Numerous studies have demonstrated the existence of the country-of-origin effect and how this effect interacts with other factors in shaping multinational corporations’ (MNCs’) practices. However, there has been little investigation of different forms of country-of-origin effect, the mechanisms through which this effect occurs, or country-of-origin effect on MNCs from emerging markets. This study explores how country-of-origin effect manifests in Chinese MNCs’ preparation for managing host country labor relations, an important area of human resource management (HRM). Based on a study of 21 Chinese MNCs, we argue that country-of-origin effect in relation to Chinese MNCs mainly manifests in two implicit forms, including transfer of management ethos and competitive disadvantage generated from the home base, rather than in the form of direct practice transfer as commonly suggested in the current literature. The major mechanism through which country-of-origin effect plays out is the mind-set of managers, rather than formally established corporate control instruments. © 2014 Wiley Periodicals, Inc.