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An Assessment of the International Human Resource Management of Panasonic in China

The organizers of the 19th Asian Games Hangzhou 2022 named Panasonic Corporation of China as the only official supplier of household appliances during a press conference on June 10, 2021, in Hangzhou. In 1978, Panasonic, a 103-year-old enterprise founded in 1918, first entered the Chinese market, commencing their relationship. After more than 40 years of growth in China, Panasonic now employs 60,000 people across Northeast Asia and China. It operates in various industries, including home appliances, housing, cold chain, electronics, automotive electronics, and connected solutions (Hayter & Edgington, 2021). As the official supplier of the Asian Games in Hangzhou, Panasonic would offer top-notch household goods and services for the occasion and assist in publicizing and marketing the Asian Games.

Management System of Panasonic

The primary principle of management at the Panasonic Group is to provide chances for success and advancement for all who work with us. The company aims to construct a society where everyone may experience monetary wealth and mental fulfillment, regardless of gender, age, ethnicity, or other qualities. it is critical to provide “the best place to work where different talents function at their best.”Each manager is accountable for and addresses human resource development, including offering education and the like, in accordance with various initiatives, including systems and mechanisms planned, created, and run by the HR divisions. This is merely one of the attempts to put management policies that reflect that approach into practice (Mehrotra & Salunkhe, 2021). Then, utilizing the yearly goal management systems, employee feedback survey, and other tools to assess each employee’s abilities, degree of engagement, motivation, and more, and use the data to enhance efforts. In addition, the presidents of Panasonic Holdings Corporation (PHD), the Operating Companies, and the Group DEI Promotion Council review and monitor the overall Group position and important actions during these meetings.

Organization Context: Panasonic Approach Strategy

Panasonic originally joined the Chinese home appliance industry a few decades ago, with its sole endeavor at localization consisting of supplying lower-cost reproductions of items offered in industrialized countries. Panasonic’s management immediately recognized that as China’s middle class expanded, domestic competitors such as Haier quickly outpaced the Japanese corporation. Panasonic’s expansion in China stagnated, despite the 20% to 30% annual growth of the domestic appliance market in the country. Panasonic’s management understood they needed to engage that market more thoroughly to gain a competitive advantage through integrated, global operations and to concentrate locally to satisfy customers’ specific demands (Shimizu, 2019). Ideas started to flow easily between China and the main office in Japan as a consequence of actions such as establishing a China Lifestyle Research Center. Panasonic’s management began to envision the firm as a worldwide powerhouse as opposed to a Japanese one as soon as it started initiatives to comprehend consumers worldwide.

The Chinese leader Deng Xiaoping visited Japan in 1978 and engaged with Konosuke Matsushita, the creator of Panasonic, to seek assistance in modernizing China’s industries. In 1987, Panasonic established Beijing Matsushita Color CRT, its first joint venture in the nation, and commenced licensing the technology to China. This venture became the focal point of Panasonic’s following corporate strategy, which resulted in the development of more than 40 factories in China that manufacture goods, including washing machines, air conditioning systems, and televisions. China rapidly became Panasonic’s central global production hub. By the early 2000s, it produced approximately 30% of the corporation’s “white goods” (home appliances) sold worldwide. The corporation invested heavily in the factories, including the expertise in supply chains, production processes, and quality control strategies (Han et al., 2019). Panasonic’s principal purpose at the time was to gain from lower production costs in China and a substantial amount of the output intended for export.

Panasonic has consistently made investments in in-depth research on how individuals and families utilize products in Japan. For example, Panasonic’s Home Appliances corporation had a profoundly committed Lifestyle research facility that teamed up intently with the commodity scheduling teams to design products like front-loading washing machines with tilted drums that enhanced water efficiency and managed to make loading relatively easy, as well as small countertop dishwashers for smaller kitchen spaces. However, there was not much of an initiative taken to comprehend the Chinese market in this manner. Although Japan did most of the product development, Japanese designers occasionally traveled to China to assess local preferences (Abe, 2022). As a result, the Chinese factories made minimal attempts at localization and primarily produced inexpensive, simplified copies of models for the home market. For instance, Panasonic made some progress in 2001 with a microwave oven designed to reheat food.

Panasonic started to recognize the shortcomings in their approach as the Chinese middle class expanded. Haier and other local rivals rapidly overtook the Japanese company. Panasonic’s expansion in China remained unchanged, even though the country’s market for home appliances expanded at a rate of 20% to 30% yearly. Panasonic endured another set of failures when its Chinese rivals began marketing their inexpensive goods in the United States, Europe, and Southeast Asia in 2000. The year 2002 marked the first time Panasonic had an annual deficit. The company’s executives recognized that they would risk losing influence in their markets if they failed to expand their presence in China (Li, 2022). The management of the firm also recognized that for their operations in China to gain a competitive edge rapidly, they would be required to use Panasonic’s core resources, which are located in Japan and include marketing and R&D (Research and Development) expertise.

The management of the Japanese corporation understood that they needed to interact with their clients in China more intensely after observing a slowing of growth there. Due to the long-standing hostility between China and Japan and its potential for unexpected resurgence, Panasonic’s intention to accomplish this was fairly extraordinary. A few Japanese businesses, including Canon, Toyota, and Panasonic, were compelled to temporarily halt their activities in China in October 2012 due to demonstrations after Japan’s announcement that it had acquired the contentious Senkaku Islands. Although the issues have resolved themselves, they caused uneasiness among the Chinese and Japanese employees. Panasonic blended two approaches to business successfully, perceived as incompatible: gaining a competitive edge via knowledge of integrated, worldwide operations; and, on the other side, focusing domestically to address the particular demands of clients through its endeavors in the Chinese market (Tokoro, 2020). There is apparent tension there: Local adaptation promotes independence and variety while global integration pushes for collaboration and consistency. The tension particularly affects multinational corporations frantically attempting to contain expenses at home while pursuing expansion in emerging areas.

Panasonic undertook a reorganization in response, reducing its organizational structure domestically and internationally to save costs and manage market disruptions brought on by increased digitization and modularization in household appliances. To promote cross-unit innovation, business units amalgamated, 13,000 employees retired early, and the corporate structure decreased by approximately half its levels. The business established the Panasonic Corporation of China in Beijing in 2003 to provide services to sales channel expansion, R&D, logistics, legal support, and assistance with human resource management, which some of its manufacturing subsidiaries offer. Panasonic’s perspective changed (Yusiana et al., 2020). China was no longer just a place to produce items at a low cost; it was a major driver of the business’s future expansion. For the localization of goods and services, as well as the understanding of issues relating to their initial plans and customer preferences, the establishment of Research and development centers and initiatives focused on assessing the Chinese market may be crucial.

International Human Resource Management Challenges in Cross-Border

International joint ventures (IJVs) are an increasingly prevalent type of voluntary collaboration between businesses of diverse sizes, sectors, and geographical locations to achieve strategic goals and manage more complex economic situations. Organizations are expanding into new international markets to gain and maintain a competitive edge in the current fiercely competitive global economy. Organizations may and do employ a variety of market entrance tactics to achieve this global expansion. According to prior reports, international joint ventures, particularly cross-border partnerships, are among the most prevalent international expansion strategies (Nippa & Reuer, 2019). International joint ventures, however, have a possibility of failing, and human resource management is crucial to whether they succeed or not. IJVs provide a range of complexity from a systems viewpoint, some of which may be a factor in the emergence of conflict and failure.

International joint ventures though wildly used, are challenging to create, coordinate, and manage. According to research, numerous IJVs fail to achieve their declared objectives, which results in expensive failures. The legal, political, economic, and organizational environments, partner disagreements, and contract conditions can challenge Panasonic in China (Tetteh et al., 2020). However, many IJV failures can be attributable to ineffective human resource management. IJVs require managing the objectives of two or more partner companies while also retaining a competitive edge in a range of international marketplaces, which leads to human resource issues, among several other issues.

Toyota and Panasonic’s Joint Venture

Toyota Motor, a Japanese-based Corporation, and Panasonic Corporation in china signed a business integration and joint-venture arrangement to form a new venture in the automotive prismatic battery market by the end of 2020. Prime Planet Energy & Solutions Inc. is a battery joint venture that Toyota Motor Corporation and Panasonic Holdings Corporation recently established. Toyota would possess 51% of the shares in the joint venture, while Panasonic would possess 49% (Houache et al., 2022). The joint venture’s business operations include development and research production engineering, manufacture, procurement, order processing, and management for automotive prismatic lithium-ion batteries, solid-state batteries, and next-generation batteries. Toyota would invest resources in the joint initiative to design and produce battery cells (Schulz, 2019). Panasonic would give the joint venture its equipment, other assets, liabilities, staff, and additional tools for administration, procurement, acquisition receipt, production engineering, manufacture (at facilities in Dalian, China, and Japan), and research in the automobile prismatic battery industry.

Possible Challenges

The premise of the transaction cost theory is that organizations typically choose governance structures that minimize the costs of creating, maintaining, assessing, and enforcing agreed-upon exchanges. The idea has immediate ramifications for comprehending how human resources are employed to create a governance framework for handling the numerous implicit and explicit contracts between employers and workers in an IJV system (Cooke et al., 2019). IJVs such as Toyota and Panasonic may forge contractual ties with each other to lower their transaction costs. However, they may uncover that national cultures will likely impact people’s preferences for explicit vs. implicit agreements.

The management of the workforce has emerged as an additional challenge with the expansion of Chinese and Japanese MNCs globally. For the human resource professionals at both multinational firms. They will be required to develop systems that work effectively with both nations’ politics, societies, laws, and cultures. Their policies and systems should be flexible enough to hire, train and retain competent employees. Additionally, as internal HRM practices differ from company to organization, global integration and local responsiveness are requirements for international managers when managing internal HRM practices (Dasgupta et al., 2022). Corporations extending their operations to other nations, such as Toyota and Panasonic, may confront international Human Resource (HR) issues owing to different cultures, time zones, and a failure to uphold legal compliance with labor regulations. To manage employees worldwide, human resource executives must be excellent communicators with the ability to devise strategic management strategies (Dasgupta et al., 2022). One approach is to use centralized HR systems, such as PeopleSpheres, to enable global employees to cooperate, communicate, and remain engaged remotely. HR management would be able to manage and facilitate all HR operations, as well as have access to critical HR information, owing to this software.

The degree of intricacy and unpredictability in IJVs and the extent to which they can exercise control over the IJV system serve to link and distinguish the various varieties of IJVs. In other words, complexity, complications, the likelihood of conflict, uncertainty control, and instability all rise as the IJV progress from simple to complex (Chang, 2019). As a result of the relationships’ growing complexity, complications, and the possibility of conflict, uncertainty and instability will present difficulties and potential roadblocks for managing the alliance system’s learning processes, achieving and maintaining economies of scale, and asserting control over the IJV system’s operations.

International Performance Management

A growing number of multinational firms operate in this more globalized world. In addition to overseeing local clients, workers, and other company operations, they must also manage foreign companies. Expatriates play a significant role in managing multinational corporations (MNCs), transferring and coordinating technology and knowledge with headquarters, exploiting local businesses, and building partnerships with local governments. Some of the parent company’s middle managers transferred to the host company—a local subsidiary—are granted top management positions. Therefore, they reside there as expatriates. They will experience various leadership-related challenges as it is a new cultural context. There is a leadership gap between middle and senior managers (van Bakel et al., 2021). According to a questionnaire study by the Japanese Ministry of Foreign Affairs, Japanese expatriates lacked interpersonal skills and strong connections outside the workplace. Japanese expatriates perform poorly in leadership, subordinate training, and business operations skills compared to local senior managers.

Expatriates are associated with MNC control and performance by lowering transaction costs between headquarters and subsidiaries and lowering risk and cultural friction. Additionally, MNCs must manage their domestic labor markets and maintain control over their international subsidiaries.MNCs have principal-agent interactions between the corporate headquarters and the subsidiary from the perspectives of agency and transaction costs theories. It consumes too much time to monitor and oversee managers’ work as MNCs’ headquarters and subsidiaries in various nations (van Bakel et al., 2021). As a result, information and negotiating challenges arise. By assigning expatriates to key roles in their international branches, MNCs can reduce communication expenses between their corporate headquarters and foreign operations.

Employing foreign nationals may lessen risk and cultural misunderstandings while enhancing performance and providing employers with a competitive edge. For these markets to mature, multinational internal labor markets assert that an MNC’s subsidiaries need to possess adequate basic human resources. In a domestic labor market, they can transfer human resources between companies. The absence of such a market hampers the management of MNCs’ human resources (van Bakel et al., 2021). For instance, if a foreign subsidiary lacked knowledge or technology in a specific field, the MNC could not send in an expatriate to fill the gap. The theories of agency, transaction costs, and internal labor markets for multinational corporations contend that MNCs must use expatriate assignments since local employees cannot completely replace them.

In corporate governance and subsidiary control, transaction cost reduction is crucial. Expatriates play a significant role in managing multinational corporations (MNCs), transferring and coordinating technology and knowledge with headquarters, exploiting local businesses, and building partnerships with local governments. In centralized organizations, as opposed to decentralized corporations, foreign managers may have a greater impact on how headquarters undertake policies. The four organizational models used by MNCs—global, multinational, international, and transnational—are strategic network organizations. The worldwide organization uses a centralized model. In this arrangement, the headquarters has a substantial degree of influence on subsidiary choices(Gao & Park, 2022). The headquarters are the only source of power. Several Japanese multinational corporations, including Kao, Panasonic, and NEC, fall under this category. Due to its headquarters requiring foreign national managers to apply plans and policies in overseas subsidiaries, this organization employs more foreign nationals than other enterprises. To account for the dangerous air pollution in China, the Japanese electronics manufacturer Panasonic should pay its expatriate workers in China a compensation wage. The atmosphere in practically all of China’s major cities falls below national standards due to Fine Particulate Matter PM 2.5, microscopic particles that easily infiltrate the lungs, contributing to hundreds of thousands of premature deaths (Yang et al., 2022). Chinese cities are frequently shrouded in haze, and many citizens wear masks to protect themselves from the toxic air.

The effective utilization of expatriates with strong Transformational Leadership (TL) from headquarters may improve the performance of international subsidiaries. Expatriate TL primarily enables subsidiary performance from four perspectives: increasing followers’ creativity and job performance through relationships of social exchange in organizations; bolstering product and business model innovation and the rate of innovation; influencing managerial performance and governance practices; and fostering the trust-based environment and influence of TL on performance (Marques et al., 2021). Human resource executives at MNCs may establish suitable leadership development initiatives to assist expatriates in enhancing their TL. According to the prior study, leadership is innate and learnable. Social learning through experience is, therefore, crucial for the development of TL.


Human resource management is an effective approach to successfully and efficiently managing personnel within a business or organization to boost the firm’s capacities to sustain a competitive advantage. By maximizing staff performance, a business may achieve its strategic goals. The institutional contexts surrounding employment in the home and host countries and the dominating effects of major economies are the main determinants of how well multinational firms handle the pressures for global integration and local responsiveness in HRM.

The Panasonic Group, which offers a vast range of products in electronic business sectors relevant to our everyday lives, is currently one of the top business groups in the world. Every individual at Panasonic takes the lead in their position and promotes Panasonic’s commercial endeavors to advance society and improve people’s lives through manufacturing. The individuals that makeup Panasonic originate from various backgrounds, including those related to region, culture, and history. They also possess various skills and characteristics related to gender, age, ethnicity, belief, religion, nationality, sexual orientation, and gender identity. Each individual has a variety of unique ideas, and by exchanging these ideas across nations and economic sectors, they may develop more innovative values. To generate products and services that improve consumers’ lives across the globe and expand Panasonic’s business, the enterprise must increase its efforts to create human talent that can engage actively and flourish in the international marketplace. It is also critical that the firm fosters an organizational culture in which all individual employees, regardless of age, gender, or nationality, may fully use their abilities. As a result, Panasonic recognizes diversity promotion as an essential aspect of its corporate strategy. It offers a wide range of possibilities to anyone who possesses competence and aspiration and actively seeks to establish a work-friendly atmosphere.


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