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China’s air pollution scaring away expat executives

Exits of top foreign managers amid health fears predicted to rise in future

Whitney Foard Small loved China and her job as a regional director of communications for a top automaker. But after air pollution led to several stays in hospital and finally a written warning from her doctor telling her she needed to leave the country, she packed up and moved to Thailand.

In doing so, the Ford Motor Co. executive became another expatriate to leave China because of its notoriously bad air. Other top executives whose careers would be boosted by a stint in the world’s second-largest economy and most populous consumer market are put off when considering the move.

Executive recruitment firms say it is becoming harder to attract top talent to China — both expats and Chinese nationals educated abroad. The European Chamber of Commerce in China says foreign managers leave for many different reasons, but that pollution is almost always cited as one of the factors — and is becoming a larger concern.

If the polluted skies continue, firms may have to fork out more for salaries or settle for less qualified candidates. Failure to attract the best talent to crucial roles could result in lost commercial opportunities and other missteps.

Poor air quality has also added to the existing complaints foreign companies have about operating in China. Even though the country’s commercial potential remains vast, groups representing foreign firms say doing business is getting tougher due to slowing though still robust economic growth, limits on market access and intellectual property theft.

China’s rapid economic development over the last three decades has lifted hundreds of millions out of poverty but also ravaged the environment as heavy industry burgeoned and car ownership became a badge of status for the newly affluent. Health risks from pollution of air, water and soil have become a source of discontent with Communist Party rule.

Foreigners regularly check the air quality readings put out by the U.S. Embassy and consulates on their Twitter feeds when deciding whether to go out for a run or let their children play outside.

The pollution has become even more of a hot topic since January, when the readings in Beijing went off the scale and beyond what is considered hazardous by the U.S. Environmental Protection Agency.

At the same time, China’s state media gave unprecedented coverage to the pollution following months of growing pressure from a Chinese middle class that has become more vocal about the quality of its air.

“January was probably the worst,” said Australian Andrew Moffatt, who worked in Beijing before the pollution pushed him to return to Brisbane in March with his wife and 5-year-old son. “Back in November I had been sick and then we went on holiday to the beach in Hainan, and it just reminded me of Australia and I just thought we could be breathing this quality air every single day rather than polluted air in Beijing.”

And it’s not only in the capital where the air pollution is driving expats away.

Ford transferred its regional headquarters from Bangkok to Shanghai in 2009. Four months after the move, Small had her first major asthma attack. “I had never had asthma in my life, never ever had asthma before China,” said Small, who quit the country in May last year.

Her asthma was exacerbated by an allergy to coal, which is the source of about 70 percent of China’s energy. In Shanghai, the problem resurfaced. “Three hospitalizations later, my doctor said it was time to call it quits,” she said.

Her frequent treatments — involving inhalers, steroids and a nebulizer in the mornings and evenings to get medication deep into her lungs — meant the medication became less effective. “I actually got a written warning from my pulmonary doctor and it said you need to reconsider for your life’s sake what you’re doing and so that was it. I didn’t really have a choice, my doctor made it for me,” she said.

Ivo Hahn, the CEO of the China office of executive search consultants Stanton Chase, said that in the last six months, air pollution has become an issue for candidates they approach. “It pops up increasingly that people say, ‘Well, we don’t want to move to Beijing’ or ‘I can’t convince my family to move to Beijing,’ ” he said.

Hahn thinks this trend will only strengthen over the next one or two years because the highest-level executives generally “are not working primarily for their survival.” Such employees, he said, “normally get a decent pay, they are generally reasonably well taken care of, so the quality of life actually does matter, particularly when they have children.”

Some, however, say that China has become too important economically for up-and-coming corporate executives to ignore. It generates a large and growing share of profits for global companies while still offering a vast untapped potential.

“It’s increasingly important for people who want to have careers as managers in multinational companies to have international experience, and as part of their career path and in terms of international experience, China is one of the most desirable places because of the size of the market and growth and dynamism of the market,” said Christian Murck, president of the American Chamber of Commerce in China.

Hahn said the effects of expats refusing to relocate to China aren’t going to be felt overnight, but eventually “either companies will have to pay a higher price overall because maybe candidates may have to commute, as an example, or they may lower their standards or they may offer the position to somebody who may actually not be quite as qualified.”

If the trend worsens, it would have some economic impact, said Alistair Thornton, senior China economist at IHS in Beijing.

“Expats contribute almost nothing to China’s growth because the numbers are just tiny, but intangibly they contribute quite a significant amount” by introducing foreign technology, best practices and Western management techniques “that Chinese companies are harnessing and using to drive growth,” said Thornton.

He is leaving Beijing in June, citing air pollution as one of the factors.

Long Live China’s Slowdown

At 7.7%, China’s annual GDP growth in the first quarter of this year was slower than many expected. While the data were hardly devastating relative to a consensus forecast of 8.2%, many (including me) expected a second consecutive quarterly rebound from the slowdown that appeared to have ended in the third quarter of 2012. China doubters around the world were quick to pounce on the number, expressing fears of a stall, or even a dreaded double dip.

But slower GDP growth is actually good for China, provided that it reflects the long-awaited structural transformation of the world’s most dynamic economy. The broad outlines of this transformation are well known – a shift from export- and investment-led growth to an economic structure that draws greater support from domestic private consumption. Less well known is that a rebalanced China should have a slower growth rate – the first hints of which may now be evident.

A rebalanced China can grow more slowly for one simple reason: By drawing increased support from services-led consumer demand, China’s new model will embrace a more labor-intensive growth recipe. The numbers seem to bear that out. China’s services sector requires about 35% more jobs per unit of GDP than do manufacturing and construction – the primary drivers of the old model.

That number has potentially huge implications, because it means that China could grow at an annual rate in the 7-8% range and still achieve its objectives with respect to employment and poverty reduction. China has struggled to attain these goals with anything less than 10% growth, because the old model was not generating enough jobs per unit of output. As Chinese manufacturing moved up the value chain, firms increasingly replaced workers with machines embodying the latest technologies. As a result, its economic model spawned a labor-saving, capital-intensive growth dynamic.

On one level, that made sense. Capital-labor substitution is at the heart of modern productivity strategies for manufacturing-based economies. But it left China in a deepening hole: increasingly deficient in jobs per unit of output, it needed more units of output to absorb its surplus labor. Ultimately, that became more of a problem than a solution. The old manufacturing model, which fueled an unprecedented 20-fold increase in per capita income relative to the early 1990’s, also sowed the seeds of excessive resource consumption and environmental degradation.

Services-led growth is, in many ways, the antidote to the “unstable, unbalanced, uncoordinated, and ultimately unsustainable” growth model that former Premier Wen Jiabao’s famously criticized in 2007. Yet services offer more than just a labor-intensive growth path. Compared to manufacturing, they have much smaller resource and carbon footprints. A services-led model provides China with an alternative, environmentally friendlier, and ultimately more sustainable economic structure.

It is premature, of course, to conclude that a services-led transformation to slower growth is now at hand. The latest data hint at such a possibility, with the tertiary sector (services) expanding at an 8.3% annual rate in the first quarter of this year – the third consecutive quarter of acceleration and a half-percentage point faster than the 7.8% first-quarter gain recorded by the secondary sector (manufacturing and construction). But it will take more than a few quarters of mildly encouraging data to validate such an important shift in the Chinese economy’s underlying structure.

Not surprisingly, China skeptics are putting a different spin on the latest growth numbers. Fears of a shadow-bank-induced credit bubble now top the worry list, reinforcing longstanding concerns that China may succumb to the dreaded “middle-income trap” – a sustained growth slowdown that has ensnared most high-growth emerging economies at the juncture that China has now reached.

China is hardly immune to such a possibility. But it is unlikely to occur if China can carry out the services-led pro-consumption rebalancing that remains the core strategic initiative of its current (12th) Five-Year Plan. Invariably, the middle-income trap afflicts those emerging economies that cling to early-stage development models for too long. For China, the risk will be highest if it sticks with the timeworn recipe of unbalanced manufacturing- and construction-led growth, which has created such serious sustainability problems.

If China fails to rebalance, weak external demand from a crisis-battered developed world will continue to hobble its export machine, forcing it to up the ante on a credit- and investment-led growth model – in effect, doubling down on resource-intensive and environmentally damaging growth. But I remain hopeful that China’s new leadership team will move quickly to implement its new model. There are no viable alternatives.

Financial markets, as well as growth-starved developed economies, are not thrilled with the natural rhythm of slower growth that a rebalanced Chinese economy is likely to experience. Resource industries – indeed, resource-based economies like Australia, Canada, Brazil, and Russia – have become addicted to China’s old strain of unsustainable hyper-growth. Yet China knows that it is time to break that dangerous habit.

The United States is likely to have a different problem with consumer-led growth in China. After all, higher private consumption implies an end to China’s surplus saving – and thus to the seemingly open-ended recycling of that surplus into dollar-based assets such as US Treasury bills. Who will then fund America’s budget deficit – and on what terms?
CommentsView/Create comment on this paragraphJust as China must embrace slower growth as a natural consequence of its rebalancing imperative, the rest of the world will need to figure out how to cope when it does.

Trading Places

With escalating labor and rental costs as well as manpower shortages on the mainland, ‘relocation’ has become the new buzzword for HK factory owners. Sophie He talks to them about their experiences.

Around 25 years ago, many Hong Kong factory owners, including Willy Lin Sun-mo, managing director of Milo’s Knitwear (International) Ltd, moved their manufacturing facilities from Hong Kong to Guangdong province on the mainland to take advantage of cheap labor and low rental costs.

At that time, a worker’s wage was as little as 8 yuan per day. Currently, wages at Lin’s Dongguan factory have risen beyond 60 yuan per day – almost more than seven times what they used to be.

Today’s mainland factories, especially those located in the Pearl River Delta, find it hard to recruit enough workers.The trend started with millions heading home annually for Chinese New Year holidays, only for large numbers to refuse to return to work. The workers preferred to stay at home for lesser-paid jobs and be nearer their loved ones and families, enhancing the jobless situation in many cities – a phenomenon that has become increasingly common these days.

As many factories in Guangdong face the triple challenges of rising labor costs, labor shortages and strong increases in rental, many factory owners, including Lin, turned to relocation or investments in factories on the mainland’s hinterland, or even transplanting to neighboring countries as a solution to their problems. By moving factories to where labor was both adequate and cheap, owners expected to offset their challenges and be rewarded with bigger profit margins. And while some have benefited from such moves, others have not.

Lin told China Daily that Milo’s Knitwear, whose Dongguan factory was established over 20 years ago, faced labor shortages several years ago, a problem shared by many such plants. As most of his workers in the Dongguan facility are from Jiangxi province, Lin invested more than 30 million yuan to set up a plant in Jiangxi four years ago, while answering the central government’s call to companies to invest in the central and western area of the country. But he simultaneously invested in automation at his Dongguan factory, replacing semi-automatic machinery with its fully automatic equivalent.

When the Jiangxi factory went operational, Lin planned to recruit as many as 2,000 workers. But despite four years of production, the factory has only hired 300 workers, Lin says, explaining that few young people who lived in the area also wanted to work near their hometown.

“Most of the young people (who are born in smaller cities) on the mainland wanted to experience life in big cities, and thanks to a well-developed transportation system in the country, they can work in big cities and return to their family overnight,” Lin says.

For those who choose to work near their family and loved ones, factory owners found these workers are easily distracted by domestic chores.

“The workers (in the Jiangxi factory) never want to work overtime, as they want to go home, prepare dinner, or take care of their children,” Lin points out, adding that such distractions from home means the Jiangxi workers are not as efficient as their Dongguan counterparts.

The Jiangxi factory still hasn’t broken even after four years. However, Lin has no intention of giving it up, as Jiangxi labor costs are still lower than those of Dongguan, and the local government is supportive.

So Lin improvised change. “Recently, it crossed my mind that since Jiangxi workers are having such a hard time adapting to our business model, maybe we should change our business model to adapt to them,” he says.

Lin says that instead of producing entire garments in the Jiangxi factory, his company decided to produce only part of the garments there, thus making it easier for workers; meanwhile, the company can also lower its requirements to adapt to their production habits.

Relocation outside the mainland

Another company Top Form International, a Hong Kong-listed brassiere manufacturer, has two production plants; one in Foshan, Guangdong province, and the other in Jiangxi province. Both were established 30 years ago to manufacture lingerie for export to the United States and Europe. The two factories have a combined labor force of some 4,300 workers.

Top Form used to have a third factory in Shenzhen, but it closed down last year, as workers’ monthly wages doubled from 2,000 yuan five years ago, to more than 4,000 yuan today. Difficulty recruiting sufficient numbers of workers was another reason for the plant’s closure.

Four years ago, the company decided to close down the Shenzhen factory as part of a “strategic shift” to reduce capacity in high-cost areas and increase capacity outside the mainland where costs were lower.

According to Top Form chairman Willie Fung Wai-yiu, producing brassieres requires numerous manual procedures, so the company is heavily dependent on workers and is highly sensitive to workers’ wage fluctuations.

Top Form then set up a factory in Thailand where it has since doubled the number of workers to 4,000 as of 2011. The company also established a factory in Cambodia in early 2012 and hopes to staff it with 2,000 workers. Average production costs in Thailand and Cambodia are 15 percent lower than on the mainland. The company expects to have two thirds of its total production capacity outside the mainland eventually, up from the current 47 percent.

But the relocation of Top Form’s factory to Cambodia brought trouble from the outset.

Fung says that by September 2012, the factory had up to 700 workers, but then out of the blue, they downed tools and went on strike.

Illegal strike

“The strike was illegal.We had to take the workers to court, and the final ruling was in the company’s favor, but by that time we had already paid dearly for the incident,” Fung explains, adding that the strike action saw the company close its factory for weeks and release the majority of the workers.

Top Form’s Cambodia factory is already back into full swing and currently has around 300 workers. But the incident forced Fung to do some serious thinking. As a result, he wants to share what he has learned from the relocation initiative with factory owners who may also want to expand their manufacture into Southeast Asian countries.

In retrospect, Fung says it is far better to train a local management team in the country the factory is relocated to, than to introduce a new management team from Hong Kong or the mainland to the country. “As it is hard to keep a non-local manager away from his family for many years, it is better to train a local manager who will ensure smoother operations,” he says.

It takes a smart firm to keep smart people

It’s good to bring in staff from overseas, but that is only half the job

Since China joined the World Trade Organization in 2001, a great number of its state-owned enterprises have developed businesses overseas. An increasing number of SOEs are also conducting international commerce with other countries. Both trends show us that the need for excellent international talent has become inevitable for SOEs. But the fierce competition among all kinds of companies in the knowledge-based economy has led to an urgent lack of foreign talent in SOEs over the years.

There is no doubt that it is critical for companies to take care of their foreign talent, especially high-end management talent and multitalented expats. From human resource management to human resource development, to retain foreign talent can be presented in every detail. But it is difficult to say whether SOEs have done a good job in retaining foreign talent.

To begin with, I would like to talk about the process of adaptation by foreign talent to the Chinese working environment. SOEs should always bear in mind that foreign employees may not stay at the company till the end of their contract.

If an SOE really wants a foreign talent to stay in the company for a long time, it really needs to take action. For instance, in order to help skilled foreigners get used to the environment quickly, a mentor from the company can be arranged to help the foreign employee with life and work issues. SOEs can also plan team-building activities to encourage them to communicate with local employees. Moreover, SOEs can organize training sessions for new employees so that they can get familiar with the company within a short time.

Another important issue is that fairness, transparency and efficiency in performance appraisals should be improved so skilled foreigners can receive objective feedback about their work. A fair performance appraisal plays an important role in the development of one’s career. Foreign employees enjoy positive recognition from their company, while negative feedback may stimulate them to work harder.

It is also very important for a foreign talent to see an SOE’s real action. To be specific, if a foreign talent performs very well, he or she expects to see a salary increase that matches what is noted in the performance appraisal.

Developing a better incentive system is also a positive action to take for SOEs.

What needs to be addressed is that both psychological and material incentives should be considered. The psychological incentive refers to an encouraging environment for foreign talent. Positive comment and feedback from management can infuse foreign talent with confidence, which can also develop into work motivation.

As for material incentives, I think SOEs should come up with some smart ones. By saying smart, I mean incentives that are tailored to foreign talent. Take housing subsidies. For foreign employees, a housing subsidy is not really practical. The majority of foreign employees in China rent houses rather than buy them. Instead of paying for the housing subsidy, SOEs could choose to pay for Chinese language courses if they are going to stay in China for a long time.

Another issue is with Chinese medical insurance. The Chinese medical insurance only covers expenditure in Chinese hospitals, but it is difficult for most foreign employees to talk with doctors or nurses in the local language. SOEs should consider foreign hospitals or clinics as options.

Lastly, taking care of the family of a foreign employee is also a good way keeping them. Foreign employees, being in another country, are unable to spend time with their families. Arranging a trip for the family of the foreign employee may be a great idea.

There are still a lot of challenges for SOEs. Attracting and retaining international talent is certainly not an easy task, but it would be helpful for SOEs to solve the issue of retaining talent by considering the suggestions set out here.

The author is CEO & founder of RMG Selection, an Asia-focused human resources and recruitment consultancy.

Secrets of the headhunters

The refined techniques of recruitment firms are in demand

An increasing number of Chinese companies are turning to international headhunters for high-quality overseas professionals, as they do not have the extended professional connections needed to find such talent.

Zhang Ruguo, the HR manager of the Beijing-based New Oriental Education Group, says that most of the recruitment is directly done by the company, save for some high-level management positions.

“Since we do not have the right connections, we have to ask for help from overseas headhunters.

“They (overseas headhunters) have a rich database and human capital resources. By going through them, we can save a lot of time and energy, and also be sure that the talent we procure is suited for our requirements,” Zhang says.

International headhunting companies had very few Chinese clients when they first entered the Chinese market some 15 years ago, but in the past few years there has been a sea change, says James Darlington, head of Asia at Antal International, a global HR consultancy.

“When we first entered the Chinese market in 1998, 90 percent of our clients were multinational companies. But today more than half of our clients are local companies,” he says.

Robert Parkinson, founder and CEO of RMG Selection, a Beijing-based recruitment consultancy, says that five years ago his company had hardly any Chinese companies as clients. But now they account for more than 20 percent of the clientele. The company plans to set up a new office in Tianjin this year to handle the workload from Chinese companies, he says.

Parkinson says the main reason why Chinese companies are looking for overseas talent is the fact that the economy is gradually changing. About 15 years ago, China was the manufacturing center of the world with the lowest prices, but now it has changed to a place where more value is added to products.

Moreover, with China emerging as one of the most dominant and resilient players in the global economy after recent financial troubles, and more Chinese companies striving to compete with multinational firms, the need for overseas talent has skyrocketed.

“If you look at what work the law firms do, you will find a lot of their work is not inbound, but outbound investment, to help Chinese companies expand overseas. That’s a huge driver,” Parkinson says.

There are large demands in two areas: one for the government-backed talent programs, which typically look for top-notch and academically qualified candidates in technology-based areas, says John Benson, CEO of Silu.com, a Chinese career site that focuses on connecting overseas professionals with Chinese companies.

The second is a more across-the-board demand for skillsets that the China talent pool cannot provide, such as professionals with experience in operating in Western cultures, especially from Chinese companies looking to expand abroad, he says.

When searching for high-level talent for Chinese companies, headhunters go through the same process as when they work for other international companies. But the situation varies from case to case, says Ed Zheng, senior client partner of Korn/Ferry International, a global executive search firm. More than 40 percent of its clients in China are local companies, with state-owned enterprises accounting for 50 percent of the total.

“The first thing that we do is to communicate with our client, so that we can understand not only what’s on the job description, but also the company’s business strategy, its growth target, structure and culture,” Zheng says. “Our first job is to help the Chinese companies figure out their specific requirements for talent.”

Following this, the company will start to look for candidates overseas. Zheng says that for high-level positions, candidates’ personalities and leadership competence probably play an equal, if not bigger, part in their career successes compared with specialized skills.

“We often spend a lot of time in assessing the potential candidate’s personalities. Usually in our recommendations about them to companies, only 40 percent are about the candidates’ professional skills, while 60 percent is about their personalities and leadership competence,” he says.

Approaching candidates is not an easy task, and it is important for headhunters to be aware of the true value of joining a Chinese company from the candidate perspective before doing so, Parkinson of RMG says.

“About 99 percent of candidates that we approach at first will be passive candidates who are not looking for changes or new experiences,” Parkinson says.

“Therefore you cannot have people with one year’s working experience calling someone with 25 years’ experience to have a conversation on career development, as they cannot engage at the same level. Engaging with them is knowing them in a deep way.”

When the candidates show interest, headhunters often arrange interviews, to see if there is something they would like to change about the current positions, and the contract-related aspects. After the candidates join the company, headhunters will help them with integrating in the first few months. In most of cases, the recruitment fees can be high and more than one third of the candidates’ yearly salary, Parkinson says.

However, even after careful matching, retention of acquired talent is a challenge for many Chinese companies. More than half of the high-level talent leave their positions in Chinese companies after one year, largely due to cultural differences, Zheng says.

“Most of the Chinese companies consider talent as an acquired skill and not as acquiring a talent,” he says. “Take a legal director in a Western company as an example. From a Western perspective what makes him tick, besides professional skills, are factors such as pets and hobbies. But in most Chinese companies, the only thing that matters is that he is an expert in legal issues.”

Zheng says the good thing about the process is that the appropriate person can be found, and skills can readily applied.
“However, ignorance about a talent’s cultural values, personalities and career aspirations will lose their loyalty. When a talent has been abstracted to a skill, and a higher-paid job has been offered, they will leave right away,” he says.
Moreover, enterprise culture in Western companies and Chinese companies are quite different. In Western companies, employees’ rights and obligations are set down in a contract and the boss is more likely to be open about it, whereas in Chinese companies, personal networks and relationships are more important, and the boss is more likely to give orders than to listen.

He adds that while retaining talent, money is usually not the prime motivator. Instead, it is more about people who have a real interest in the culture and history of China, and those who are ambitious and capable of seizing the available opportunities.

Claire Yang, managing director of the consultancy Accenture Greater China, and an expert on talent and organization performance, says overseas talent should accept that things operate in different ways in different cultures and be more positive in communicating with Chinese bosses and make changes.

Even though the number of companies using headhunters is increasing, it is still small compared with the whole market, Parkinson says.

“Chinese companies are less familiar with headhunting services. In Chinese culture, people pay more attention to their own network and relationships; they come to us only when people simply cannot be found by other channels,” he says.

It will take another five or 10 years for Chinese people to start using headhunting companies for outsourcing professionals, he says.

Contact the writers at chenyingqun@chinadaily.com.cn and huhaiyan@chinadaily.com.cn

Theater firms scramble for managers

Rapid expansion has left the industry short of qualified professionals, Huang Ying reports.

The rapid expansion of movie theaters in China has boosted box office revenues as well as spurred a huge demand for theater management specialists.

The boom began in 2010, when box office receipts exceeded 10 billion yuan ($1.61 billion) for the first time. The number of theaters surged from 2,000 in 2010 to 2,800 in 2011, up 40 percent year-on-year, according to statistics from EntGroup Consulting, a Beijing-based entertainment industry consultancy. The rapid increase in the number of theaters resulted in a shortage of qualified managers.

“During rapid economic development, the availability of human resources tends to lag behind industry growth,” said Han Jian, associate professor of human resource management at China Europe International Business School.

A qualified manager must understand all aspects of running a theater, including operations, marketing, finance and screening, which is why it takes a considerable amount of time and effort to develop such skills, Han said.

Liu Cuiping, research manager at the Beijing-based entertainment consultancy EntGroup Consulting, said, “Nowadays, most movie theater managers are sourced from other sectors, such as hotel management, business administration and finance.”

For example, Xu Qiong, general manager of Bingo Cinema in Hangzhou, Zhejiang province, said that she entered the industry after leaving her managerial position at Procter & Gamble Co.

The shortage of qualified candidates has left theaters fighting for recruits.

Li Hui, assistant general manager of Omnijoi International Cinema in Xi’an, Shaanxi province, said: “I receive many calls inviting me to join other theaters. It’s not unusual in our line of work.”

Li began working in theaters in 2005 and has held different positions, such as waitress, ticket clerk and snack saleswoman.

Wang Guangmin, director of human resources and administration at Beijing Megabox Zhongguan Cineplex Co, which owns and operates two theaters in the city, said, “Qualified theater management candidates have a wide range of options when seeking job offers.”

The competition for managers has led to a high turnover rate.

Some candidates seek higher positions and higher pay, but once they are hired, sometimes their skills are insufficient for their added responsibilities, said Li Yunling, training director of operations at a theater owned by Hainan Airlines Co Ltd.

“Those people just use their previous work experience as a bargaining chip for higher positions and better pay,” Li added.

Liu from EntGroup said the turnover rate in the theater business is high because of strong market demand yet low wages, especially in second- and third-tier cities.

Some managers leave for other theaters, while some leave the industry entirely, Liu said.

Yin Gang, president of Cine Asia (Shanghai) Ltd, a theater solutions and services consultancy, said, “Competition for competent theater managers results in higher operation costs, which is undoubtedly detrimental.”

In the movie industry, theaters have more clout than film production and distribution companies, said Cai Ling, a cultural industry researcher with CIC Industry Research Center, a Shenzhen-based consultancy. The high managerial turnover rate in the sector will have a negative influence on the industry’s development, he added.

In order to retain the managers they already have and to keep qualified candidates waiting in the wings, theaters have come up with different strategies.

Some train their employees as potential theater managers in advance, so as to fill vacancies in newly opened outlets or to respond immediately to unexpected turnovers, Liu said.

“We try not to recruit managers from outside our company. We prefer to maximize the potential of our own employees through proper training,” Wang from Beijing Megabox said.

Lu Yi, business manager of Shanghai-based Century Universal Film Network Development Co Ltd, which operates 20 theaters across Shanghai, Beijing and Jiangsu province, said: “Although our company is not big, our turnover rate is small. Most of our theater managers have witnessed the development of the company and have become emotionally attached to it.”

Yin from Cine Asia said, “The fundamental solution to the shortage is education, but currently, only a few Chinese universities and colleges offer theater management as a field of study.”

Beijing Film Academy began offering courses in theater management in 2010 in response to the widening gap between supply and demand.

“As far as I know, it is the only example of theater management studies at the university level in China,” Liu from Entgroup said.

The number of movie theaters increased to 3,680 by the end of 2012 from a year earlier, up 31.4 percent year-on-year, according to statistics from EntGroup.

National box office revenues reached 17.07 billion yuan last year, registering a year-on-year growth of 30.18 percent. Ticket sales from 25 theater chains exceeded 100 million yuan, of which six generated sales worth more than 1 billion yuan each, according to the State Administration of Radio, Film and Television.

Fight for the right sort of talent

As a human resources manager, when is the last time you talked to the leader of your company’s sales department?

Chong Ng, Greater China managing director of talent recruitment solutions provider FutureStep, is often disappointed with the answer he receives.

One of the techniques his company uses is to set up a one-day workshop and make sure all the client company’s business leaders – all its China-based CEOs, board of directors and senior HR leaders – are in the workshop.

Ng then asks them about their business strategy for the year, and the talents they need to implement it. His team will make sure they work together to come up with strategy for the year ahead.

“You’ll be surprised how often this does not happen (in their own boardroom),” Ng said.

“Most often, a sales manager picks up the phone, calls the HR manager and says, ‘I want to fill the position immediately, or we want to find a sales manager immediately’.”

FutureStep calls this a “reactive” recruitment approach, one that leads to employers failing in the increasingly competitive talent market.

“China’s talent market, especially in the high end, is becoming more and more competitive,” Ng said. “Employees now have a lot of options. They can work for big US multinationals, big European multinationals or big Chinese companies. How can your company stand out in the market?”

According to Ng, to be strategic, employers have to have a very good workforce plan. Every business plan – from opening a research and development center to increasing sales by 20 percent – should be followed by a workforce plan. As business plans change, the workforce plan should also be flexible and change accordingly.

Ng compared this process to marketing strategies used by consumer goods companies. You have to know your target candidates’ genuine needs and try to fit your company’s features to their appetites.

Generally, potential employees want to know the company’s culture, salaries and development prospects. The HR department should give them this information, in addition to other information that may suit them, such as certain traits about the company that match prospective employee’s interests and likes.

Be attractive

These days, large Chinese companies, especially State-owned enterprises, are increasingly popular among China’s young job seekers. In its annual list of the 50 best employers in China, recruitment website Chinahr.com listed 18 foreign companies. Chinese companies, most of which were SOEs, took up the rest of the list.

So what can foreign companies do in China to improve their popularity?

Ng said foreign companies should clearly demonstrate their commitment to China. This commitment can be shown by opening research and development or product development centers in China.

“It shows that they are not coming to China just to sell their products. They are also developing their products for China and for the world,” Ng said. “When candidates see this, they will feel reassured.”

Ng said it is also important for foreign companies to create a stable leadership. In the past, some multinationals’ China branches saw a leadership reshuffle every six to 12 months. The frequent changes give employees a sense of instability.

In addition, foreign employers have to make sure growth and development opportunities are available to their local employees, he said. This commitment can be shown by making leadership as diverse as possible to break the perception of “glass ceilings”.

Most-wanted talents

Upon being asked about the most-wanted professionals in 2013, Ng said he would rather talk about function than specific industries.

“In fact, except for a few technical people, talent requirements are more or less the same across various sectors,” he said.

“For example, all companies need salesmen. Actually, the need for sales managers is rising strongly in 2013.”

As markets in first-tier cities are becoming mature and saturated, multinationals have a robust demand for salespeople with a full knowledge of markets in second- and third-tier cities.

In this regard, multinationals have to put in much more effort to fostering their employers’ brands in these cities and identifying the talent pools there, because local companies have an advantage in finding local talents, Ng said.

And as the Chinese market is departing from its previous linear growth pattern, corporations operating in China need a new type of leadership, which Ng described as “a shift from operation-oriented toward growth-oriented”.

“The good old days are gone. Now not only do you need to run a business, you need also to fight a business,” Ng said. “This means leaders should run a factory, but also find business to keep the factory running.”

However, Ng said one of the most common mistakes foreign companies make is they expect the local talents they hire to be productive in a very short time, but it does not work that way.

“A lot of multinationals have a mixed organization. You get one boss in Singapore and the other in New York. So you have to be able to work on a global basis. Decision-making there is very different from local companies, so it takes time for new hires to adjust to that environment,” Ng said.

Foreign companies should also provide local talents with the resources to be productive, he added. “You can’t just send a manager to the office in Beijing and say ‘good luck’, with no backing resources, no coaching and training.”

Throughout the interview, Ng stressed that the qualified talent pool in China is “not very big”. To get them, foreign companies should prepare for a fight.

“In 2013, the war for talent, once ferocious, will become more subtle and focused. Businesses will not hire the volume of talent they once did, but against the current economic backdrop and the drive for growth, they will be focused on hiring critical talent,” Ng said.

Expats prefer Beijing, Shanghai

The living environment has become a growing concern for expatriates working in Shanghai and Beijing, although the two cities topped a list of the most attractive Chinese cities for expats, a new study found.

The survey — 2012 Amazing China, conducted between September and December by International Talent, a magazine under the State Administration of Foreign Experts Affairs — gauged views of 175,400 expats working in China about their favorite Chinese cities.

Among those expats, 1,050 were surveyed about their opinions on the policy, administration, and working and living environments of their cities.

Shanghai and Beijing were topped the list, followed by Shenzhen, Suzhou, Kunming, Hangzhou, Nanjing, Tianjin, Xiamen and Qingdao.

In Shanghai and Beijing, their living-environment scores were lower than those of other cities, said Zhang Xiao, who was in charge of the survey.

Cities such as Suzhou, Kunming and Hangzhou received comparatively high scores in living environment, and that helped boost their rankings, she said.

Despite topping the chart for three years, Beijing and Shanghai underperformed this time in living environment as foreigners living in these two cities have complained about the worsening air pollution, according to the survey.

The smog-shrouded sky over Beijing is discouraging expats from staying longer and scaring away others who would otherwise love to visit, work, and live in the city, the study showed.

“Recruitment has become difficult as the number of foreigners who are applying for teaching positions in Beijing has decreased by at least half compared with the same time last year,” said Yang Sha, general manager with Angelina International Placement Service in Beijing, which specializes in hiring foreigners to teach languages in schools in China.

“Air quality is absolutely the main reason,” he said.

All four foreign staff members in Yang’s company left Beijing this year because of the smog.

One left for the southern city of Xiamen, Fujian province, and the others went back to their home countries, Yang said.

Nestle to invest more in health food sector

Nestle SA, the world’s largest food company by revenue, said on Monday that it will boost its investments in China’s health food sector.

“Nestle will bring more products which target Chinese kids, the senior, pregnant women and (products) for critical care,” said Luis Cantarell, president and CEO of Nestle Health Science SA.

The Chinese health food market was worth 105 billion yuan ($16.87 billion) in 2011, with an annual increase of 11.4 percent since 2006, said the State Food and Drug Administration.

According to the Beijing-based S&P Consulting, China’s per capita spending on health food is $31 per year, which accounted for 0.07 percent of consumers’ total annual consumption. By contrast, the figure in the United States and in the European Union is about 2 percent.

Seyfarth Shaw Opens Office in Shanghai

Chicago-based labor and employment law firm Seyfarth Shaw announced on Wednesday their launch of a new office in Shanghai, China. The law firm intends the Shanghai office to function as a work hub covering the entire of Asia. The office in Shanghai will be managed and led by Wan Li from DLA Piper, who is one of the most high-profile China practitioners. The Shanghai office is Seyfarth Shaw’s second office outside the USA. The other one is in London.

J. Stephen Poor, the chairman and managing partner of Seyfarth said, “Opening our Shanghai office is part of aligning our international services with the needs of our clients … In speaking with our clients during the last 12 months, there has been overwhelming feedback for us to open an office in Shanghai to support our clients in some of our core practice areas. We are delighted to open the Shanghai office to help us better serve our clients in China.”

Darren Gardner, the chair of Seyfarth’s International Practice said, “It is an exciting development for us to open our office in Shanghai. This is an important next step in the evolution of our international service model, following the very successful opening of our London office in 2011.”

Speaking on the recruitment of Wan Li, Gardner said, “We are very pleased to welcome Wan Li to the firm. He is an experienced and highly-respected member of the Chinese legal community who we have known and worked closely with for mutual clients over a long period of time. We are very much looking forward to building out our team around him, especially in the employment and corporate practice areas.”

The new office of Seyfarth Shaw will be in Shanghai’s “Jing An” business district and located in the Jing An Kerry Centre Tower II.