Before the economic reforms began in 1978, the characteristics of HRM systems in
Chinese firms embraced the so-called ‘iron rice bowl’, which comprised lifetime
employment, egalitarian pay and ‘cradle-to-grave’ welfare (Ding, Field and Akhtar 1997;
Warner 2004, 2008). Under this employment system, Chinese employees seldom
completed their in-role behaviour and task performance. There were rarely discretionary
work efforts or organizational citizen behaviour, as competitive pressure and control
practices did not exist in firms (Su and Wright 2012). Chinese managers were only
involved in the administrative function and policy implementation under rigid policy
guidelines (Child 1994; Cooke 2003). Since 1978, the launch of the economic reforms has
brought about shifts in the institutional and organizational environments faced by
enterprises (Nolan 2003). China has seen a reduction of the number of state-owned
enterprise (SOE) and a rise of privately owned enterprises and foreign-invested enterprises
(FIEs). Meanwhile, a series of changes in law in the People’s Republic of China (for
example, Labour Law 1994, Labour Contact Law 2007 and New Bankruptcy Law 2007) have led to a fast-growing and floating labour force within a free but plural-level market
with different standards applied (Zhu 2005; Warner 2008). The establishment of a
nationwide insurance scheme means that costs are shared between three parties: the state,
the enterprise and the individual employee (Ding and Warner 2001).