There are a number of human resource strategies that can be undertaken by Chinese companies to retain employees. As previously stated, factors most valued by Chinese employees include compensation and benefits packages, opportunities for future development, creative work that creates meaning to employees, and company location. It should be pointed out that compensation, meaningful work, and opportunities for future development are the most critical factors to employees. While benefit packages are a form of compensation and are controlled by Chinese companies, opportunities for future development and meaningful work that creates value are directly related to employee empowerment. Chinese leadership style is considerably more autocratic as compared with the Westerns style of management. The general approach used is from top to down. Studies estimate, that about one third of Chinese companies do not empower their employees at all.



When considering the issue of empowerment, scholars tend to subdivide Chinese business by the type of ownership. As in China there is a command economy, which very unproductive, government owned companies tend to have the lowest degree of empowerment. Overall, the tendency of empowerment is the following – the lowest level is observed in state owned companies, privately owned enterprises take the next position, whereas multinational enterprises that established their business practices take the leading position in employee empowerment.

At the same time, empowerment is one of the key strategies used by human resource management in the West. While the number of businesses with the degree of empowerment among employees being close to 0 per cent reaches 46 percent in state owned enterprises in China, in the US – the respective number is twice less. Employee empowerment ensures employee ownership of day to day operations as well as the authority of employees to carry out their operations. It is estimated, that there is a positive correlation between the level of employee empowerment and return on investment; whereas labor turnover and empowerment rates are negatively correlated.

A case study of a state owned enterprise in China revealed that when empowerment rates among company employees reached 100 per cent, return on invested capital increased by 35 per cent, whereas the labor turnover rates went down. Scholars predict that in order for China to remain competitive, enterprises will have to adjust their human resource strategy in the long run in order to provide higher empowerment rates.

There are considerable differences in both structure of compensation and the level of compensation in China as compared with Western countries. Generally, in China total labor costs account for 25 per cent of cost of goods sold, whereas worker compensation in Western economies accounts for only 20 per cent. As such, when comparing the level of employee of compensation based on cost share of the product or service produced, the level of employee compensation is higher in China. At the same time, Chinese enterprises tend to offer significantly lower employee benefits such as insurance and flexible working hours. Consequently, employee compensation are negatively correlated with the labor turnover rates. The general tendency of Chinese companies is to over pay directly to employees as a way to retain employees; however, this strategy tends to have short term results. In contrast, employee benefits employed in Western enterprises in the form of insurance benefits tend to have long term impact and allow companies to reduce overall compensation rates.