Category Candidates & Labor market

China’s College Graduate Glut

With China’s economy still at high speed and corporate profits and wages on the upswing, this should be a golden time to be a newly minted university graduate. After all, multinational corporations have been complaining that they can’t find enough qualified people to hire. Factories along the coastal regions have been hit by a shortage of migrant workers.

But guess what? For college seniors graduating this spring, finding a job has been a real struggle. There are simply too many of them to absorb even for a growing economy like China. Just ask Yang Hanning, who will be graduating with a degree in computer science from Tianjin University of Commerce in July. He has sent out dozens of r sum s and been called back for an interview for fewer than 10 companies. He has yet to receive a job offer.

“All of the jobs I’ve applied for are looking for people with experience. They give us recent graduates the cold shoulder,” Yang, 23, laments. In fact only three out of his 22 classmates in the computer science department have received job offers so far, and none of the jobs has anything to do with their major.

Cutthroat Job Market
In 1977, the first year that Chinese university enrollment resumed after the trauma of the Cultural Revolution, only 4.7% of applicants, or 270,000 students, were accepted into college; a carefully managed trickle. And those lucky kids generally coasted into a stable job in a government ministry or state-owned enterprise. It was the fabled era of the “iron rice bowl” in which college grads received subsidized housing and rock-solid job security.

China’s evolution since then into a more market-driven economy has also meant a far more cutthroat job market. This spring, 4.95 million seniors will graduate from colleges across China, nearly five times as many college graduates than China produced seven years ago.

“There are a lot of people in China. Everybody has a college degree and they’re all competing for that one opening,” said Liu Chao, 21, who will be graduating in July with a degree in computer science from Beijing Information Technology College. The joke floating around college Internet chat rooms is that college students nowadays are like cabbages: There’s an abundant supply of them and their price never goes up. A Man A Woman

A Man A Woman

Flood of Unemployed
The reason universities are churning out record numbers of graduates every year is rooted in the Chinese government’s decision to expand university enrollment starting in 1999. With the Chinese economy slowing during the Asian financial crisis,Asian Development Bank economist Tang Min in 1998 proposed expanding university enrollment to boost domestic consumption. China was closing down state-owned enterprises and laying off millions of workers at the time, so it seemed like a good idea to send some of the 3 million high school graduates in 1999 to college and delay their entry into the job market.

Today it is unclear exactly how many recent college graduates are unable to find a job. Since 2001, the official figures from the Ministry of Labor and Social Security [MOLSS] claim that roughly 30% of college seniors have not signed an employment contract by the time they receive their diplomas in July, which is a typical number for the U.S. and other developed nations. In China, however, that would mean nearly 1.5 million recent graduates will be flooding the job market this summer.

“The MOLSS tabulates the unemployment figures for blue collar workers and doesn’t really care about white collar unemployment. College graduates are white collar. The MOLSS doesn’t know how many of them are unemployed and doesn’t care,” said Yao Yuqun, professor at Renmin University’s School of Labor Relations and Human Resources. He added that unemployed college graduates are not counted in China’s official 4.1% unemployment rate.

Spoiled Only Children?
However there is anecdotal evidence to suggest that it is a growing problem that has attracted the government’s attention. Last November, a graduate student from the prestigious Tsinghua University committed suicide because he was unable to find work. Starting last year, college graduates who have been unable to find work by Sept. 1 have been allowed to register as unemployed with their local government offices and receive unemployment benefits.

Older Chinese complain that the current crop of college graduates born in the 1980s under the one-child policy have been coddled by their parents. Unlike their parents who dutifully went to work wherever the state assigned them, this generation of Chinese are pickier about where they live and where they work.

“Some college graduates will only work if they find a good job. If it’s a regular job, they won’t do it,” noted Sun Baohong, head of the Shanghai Academy of Social Sciences’ Institute of Adolescents.

Please Stay Home
College graduates expect to land nice white collar jobs after graduation. The reality is that China’s economic growth is still largely driven by factories needing cheap, low-skilled workers churning out products for export. Hence, chief executives complain that they receive a mountain of r sum s for administrative positions but are having a hard time filling openings on the plant floor.

Most college graduates have also shunned the countryside and flocked to China’s major metropolitan areas, such as Beijing, Shanghai, and Shenzhen, to find jobs. The government has been trying to entice college graduates to spend a year or two working in rural areas after graduation by giving them bonus points if they apply to graduate school later. But young Chinese say that one reason they prefer to go to major cities to find work is because they feel the playing field is more level there, unlike in the countryside where “guanxi” or connections are needed to find jobs.

Companies say that China’s educational system, which stresses rote memorization, turns out college graduates who can perform repetitive tasks efficiently but cannot think “out of the box” to attack problems creatively. Often college graduates simply can’t do jobs they are hired for without further post-graduate training.

Experience Worth the Price
A European startup working on applying artificial intelligence to business cases moved its research and development operations to Beijing last year to take advantage of the cheap cost of Chinese software programmers and found this out the hard way. It originally posted job advertisements on the Internet and hired seven recent college graduates only to discover that some of the programmers were unable to write simple computer programs.

In February the company decided to start over from scratch. This time it hired a headhunter to find programmers with 5 to 10 years of experience. Even though it costs up to 10 times more to hire experienced programmers, as opposed to hiring fresh college graduates, the decision turned out to be worth it. “Of course the salary is different but you don’t have redo their work and the work is higher quality. They would probably be actually cheaper than hiring fresh college graduates,” said Nicolas Piguet, co-founder and R&D manager of the startup.

To be sure, many recent college graduates are aware of their shortcomings. They cite training and room for career advancement as one of the main factors when choosing where to work. “A lot of companies neglect career training. I don’t get the feeling that I would learn a lot at these companies,” said Jia Zhanjie, 24, who will be graduating with a degree in chemistry from Beijing Normal University. Even though he already has a job offer, he was still trolling job fairs on the weekends to see if he could find something better.

Limiting Number of Students
Not surprisingly, more and more college students are going to graduate school before entering the workforce. “After I return with my master’s degree, it’ll be easier to find work,” said Luo Binhan, 23, who graduated with a degree in insurance from Wuhan University in 2005 and has taken the past year off to apply to graduate school overseas. However in the last couple of years Chinese students with graduate degrees have also found it harder to find work.

The Chinese government has started to take steps to improve the quality of education. The central government will invest 10 billion yuan [$1.3 billion] between 2006 to 2010 in vocational and technical schools to create more skilled workers. With factories facing shortages of skilled laborers, 95.6% of vocational school graduates had a job offer by the time they graduated last year.

Last year, the Ministry of Education also began to limit the number of incoming freshmen universities could accept to no more than 5% more than the year before. The rapid expansion of college enrollment had led to a shortage of qualified professors, leading to a drop in the standards. Renmin University’s Professor Yao said, “A lot of people have been complaining to the Ministry of Education that their children can’t find jobs. Expanding university enrollment has lost its attractiveness.”

China’s new weapon: Low executive pay

BEIJING–Will globalization someday stick it to the man?

Excessive executive pay has been a hot-button issue in American politics for years, but worldwide factors could one day make it a liability on the balance sheet.

As companies in countries like China and India move away from performing behind-the-scenes functions, they’re selling products and services under their own brand names directly against U.S. and European counterparts.

Since high-level executives and other white collar professionals in Asian companies typically make less than their Western equivalents, these companies potentially will have a cost advantage.

How or even whether the differences in executive salary will impact the market remains unclear: multinational companies are hiring their own executives in these regions, too, after all. Nonetheless, the numbers are tough to ignore: engineers aren’t the only “talent” that costs less in developing markets. Executives cost a lot less, too.

Shanghai’s SunTech Holdings, for instance, has moved from being a bit player in solar panels to becoming one of the largest manufacturers in the world. Most of the company’s panels end up overseas, and it can produce those panels more cheaply than American competitors for various reasons. Among them: the company isn’t lavishing huge compensation packages on its executives.

“There aren’t 10 executives in the company that make more than $200,000,” said Steve Chan, vice president of business development at SunTech Power Holdings.

U.S. execs make far more. In a survey conducted by Forbes last year, the magazine found that the average big company CEO made $3.3 million in salary and bonuses.

It trickles down from there. Chinese engineers make about one-third to one-half the salary of their U.S. counterparts, said one executive who runs Asian operations for a U.S. high tech firm. Marketing execs can make about half as much as their stateside colleagues.

“If you have one (marketing manager) that makes about $100,000 in the U.S, you can hire one here for $50,000,” he said.

Professional services firms also pay less than U.S. counterparts, said Ted Dean, managing director of BDA, an analyst firm specializing in Asian markets. New college graduates hired by services firms might make $400 to $500 a month, or $4,800 to $6,000 annually. A well-regarded person with years of experience might make $30,000 to $50,000 annually. In the U.S., the same person can graze around the $100,000 mark.

While executive compensation can be absorbed somewhat in manufacturing companies, it can be pronounced in purely white-collar service operations. Panorama Media Holdings, based in Beijing, sells high-resolution photos to advertising agencies, similar to Getty Images and Corbis.

Panorama, though, can sell its products for an eighth the price, according to Wayne Shiong, a partner in venture firm WI Harper, an investor in Panorama. Wherever Getty charges $50,000 for services, Panorama can charge 50,000 RMB (China Yuan Renminbi), or about $6,600.

Panorama primarily sells its photos to Asian advertising agencies. Shiong, though, said that the multinational photo outfits have not reacted to lower their prices for the local market. Additionally, Panorama is contemplating taking out office space in New York to test out the international opportunities.

The Spartan start-up
The pay discrepancy starts during the start-up phase. Founding CEOs of some Chinese start-ups deliberately take low wages to keep costs down, according to Shiong and others. The CEO at a company that’s just finished a Series A round of funding might pay himself 500,000 RMB a year, or about $67,000.

Documents filed by Chinese companies with the Securities and Exchange Commission back this up. Focus Media Holding, which specializes in outdoor advertising kiosks, paid $100,000 to its two executive officers in 2004 combined. In 2005, the year the company went public on Nasdaq, Focus had 13 executives and directors and the total pay for all of them for the year was $512,947.

In 2005, the company’s four executives and directors pulled in $100,000 combined. The four executives and directors of Trina Solar Limited pulled in $128,039 in 2005. None had severance packages, the filing states.

Compare that to a pre-public U.S. company. DivX, which makes media software, paid its top five execs about $1 million in 2005, the year before it went public. Shutterfly paid its top five people $1.1 million the year before an IPO–only one made under $210,000.

Chinese executives make their wealth in stock options, which U.S. execs get, too. Suntech founder Shi Zhengrong is considered one of the richest individuals in China, with a net worth exceeding $2 billion, according to various studies. Focus awarded 22.5 million in options to executives and employees in 2005. Salaries also rise after an IPO, but generally not to U.S. levels. One reason, of course, is that the cost of living is lower. Someone making $50,000 in China will likely be able to retain a driver and other household help. That’s not enough to rent a decent one-bedroom apartment in many American cities.

Conversely, to expand internationally, Chinese companies have to hire U.S. and European executives, who will command U.S. salaries. Suntech’s Chan said that will be an issue for his company. In the first few years of the company’s growth, the salespeople came out of China. Expanding internationally will also take quite some time.

Victor Canto, chairman of La Jolla Economics, added that many executives in Asian companies will also leap to U.S. competitors to get salary raises. “That will decrease the disparity,” he said.

Still, in the end, multinationals of course have some of their higher-level people in more expensive countries, so a discrepancy should be expected.

“Foreign vendors might be able to achieve comparable manufacturing costs, but they still will have a huge R&D lab in Finland,” said BDA’s Dean.

Compensation and Benefits Data and Trends in the Shanghai R&D Sector – Invitation

Wednesday, May 23, 2007

Type: Science and Technology Committee Meeting
Venue: Regus Shui On Plaza Centre
12/F Shui On Plaza, 333 Huai Hai Zhong Road
雷格斯环业会议中心
淮海中路333号，瑞安广场12楼
Time: 16:30 to 18:30
Price: Members (RMB): 0

The AmCham Shanghai Science and Technology Committee is pleased to host its third roundtable discussion of the year on May 23, 2007.

Eric Fiedler, Regional Director of Hewitt Associates and current AmCham Chairman, will discuss compensation and benefits data and trends in the Shanghai R&D sector. Fiedler’s presentation will cover how your company can attract and retain talent in this increasingly competitive market, especially regarding leadership and managerial positions.

The S&T Committee meets on the fourth Wednesday of each month. The forum will include an invited guest speaker to address a key topic of interest followed by an in-depth roundtable discussion.

Please email your RSVP to Christine Li at Christine.li@amcham-shanghai.org no later than Monday, May 21, 2007.

Best regards,

Science & Technology Committee

AmCham Shanghai

The Hunt For Chinese Talent

GUANXI (THE ART OF RELATIONSHIPS)
Microsoft, China, and Bill Gates’s
Plan to Win the Road Ahead

The Good Argues that Microsoft’s Beijing research lab has played a pioneering role in high tech.
The Bad Misses key developments and rarely goes beyond the lab to explore issues facing Microsoft.
The Bottom Line Flawed, but it shows the importance China has for American high tech companies.

Last summer a Taiwanese-born PhD named Kai-Fu Lee was at the center of an intense battle between Microsoft (MSFT ) and its latest challenger for high-tech dominance, Google. (GOOG ) Lee, an expert in speech-recognition technology, had been working at Microsoft for seven years, recently in Redmond, Wash., and before that at the company’s China research lab in Beijing, which he founded in 1998. But he had become increasingly frustrated by what he described as Microsoft’s “incompetence in China” and last July abruptly announced that he was leaving to join Google. A nasty lawsuit followed over the terms of a noncompete agreement. During the trial, another Microsoft defector revealed that Microsoft Chief Executive Officer Steve Ballmer had vowed to “f—ing kill Google.” Lee ultimately won permission to leave, becoming a prime example of the recent talent exodus at Microsoft.

You might expect that a new book in which Lee is prominently featured and extensively quoted would have juicy insights into that drama. Alas, the flawed Guanxi (The Art of Relationships): Microsoft, China, and Bill Gates’s Plan to Win the Road Ahead, by journalists Robert Buderi and Gregory T. Huang, has little to say about this key moment in the Microsoft-Google rivalry. Indeed, it appears Microsoft executives weren’t the only ones surprised by Lee’s departure: Although Buderi and Huang seem to have spent many hours over many months talking with Lee, they apparently had no inkling of his dissatisfaction. They devote one late chapter to the custody battle. But it feels tacked on, almost as if they realized at the 11th hour that Lee had upended the whole premise of their book, which tells how Microsoft successfully built its Beijing research center.

Microsoft Research Asia was only the second center for high-level research opened by the company outside the U.S. (The first was in Cambridge, England.) The authors argue persuasively that Microsoft’s Beijing center has played a central role in developing products and served as a model for the company as it expands in countries such as India, where Microsoft opened a Beijing-like research center last year. In setting up the center in the late 1990s, long before most other multinationals had started to take China seriously as a research and development location, Microsoft was a pioneer in recognizing “the imperative of looking at emerging nations not just as potential markets but as sources of talent.” Contrary to the book’s subtitle, though, this is not a story about Bill Gates’s strategy in the world’s largest country, and the authors spend almost no time discussing Microsoft issues beyond the lab. For example, there’s very little about problems with China’s counterfeiters. And while mentioning a botched Microsoft pledge to invest $100 million in the country, they don’t offer any insights into what went wrong.

Guanxi is at its best when it describes the brilliant collection of experts recruited by Lee, such as multimedia whiz Ya-Qin Zhang. (Buderi and Huang use the Western convention of given name first, family name last for most of the Chinese in the book.) A former child prodigy who entered one of China’s top universities before his 13th birthday, Zhang took over as director in Beijing in 2000 after Lee relocated to Redmond. Zhang is adept at wooing Chinese officials. For instance, he scored a coup when he won permission from the government for the Beijing lab to award post-doctoral degrees, a first for a foreign company. And Zhang boasts about his ability to cut through red tape by making one phone call to the vice-mayor. “Problem solved,” Zhang tells the authors.

Buderi and Huang also profile Jian Wang, an engineering psychologist who at first was reluctant to give up his position as a professor at Zhejiang University but went on to lead the team that developed the handwriting-recognition software used in Microsoft’s Tablet PCs. Wang, who has come up with a “universal pen” that can instantly take writing from a piece of paper and put it on a computer screen, also created Thought Explorer, a computer interface custom-made for Gates that the chairman uses during Think Week, his semi-annual retreat.

Yet as fascinating as these characters are, the book suffers from its almost exclusive reliance on them for its information — and its numerous boosterish quotes. Significantly, we don’t hear from many Chinese officials, even though one of Buderi and Huang’s themes is the importance of building relationships, or guanxi, with government leaders.

For all its shortcomings, though, Guanxi does show the importance that China has for American high-tech companies. With Kai-Fu Lee now back in Beijing to launch another R&D center, this time for his new company, the competition for Chinese talent is only going to get rougher.

China hopes to promote justice in employment by new law

by Ren Ke

BEIJING, March 10 (Xinhua) — Liu Dan, a final year student at the Capital Normal University in Beijing, has been job hunting since October last year. As a female student without any relatives in Beijing, she is finding it difficult to get employed.

“It’s really too difficult for me to find a job,” said Liu, “some employers turned down my resume just because I’m from Henan Province, some rejected me because I’m a girl, or they did not need undergraduates. Finally, I found an administrative job but one of the job requirements was that I must have relatives in Beijing as my guarantors — so I failed again.”

Liu’s experience is widespread in China, most people encounter discrimination when they are trying to find jobs. Gender, educational background, age and health conditions — such as carriers of Hepatitis B or HIV — all fall foul of discrimination on the part of prospective employers.

A questionnaire regarding job discrimination, which was made at the end of last year, revealed that 86 percent of interviewees thought discrimination exists in employment market, while 58 percent thought that this discrimination is of a severe nature.

However, this may all be set to change with the introduction of a new employment law by the Chinese government. The Standing Committee of the National People’s Congress (NPC) — China’s top legislative body — has recently examined a draft law on employment promotion for the first time.

The drafting of the law started in the second half of 2003 and, after repeated revision; the law is now on the agenda of China’s legislators. As chairman of NPC standing committee, Wu Bangguo said, since the law has close relations with people’s interests, the full text of the draft law will be published after the 5th plenary session of the 10th NPC in order to ascertain public opinion.

“Unemployment leads to social unrest and conflicts between different groups,” said Liu Cuixiao, a researcher with China Academy of Social Sciences (CASS) who believes that the main catalyst for the new law is China’s present social situation.

As the most populous country in the world, China is now facing a rapid rise in its labor force — nearly 10 million people every year. Unemployment is becoming a challenge that the government is increasingly facing. Although the official urban registered unemployment rate is 4.6 per cent, some economic observers believe the national figure may be much higher.

In order to address this issue, the draft law is aiming at promoting employment around the country. The law states that the government will implement new policies, such as boosting professional training, regulating the intermediary employment agencies and increasing financial investment in employment promotion.

Severe employment stress makes discrimination more popular in China, however building a fair employment market is a key issue addressed in the draft law, which contains a special clause on anti-discrimination. The clause states that discrimination against job seekers with respect to their background, whether it is with regards to ethnicity, gender, religious beliefs, age, or physical disability, will be prohibited.

Indeed, as well as college students like Liu Dan, some disadvantaged groups — such as some 200 million migrant workers and laid-off workers from state-owned enterprises — also suffer from discrimination in the labor market. Most Chinese employers will not consider job applications from candidates above 35, excluding the majority of China’s laid-off workers.

China’s residential permit system (or ‘hukou’) ties farmers to farmland, restraining the surplus labor force in rural areas from migrating into the cities and thus suffering discrimination from urban dwellers.

Due to the discrimination, they have little say over their treatments. They cannot enjoy some basic rights, such as work-related insurance and health care. Although the government always vows to protect the interests of them, sometimes they even cannot get paid on schedule.

According to Xie Zhiyong, a professor at the China University of Political Sciences and Law, discrimination also exists in China’s civil servant recruitment exams.

“Some posts only accept male candidates,” he said, “and 35 is the age limit for the promotion of many posts — these requirements have no necessary connections with the nature of the work.”

Such widespread discrimination sometimes triggers tensions in society, often resulting in tragedy. One such case that raised public awareness of job discrimination was the murder committed by Zhou Yichao, a university graduate that was also a carrier of Hepatitis B.

In 2003, Zhou killed a civil servant and seriously wounded another, primarily due to his anger over the recruitment procedure of a local government department in Jiaxing City of East China’s Zhejiang Province — he had successfully passed the interview and the exam for the post, but had failed the health check-up. Zhou was subsequently sentenced to death.

“These inharmonious things obviously do not tally with the picture that the Chinese government is now trying to draw — a socialist harmonious society, in which equality, justice and the interests of social vulnerable groups are being addressed,” said Liu Cuixiao.

Issues concerning people’s livelihoods are amongst the most important subjects being discussed in the recently convened annual session of the NPC and the Chinese People’s Political Consultative Conference (CPPCC).

Prof. Zheng Gongcheng of Renmin University, who is also a member of NPC Standing Committee said, “Discriminations may damage the labor market, and thus lead to serious social consequences, it undermines the fair competition environment of the labor market, and results in a tremendous waste of labor capital.”

“What the draft law said on anti-discrimination is mainly in principle,” remarked Liu Cuixiao, “however, as an administrative law made by the central government, all of the local provisions that are against such principles will be abolished.”

More importantly, the draft states that the government is to co-ordinate rural and urban employment policies in a bid to build a system in which workers from rural and urban areas can have equal rights in employment.

Due to lack of education and professional training, these workers from rural areas cannot find jobs requiring skills and technology, which made them disadvantageous when competing with urban people.

As Liu Cuixiao said, it is unfair for them — she believes that with all the efforts that the government will make, discrimination must be curbed significantly.

However, some experts think that there is still some room for improvement in the draft law.

Lin Qiang, a member of NPC standing committee commented, “Now the draft law has only prohibitory provisions on job discrimination, however, there is no corresponding legal obligation.” Lin suggested that the legal obligation of discrimination should be clarified in the future.

Another member of NPC standing committee, Yuan Hanmin, suggested that the present draft law is too ‘soft’ to curb the discrimination in employment. He also suggested that some foreign experience should be taken for reference.

“In order to avoid gender and racial discrimination, American employers have to keep certain ethnic and gender proportions in their companies.” As the draft law mainly focuses on discrimination based on age, gender and hukou, Yuan also suggests that more attention needs to be paid to the 120 million carriers of Hepatitis B.

Chinese netizens have welcomed the government’s efforts to promote employment and oppose discrimination on web forums, however voices that doubt the law’s effectiveness in anti-discrimination remain.

“Where employment exists, employment thresholds exist,” said Luo Baiwei, a lawyer from South China’s Guangzhou City, “therefore, a job seeker may have formal equal rights in employment, but he may suffer from de facto discrimination. Any differences in gender, age, appearance and background will become the pretexts for employers to decide to hire or not.”

As Luo said, it is difficult for the government to decide what kinds of behavior are discriminatory, since there are no specific standards. Furthermore, anti-discrimination is not always good news for everyone, especially for those who have gender, age and hukou advantages. At the same time, the employers will face more restrictions when hiring people.

“Laws cannot create employment, but a fair environment, which will undermine the efficiency and lead to different impacts to different groups,” said Luo.

Liu Cuixiao with the CASS believes that the fight against discrimination will be a long-term process and there is still a long way ahead. “It depends on the level of economic development, the changes of the employers’ ideas and improvements in the quality of the labor force,” said Liu.

“A single law is not enough — we need a series of systems to promote justice in employment, possibly including reform of the hukou system,” Liu added

More M.B.A.s From China Seek Employment Back Home

By Ronald Alsop

When Zhe Xu receives his M.B.A. degree from the University of California at Berkeley this spring, he will hop a plane back to his native China for a job in management consulting rather than seek employment in America.

Just a few years ago, such a career move would have been almost unthinkable. Most students reluctantly returned to China only because they couldn’t land a position with a U.S. company that would sponsor them for a work visa.

But Mr. Xu represents a new breed of Chinese M.B.A. student, for whom China’s booming economy is proving more alluring than a career in the West. “It is much more exciting right now to be in China, especially in the health-care area,” says Mr. Xu, who plans to do life science and health-care consulting in the Shanghai office of Cambridge, Mass.-based Monitor Group. “Many things are changing rapidly, and I can really put my hands on some of the hot buttons and make my own mark on the country’s economic development.”

While many Chinese students at U.S. business schools still covet a visa that will allow them to work in America, career-service directors say a growing number are much more willing — even eager — to return to their homeland after graduation. “International companies have long tried to pitch this idea of going back to China where a student’s language and cultural background is of great value to them, but until recently, it fell on deaf ears,” says Paul Allaire, career-resource center director at the University at Buffalo School of Management.

Abby Scott, executive director of M.B.A. career services at the Haas School of Business at Berkeley, even sees some Chinese-American students, who were raised and educated in the U.S., moving to China. “They want to be part of all the interesting things happening over there,” she says. “The safe way is to get your feet wet by joining a multinational, but a few gutsy students are trying to start something of their own.”

At Stanford University, Virginia Roberson, the business school’s international career adviser, finds entrepreneurial-minded students especially drawn to China. “It’s like the Wild West and the gold rush to them,” she says.

Students say they expect ever greater career opportunities and compensation as China’s economic expansion rolls on. “I plan to go back to China after my studies because of the high demand for real-estate and infrastructure development,” says Patricia Cheung, a first-year M.B.A. student at Berkeley who will be interning this summer at Deutsche Bank’s real-estate asset management office in Hong Kong and working extensively in China. “I am passionate and patriotic about China and also feel that it is where I have a comparative advantage both in language and culture. I speak fluent Mandarin, Cantonese and English and have lived or worked in many Asian countries.”

Indeed, U.S. and European companies consider many Chinese M.B.A. graduates ideal managers because of their knowledge of languages and business customs. They also have studied the ways of Western companies in business school so they can relate well to their employer’s management style.

“Chinese students are more valuable back in their home country where they can charge a premium for their expertise,” says Mark Wilkins, president of Stampede, who last year hired a Chinese graduate from the University at Buffalo to represent the distributor of electronic products in Shenzhen, China. “We needed his knowledge of the country and language because doing business in China is all about relationships.”

Johnson & Johnson, which has had business operations in China from more than two decades, also is finding it easier to recruit Chinese nationals and has already hired 13 this school year for its pharmaceutical and medical-device businesses. Irene DeNigris, director of global university recruitment, seeks M.B.A. graduates who have acquired both general-management skills and the ability to work in cross-cultural teams in business school.

“Salaries are much better than five years ago” in China, she says, but she acknowledges that student-loan repayment still poses a financial challenge for some M.B.A. graduates there. J&J and other companies offer bonuses, housing allowances and other incentives to help ease the loan burden.

Some Chinese students still prefer to spend at least a year or two working in the U.S., both to repay some of their education debt from their higher income and to learn about Western business practices firsthand. Zhou Yu, an M.B.A. and computational finance student at Carnegie Mellon University, has accepted a job in fixed-income strategy at Citigroup because he believes some experience in New York should make him “more marketable.” But in a few years, he and his wife hope to return to their families in Beijing.

Likewise, Qin Yu, an M.B.A. student at Ohio State University, plans to start with Intel as a senior financial analyst in the U.S. before heading back to China as a manager for the chip maker. “Most major U.S. companies have an operation in China now, so going back to China is not so bad,” he says. “But before I go, I need to work in America to better understand the business culture. Academic experience alone is not sufficient.”

China’s Talent Wars

By Benjamin Robertson

Chinese graduates are facing their first employment crunch in 30 years, but employers aren’t rejoicing. Despite the apparent abundance of labor, there is a paradox: Companies often have trouble finding the right candidate for the job.

Another job fair, another riot.

Such is the demand for college graduate jobs in China these days. Pictures from a recruitment fair in the central Chinese city of Zhengzhou showed smashed doors, broken glass and an escalator with sides bent outward at an extraordinary angle. Thirty-thousand eager students surged into the exhibition center in mid-November, overwhelming police, security guards and one hapless escalator as they rushed to be the first to sign up with potential employers.

It was an image that revealed the desperation of Chinese college graduates facing an employment crunch for the first time since market reforms began in the late 1970s. As more people enter universities than ever before, government figures indicate that 20 percent to 50 percent of this year’s 4.13 million graduates will not find jobs. It’s a situation that shows little sign of abating in the years ahead. A December report from the government-affiliated Chinese Academy of Social Sciences says that next year there will be 25 million urban job seekers chasing 10 million jobs.

“It is now very difficult to find work. There is a strong supply and demand imbalance in the college graduate market,” says Liu Hao, CEO of Zhaopin, one of China’s leading recruitment portals. Its services include online recruiting, newspaper recruiting, headhunting and campus recruiting. “Whereas the U.S. job market is cyclical, China has not seen a recession in 20 years.”

A generation of college graduates has never seen large-scale layoffs, says Liu, echoing the concerns of senior government leaders, who have worried about potential effects on social stability and have held crisis meetings regarding the issue.

Zhaopin’s Web site is registering an average of 70,000 new job seekers every week. Yet despite the apparent abundance of labor, there is a paradox: Liu says companies often have trouble finding the right candidate for the job. Though China is famed for a large, mobile, hardworking workforce, the 37-year-old CEO suggests the country’s education system is not always producing the right sort of talent.

Many multinationals would agree with him. Despite the record number of graduates, sourcing talent is now the leading concern for American companies in China ahead of intellectual property rights protection, according to an annual members’ survey of the American Chamber of Commerce.

“Employers are looking for someone with practical work experience, leadership ability and creative problem-solving skills,” explains Jim Leininger, general manager of Watson Wyatt in Beijing. “The education system is very good at developing quantitative ability but falls short in developing some of the key skills employers are looking for: creative thinking, group problem solving and the ability to apply knowledge to real-life situations.”

At the Beijing offices of Microsoft, human resources director Danielle Monaghan concurs. Microsoft often advertises through Zhaopin and has no shortage of applicants. The company often receives 16,000 to 17,000 applications for just 300 places. Monaghan says the company still needs to invest time and money into certain forms of training that would be unnecessary back in the U.S.

“We do have to develop their skills to work in a multinational,” she says. “Generally graduates are without strong team-working skills. They don’t take a lot of initiative. They don’t push back or say no, and we have to teach these skills because that is key to survival at Microsoft.”

While China is by no means the only country facing a talent shortage, its blistering growth over the past decade makes any shortfall all the more acute. In a 2005 report titled “China’s Looming Talent Shortage,” consulting firm McKinsey & Co. predicted the country’s economy would have difficulty moving up the value-added ladder from manufacturing to services if the quality of graduates were not addressed.

Like recruitment portals in the West, Zhaopin provides an online interface for posting job advertisements and résumés. It allows Liu to see exactly where the shortfalls are. High-tech industries like auto and drug manufacturing are especially short of quality candidates, he says.

A step above graduate-level job seekers, midlevel managers in the marketing and finance sectors are also in high demand, Liu says. Zhaopin’s goal is help employers fill these gaps in their hiring process. Using part of a recent capital investment from Australian firm Seek, Zhaopin hopes to upgrade its search algorithms to provide better matches and value for employers and would-be employees alike.

“In the past you [would] put out an ad and get a hundred résumés and you would be happy. But now we realize that only a small percentage would be qualified,” Liu says.

Another solution to the lack of graduate talent is company training. But while larger multinationals have well-established training programs, smaller foreign companies and their Chinese counterparts are just beginning to invest in the sort of team bonding and leadership exercises that are common practice in the West. In a survey of 558 multinationals in Mainland China, Watson Wyatt found that the average annual cost of training per employee is only $200.

Though puny, the investment reflects a change in corporate thinking, Liu says.

“The standard HR managers in this market were guys who pay salaries and hire and fire people. Now, more and more companies claim they realize human capital is the most important form of capital,” he says.

Spotting an opportunity for expansion, Zhaopin has begun company training programs. Clients so far include a municipal government tax bureau and various state power companies.

But a limited length of job tenure can offset such investment. Because talent is in short supply, employee poaching is rife within industries.

“In the U.S., the average length of time someone stays in a job is five to six years. In this market it is two years,” Liu says. Figures from Watson Wyatt say annual employee turnover at multinationals is 14.3 percent, and because employers are desperate to find and retain talent, annual salary increases now average 7.8 percent, noticeably higher than the 1 percent to 2 percent rate of inflation.

Despite their exposure to the dynamics of the human resource market, Zhaopin has not been immune from high turnover. At one point, its sales team was posting 25 percent annual turnover, a frighteningly high proportion that Liu says has since been brought under control.

The key is breaking up office hierarchies by allowing new sales members to chase existing but inactive accounts. Previously, client accounts were the domain of the original contract winner, regardless of whether any recent sales had been made.

One emerging trend among multinational companies is to relocate inland, away from the wealthier and more expensive eastern seaboard. Provincial capitals such as Chengdu, Chongqing, and Nanjing are already booming centers of industry and commerce and should in theory offer large pools of untapped talent.

Liu, whose company also is expanding to cover the country’s provincial capitals, is less sanguine. He says the top talent has migrated to the big cities of Beijing, Shanghai and Guangzhou.

China’s Emerging Labor Movement

Trade unionists in the US and elsewhere have long argued that there is no labor movement in China. They rightly point out that Chinese workers lack even the most basic human rights protections, including the rights to strike and join an independent union.

But there’s more to the story: Ten years ago, according to the China’s Minister of Public Security, there were on average 10,000 large-scale collective protests each year. By 2004, the government recorded 74,000 large-scale protests. Late last year, the Minister of Police announced protests had increased to 87,000 last year, involving well over four million workers.

Four million workers! In the US we celebrated the birth of a new global social movement when 60,000 people showed up for the ‘Battle of Seattle’ in 1999. In China there is now more than enough evidence of continual worker self-organization outside of official trade union channels to put to rest notions that ‘there is no labor movement in China’.

According to Robin Munro, research director of China Labour Bulletin, ‘[W]hereas 10 years ago I think you could have said China did not have a labor movement, that is no longer really the case- there is no freedom of association for workers, but hitherto, people have tended to think that, therefore, there is no Chinese labor movement. I think the scale of worker unrest nowadays is so great, you can go to almost any city in the country now and there will be several major collective worker protests going on at the same time.

So China now has a labor movement.This is an important point to just put there on the table and recognize. It is not organized. It is spontaneous, it is relatively inchoate. But then so were labor movements in most Western countries before trade unions were permitted. We have basically a pre-union phase of labor movement development in China today. It also has great potential, I think, for becoming a proper labor movement.’

In the years before the passage of the National Labor Relations Act – known as the Wagner Actor ‘Labor’s Magna Carta’ – there was no legally enforced right to organize, bargain collectively, or strike in the United States. But US workers who were denied these rights responded with their own “pre-union” phase of struggle. Thousands of workers were arrested or beaten and scores shot dead for trying to exercise these rights. For example, in 1934 alone there were three general strikes and a huge national textile strike – all marked by substantial violence.

Largely in response to this upsurge, in 1935 the Federal government passed the Wagner Act hoping to legalize the labor movement and divert it into more moderate channels. According to a recent study by labor law historian James Gray Pope, the massive sit-down strikes and factory occupations of the following year cajoled the Supreme Court into reversing its own precedents and accepting the Wagner Act as constitutional.

American workers did not get their rights by waiting for the government to provide them; rather, they began asserting rights they believe they were entitled to, and thereby forced the Congress and the courts to acquiesce.

One innovative labor strategy that is being encouraged by CLB as a way to relate to the new emerging Chinese labor movement is the CC-2005 Campaign or Collective Contract 2005. (According to CLB staff, the Campaign’s name is “a slightly cheeky designation, thinking in terms of SA-8000” and other Corporate Social Responsibility (CSR) standards.)

Under existing Chinese labor law, where there is no union presence in a factory, workers are allowed to elect their own representatives to negotiate and sign a collective contract.

With the ACFTU holding only 30% representation outside the government sector, CLB is trying to take advantage of this legal ‘loop-hole’ by urging multi-national corporations that operate in China ‘to pressure their supplier factories into allowing the workers to negotiate a proper collective contract in the workplace.’ The innovation of this approach is the use of existing Corporate Codes of Conducts to negotiate binding collective agreements with enforceable rights. CLB views the CC-2005 campaign an opportunity to create a basic organizing space that is legally protected in the private sector.

As Han Dongfang, Director of CLB, explains, ‘What we want to do is get this collective contract regulation connected, with a code of conduct, a corporate social responsibility kind of thing, which they have been trying to work out for more than 10 years but have never worked out. Now we try to put it together as a new program. We make the corporate social responsibility, the Code of Conduct document, which has no teeth, and make them, together with Chinese law, have teeth, in particular with the workers’ participation, workers’ representation.’

CC-2005 has three major strategic objectives:

To mobilize workers to participate in collective bargaining, so that they can play an active role in protecting their own rights; To achieve real implementation of China’s labor laws, trade union legislation and the relevant standards of the International Labour Organization; To provide a new and effective means by which multinational buyers can realize their commitment to the principle of social accountability.

The massive number of wildcat strikes occurring in China shows that Chinese workers are not waiting for official unions to reform themselves. Instead, they are fashioning new ways to improve their lot. So the challenge is for the US and the other labor movements to find ways to reach out and encourage new independent workers organizations in China. We might want to start by supporting CC-2005 campaign.

[Brendan Smith, Jeremy Brecher and Tim Costello are co-founders of GlobalLabor Strategies, a new resource center working to assist labor and other social movements make the connections and develop the strategies needed to function effectively in the global economy. Read their blog at www.globallaborblog.org.]

Reuters opens China development centre, sees staff tripling

BEIJING, Oct 9 (Reuters) – Global news and information company Reuters Group (RTR.L: Quote, Profile, Research) opened a development centre in China for key products such as its 3000Xtra desktop terminal and said it expected to triple the operation’s staff to 600 in three years.

The centre, located in the capital’s technology hub of Zhongguancun, will also input data related to mergers and acquisitions, company financial reports and forecasts, and economic data for markets in China, South Korea and Japan, Reuters said in a statement on Monday.

It gave no figure for the amount invested.

“This investment underscores our commitment to China and our desire to participate in its future as a global leader in technology and financial markets,” Chief Executive Tom Glocer said in the statement.

US firms in China face skills shortage

BEIJING – A skills shortage has emerged as the top challenge for US companies operating in China, according to a report from the American Chamber of Commerce in Shanghai.

The 2006 China Business Report was released on Wednesday after the organization polled 274 member companies throughout China.

Charles Mo, who heads human resources at the Chamber of Commerce, said the skills shortage had, for the first time in five years, overtaken bureaucracy as the No 1 headache for US companies in China.

“The vast majority of US companies said their China operations were suffering from challenges in recruiting capable Chinese managers and retaining them,” Mo said.

They account for about 80% of those companies polled. The scarcity of entry-level and clerical staff has also had a negative impact on US companies.

“Controlling salary increases was also a problem for 82% of the companies,” Mo said.

Mo said the growth in operations in China had outpaced the supply of desirable staff.

“US companies have to fight for talent against international and domestic competitors,” Mo said.

Bureaucracy, lack of transparency and inconsistent regulatory interpretation were the second-biggest challenge facing US companies, the report showed. These challenges, along with other factors, are squeezing the profit margins of US companies in China, according to the report.

More than half of those firms polled said their China margins were threatened by price pressure from domestic competitors, price pressure from major customers, or changes in salary and wages in China. These factors have affected the bottom line of many US companies.

While half of those polled saw improved profitability in 2005 over 2004, most saw profit margins increase by less than 10%, and only a quarter reported higher margins for China than for their worldwide operations.

Nevertheless, US companies are clearly bullish about China, and the country is a priority for many. When describing their five-year business outlook in China, 94% of those polled were either “slightly optimistic” or “optimistic”. And 79% were more optimistic about their business outlook in 2006 than a year before.

(Asia Pulse/XIC)