aside from attracting foreign exchange, Chinese organizations have entered into joint ventures with foreign firms or the Chinese govemment has authorized wholly owned foreign enterprises in order to bring new technology into China, acquaint Chinese administrators with profit- directed management techniques and encourage use of modem business processes to further the industrial modernization of China (Pearson, 1991; Tsang, 1994; Wang, 1992). 0985-5192 © Chapman & HaU 1997