U.S. staffing companies in China see chance for profits
NEW YORK, Aug 27 (Reuters) – China may have plenty of man power, but it could also use some help from Manpower.
U.S. staffing company, Manpower Inc. , is one of a number of business recruiters putting emphasis on the world’s most populous country, where a rapidly developing economy is driving the demand for engineers, finance professionals and technology specialists.
China’s growth rates of about 10 percent per year, which already makes it the world’s No. 4 economy, pushes companies to develop leaders at a faster pace than most other countries.
A McKinsey & Co. study estimates that, within five years, China will need 75,000 executives who have either Western technical skills or language ability — ideally, both. Only about 5,000 are in the work force now.
“The challenge is not in finding 500 or 1,000 people to man the factory. The challenge is in finding leadership skills and functional management skills,” said Iain Herbertson, president of Asia-Pacific for Manpower, which has 350 consultants in 11 Chinese cities. About half its contracts are for information technology workers.
For now, the numbers are relatively modest. Of Manpower’s $4.4 billion in second-quarter revenue, the “other” segment — which includes China, Japan and Australia, as well as Mexico — reported sales of $577 million. Its operating profit of $15 million was about 9 percent of Manpower’s quarterly total. ADVERTISEMENT
But the segment is among the company’s fastest growing. Within three to five years, Manpower will have a staff of 1,000 to 1,600 in mainland China.
New rules this month allowed foreign companies to own a controlling stake in their local joint ventures if they set up shop in Pudong, the fast-growing financial center in Shanghai.
The move is part of a broader relaxation of rules, which should help draw more companies to China, and will enable Manpower to expand its range of services, Herbertson said.
“Our business is more than doubling every year,” Herbertson said in a telephone interview from Shanghai.
Monster Worldwide , which this year raised its stake in ChinaHR.com to 45 percent, may take majority control of the venture by 2008, though the unit is currently losing about $2 million per quarter.
“We don’t expect it to be (profitable) because we are at the beginning of the beginning,” said Marcel Legrand, Monster’s senior vice president of strategy and corporate development. “Profit is not of great interest to us in that particular market — it’s about an investment.”
ChinaHR has about 600 staff and 4 million resumes on file, but those numbers will grow as more Chinese go online, Legrand said.
Monster, parent of the world’s largest recruitment Web site, followed customers like Procter & Gamble , L’Oreal , and Hewlett-Packard to China, which fits with a goal for international operations to account for more than half of its revenue by next year.
That global expertise, including serving multinationals in other markets, is what differentiates companies like Manpower and Monster from their smaller competitors.
“We can bring to China the best of what happens in Brazil, or what happens in Korea, and they can help us export their best practices,” Legrand said.
This week, Monster hired a former Nike Inc. executive, Tony Balfour, to head its Asia-Pacific operations.
He will have competition.
Rival job site Careerbuilder.com on Wednesday said it was entering the Chinese market in an exclusive deal with human resources company 51job Inc. , to link to each others’ sites and sell job postings and access to their resume databases.
At executive recruiter Heidrick & Struggles International Inc. , Asia-Pacific operations had faster revenue growth and highest profit margins than either the United States or Europe. The region accounts for 10 percent of total company sales, and China about a fifth of that.
Since rules are different depending on the services offered, Heidrick owns 90 percent of its Chinese joint venture, said Kevin Kelly, who heads Heidrick’s European and Asian operations, adding that consumer goods, technology and industrial companies are its main clients.
Financial companies, including investment banks, will need experienced staff starting in 2008, when new rules take effect under China’s commitment to the World Trade Organization.
Heidrick’s China operations are expected to double within three years, and the company is recruiting Chinese-speakers in the United States and Europe for positions there, Kelly said.
“European and U.S. markets are more mature, so everyone sees China’s huge potential for developing or expanding their businesses,” Kelly said.