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).