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a few expatriates can have a great impact as they initially operated with two UK expatriates (Gamble, 2003)..

Implications of expatriates however are that in China, few expatriates can speak Mandarin and fewer can read it, consequently, some expatriates cannot talk directly to their staff, let alone read legislation in Chinese and this may have a detrimental impact on long term relations and business outcomes (Gamble, 2003).

Lack of skilled labour resources and retention issues.

The second major emerging HRM issue in China is the growing need for talented managers and the lack of skilled workers. For MNE's, this is stated as by far the biggest HRM challenge in China and this applies for locally owned businesses also (Bacani & Peavy-Sima, 2006). According to the China Economic Review (2009), ‘the imbalance between business opportunities in China and qualified executives to manage them will get worse, before it gets better'. In a recent survey of US-owned enterprises in China by ‘AmCham Shanghai', 37% of the companies said that recruiting talent was their biggest operational problem and this issue was greater than regulatory concerns, a lack of transparency, bureaucracy, or the infringement of intellectual-property rights which are all deemed as significant issues also (Bacani & Peavy-Sima, 2006) . In another survey, 44% of executives at Chinese companies surveyed by ‘ The McKinsey Quarterly' stated insufficient talent locally was the biggest barrier to their global ambitions.

With a population of——1.3 billion people, one would assume that labour resources are freely available and skills abundant in China but this is not the case currently and this is due to China's history. One reason historically is due to the ‘iron rice bowl' approach of managing people in China prior to the reforms of the 1970's. Essentially, from a HR perspective, the ‘iron rice bowl' approach involved cradle to grave welfare coverage, no layoff/firing policies, egalitarian pay systems, and group based rewards which coincided with lack of organizational autonomy and discretion due to the centrally planned economy at the time. (Wright, Mitsuhashi & Chua, 1998). To add to this, the government controlled all resources and centralized the allocation of the material supplies, filling quotas assigned by the state, rather than improving productivity and quality. Consequently, there was no incentive for organisations to reduce costs, alter work processes for productivity or improve products. No incentive system in organizations meant that employees were not motivated and this had a detrimental impact on organisational competitiveness (Goodwall & Warner, 1997).

A second reason historically for the lack of skilled human capital in China was the absence of higher education in general and management training which is primarily linked to the ‘Cultural Revolution' from (1966-76) where universities and educational institutions were closed and a whole generation of potential managers were lost (Wright et at, 1998). This action by those in power meant that the cohort of workers entering work came without the benefit of quality education and consequently, created human capital shortages.

Therefore, a huge HR dilemma exists in that MNE's in China face a workforce supply that is synonymous with low skills, degraded motivation at both management and employee levels. To coincide with t