Category Candidates & Labor market

Defying the global trend, China faces labour shortage

Keith Bradsher, The New York Times

Just a year after laying off millions of factory workers, China is facing an increasingly acute labour shortage…

Chinese workers enjoy their meal beside a billboard in Beijing . APAs American workers struggle with near double-digit unemployment, unskilled factory workers here in China’s industrial heartland are being offered signing bonuses. Factory wages have risen as much as 20 per cent in recent months.

Telemarketers are turning away potential customers because recruiters have fully booked them to cold-call people and offer them jobs. Some manufacturers, already weeks behind schedule because they can’t find enough workers, are closing down production lines and considering raising prices. Such increases would most likely drive up the prices American consumers pay for all sorts of Chinese-made goods.

Rising wages could also lead to greater inflation in China. In the past, inflation has sown social unrest. The immediate cause of the shortage is that millions of migrant workers who traveled home for the long lunar New Year earlier this month are not returning to the coast. Thanks to a half-trillion-dollar government stimulus programme, jobs are being created in the interior.

But many economists say the recent global downturn also obscured a longer-term trend: China has drained its once vast reserves of unemployed workers in rural areas and is running out of fresh labourers for its factories. Since China does not release reliable, timely statistics on employment, wages are considered the best barometer of labor shortages. And temp agencies here in Guangzhou raised their rate for factory workers this week to $1.17 an hour, from 95 cents an hour before the new year holiday. The rate was 80 cents an hour two years ago, before the global financial crisis temporarily depressed wages and demand. The dearth of returning migrants set off a desperate scramble this week to recruit the workers who did step off long-haul buses and trains returning from the interior.

At a government-run employment centre in downtown Guangzhou, employers seeking workers outnumbered job-hunters recently. Outside, Liang Huoqiao, a 22-year-old plastics worker, joined a small group of men and women studying a 40-foot-wide list of companies seeking workers. “You can walk into any factory and get a job,” he said.

The official China Daily newspaper said that surveys of employers showed that one in 12 migrant workers was not expected to return here to Guangdong Province. Cities farther north along China’s coast are also running low on labor; Wenzhou alone posted a shortage of up to one million workers. Guangdong provincial officials announced that they were considering increasing the minimum wage, which varies by city and ranges from $113 to $146 a month.

Higher wages could ease labour shortages by prompting factories to reduce their work forces. But many factories already pay well above the minimum wage. They are wary of further pay increases because it is not certain they can pass the increased costs on to their customers — in particular, strapped importers in the United States and the European Union.

Rising wages suggest the re-emergence of a worker shortage that was becoming evident before the financial crisis. A government survey three years ago of 2,749 villages in 17 provinces found that in 74 per cent of them, there was no one left behind who was fit to go work in city factories — the labour pool was dry.

Mass layoffs in late 2008 and early 2009 because of the global financial crisis temporarily masked the developing shortage of industrial workers. But two powerful trends were still working to reduce the supply of young people headed for factories.

For one, the Chinese government has rapidly expanded postsecondary education. Universities and other institutions of higher learning enrolled 6.4 million new students last year, compared to 5.7 million in 2007 and just 2.2 million in 2000.

At the same time, China’s birth rate has been sliding steadily ever since the introduction of the “one child” policy in 1977. Labour shortages have returned quickly in recent weeks as these long-term trends have collided with a recovery in overseas demand for Chinese goods.

Far more jobs are available these days in China’s interior. Government projects like rail and highway construction have absorbed millions of workers, particularly after Beijing allocated nearly $600 billion to economic stimulus spending in 2009 and 2010. Consumer spending is also rising briskly; auto sales more than doubled last month from a year before, and this has created many jobs in retailing, restaurants, hotels and other inland businesses.

Even before the holiday, companies were struggling to find the employees needed to keep assembly lines running. At many factories, white-collar managers and engineers were forced to spend time on assembly lines to meet deadlines before the lunar New Year, because laborers were in such short supply. The managers often struggled with the tedious but intricate tasks required to make everything from toys to DVD players. “People working in the office, like me, have been asked to help on the factory floor,” said Sky Niu, the Sales Manager at the Hengjia Electronics Company in Dongguan. “Of course, we can only help on the simpler tasks, such as packing.”

The labour shortage is not benefiting workers just through higher wages. Personnel managers here say they are also abandoning the informal tradition of not hiring anyone over 35 — they say they are now hiring workers up to 40 years old, and sometimes older, despite concerns about whether they can keep up week after week with the rapid pace of Chinese assembly lines.

It remains to be seen if Chinese factories will learn from their hiring difficulties now and be less quick to lay off workers during the next global downturn. The current system “is not stable, it’s not healthy,” said Han Dongfang, the Director of the China Labor Bulletin, a Hong Kong-based group that advocates collective bargaining.

Though the wage boost increases the prospect of inflation, it may have another more salutary aspect. The Obama administration has been pushing China to let the renminbi rise against the dollar, which would erode some of China’s formidable advantage in export markets. Rising wages in China have the same effect — while also giving Chinese families more spending power.

Letting wages rise benefits workers, said Jing Ulrich, the Chairwoman of China equities and commodities at J P Morgan. Letting the currency rise benefits currency speculators, she said. Liang, the 22-year-old plastics worker, said that he expected his pay to double in the next five years and added that he already had set his priorities.

“For sure, I want to buy a car,” he said. “Car first, then maybe marriage later.”

Shanghai still faces skills shortage

China’s plan to turn Shanghai into a leading financial centre by 2020 could be undermined by its ability to attract the talent it needs, as suggested by respondents to our latest poll.

By FinanceAsia Editors

This time last year, China’s leaders announced plans to develop Shanghai into an international financial centre by 2020, but, with just 10 years to complete the transition, the city faces a skills shortage. In our web poll last week, FinanceAsia readers said that it is still far harder to hire finance professionals in Shanghai than in either Hong Kong or Singapore.

And the skills shortage is but one of the obstacles Shanghai must overcome to transform into a globally competitive financial centre, argue market participants. China’s currency is still not freely convertible and the rule of law is perceived to be far weaker than in Hong Kong, Singapore or even Mumbai. The government’s “direct and discretionary control over the national economy” is also a worry for foreign investors, according to Winston & Strawn, a US law firm that published a report last year on Shanghai’s progress towards becoming a financial centre.

Our readers certainly agree. When asked which city is the hardest place to hire finance professionals, 65% voted for Shanghai, compared to just 19% for Singapore and 16% for Hong Kong.

Shanghai’s market capitalisation is bigger than both Hong Kong and Singapore, but it still lacks the financial infrastructure to compete with them as a regional centre. Also, few foreign financial professionals are keen to move from low-tax jurisdictions, such as Hong Kong and Singapore, to a city where income tax rates are close to 50%.

But it rarely pays to underestimate China. “Judging by the government’s ability to turn China into one of the world’s leading economies within less than 30 years, there is certainly hope for Shanghai,” wrote Winston & Strawn.

Chinese male grads given edge in job recruitment

Male graduates get preferential treatment in their hunt for jobs, with a full nine percentage points more male university seniors having landed positions than their female counterparts as of the end of February.

A survey released by MyCOS HR Digital Information Co Ltd, a human resources consulting company in Beijing, shows that 30 percent of male university seniors set to graduate in July have found a job, while only 21 percent of female students have done so.

The survey also indicates that among the male students with offers of employment, 31 percent were hired by State-owned enterprises – traditionally the biggest employer of university graduates by far. Only 17 percent of the females were offered jobs at such companies.

In addition, female graduates in the sectors of transportation and logistics were offered 523 yuan less per month. Female majors in information technology and telecommunications were offered 420 yuan less than male students.

Li Xing, a former human resources employee in charge of recruitment at a State-owned real estate development company in Beijing told METRO that males are given hiring preference – 70 percent of the company’s staff is male.

“We only considered women for the positions such as secretaries,” Li said.

“Females are never considered for other positions, including construction supervisors, even though some of the female applicants were equally excellent as male counterparts.”

He also admitted there was a small income gap between male and female employees doing the same job, but said it wasn’t significant.

Wang Junjie, a consulting manager with the Beijing office of Towers Watson, a US-based human resources consultation, attributed the unpopularity of females in some workplaces to the nature of certain jobs.

Wang said male graduates are preferred in industries such as transportation and mining because overtime and frequent business trips are often required.

Male workers don’t take maternity leave, he noted.

Furthermore, some companies may bear extra expenses if they hire female employees, according to Wang.

For example, if a real estate company hires a female quality control supervisor and she goes on a business trip with a male colleague, the company must pay for two rooms instead of one for their accommodation.

Defying Global Slump, China Has Labor Shortage

By KEITH BRADSHER

GUANGZHOU, China — Just a year after laying off millions of factory workers, China is facing an increasingly acute labor shortage.

As American workers struggle with near double-digit unemployment, unskilled factory workers here in China’s industrial heartland are being offered signing bonuses.

Factory wages have risen as much as 20 percent in recent months.

Telemarketers are turning away potential customers because recruiters have fully booked them to cold-call people and offer them jobs.

Some manufacturers, already weeks behind schedule because they can’t find enough workers, are closing down production lines and considering raising prices. Such increases would most likely drive up the prices American consumers pay for all sorts of Chinese-made goods.

Rising wages could also lead to greater inflation in China. In the past, inflation has sown social unrest.

The immediate cause of the shortage is that millions of migrant workers who traveled home for the long lunar New Year earlier this month are not returning to the coast. Thanks to a half-trillion-dollar government stimulus program, jobs are being created in the interior.

But many economists say the recent global downturn also obscured a longer-term trend: China has drained its once vast reserves of unemployed workers in rural areas and is running out of fresh laborers for its factories.

Since China does not release reliable, timely statistics on employment, wages are considered the best barometer of labor shortages. And temp agencies here in Guangzhou raised their rate for factory workers this week to $1.17 an hour, from 95 cents an hour before the new year holiday.

The rate was 80 cents an hour two years ago, before the global financial crisis temporarily depressed wages and demand.

The dearth of returning migrants set off a desperate scramble this week to recruit the workers who did step off long-haul buses and trains returning from the interior.

At a government-run employment center in downtown Guangzhou, employers seeking workers outnumbered job-hunters Thursday afternoon.

Outside, Liang Huoqiao, a 22-year-old plastics worker, joined a small group of men and women studying a 40-foot-wide list of companies seeking workers.

“You can walk into any factory and get a job,” he said.

The official China Daily newspaper said on Thursday that surveys of employers showed that one in 12 migrant workers was not expected to return here to Guangdong Province. Cities farther north along China’s coast are also running low on labor; Wenzhou alone posted a shortage of up to one million workers.

Guangdong provincial officials announced on Wednesday that they were considering increasing the minimum wage, which varies by city and ranges from $113 to $146 a month.

Higher wages could ease labor shortages by prompting factories to reduce their work forces.

But many factories already pay well above the minimum wage. They are wary of further pay increases because it is not certain they can pass the increased costs on to their customers — in particular, strapped importers in the United States and the European Union.

Rising wages suggest the re-emergence of a worker shortage that was becoming evident before the financial crisis. A government survey three years ago of 2,749 villages in 17 provinces found that in 74 percent of them, there was no one left behind who was fit to go work in city factories — the labor pool was dry.

Mass layoffs in late 2008 and early 2009 because of the global financial crisis temporarily masked the developing shortage of industrial workers. But two powerful trends were still working to reduce the supply of young people headed for factories.

For one, the Chinese government has rapidly expanded postsecondary education. Universities and other institutions of higher learning enrolled 6.4 million new students last year, compared to 5.7 million in 2007 and just 2.2 million in 2000.

At the same time, China’s birth rate has been sliding steadily ever since the introduction of the “one child” policy in 1977.

Labor shortages have returned quickly in recent weeks as these long-term trends have collided with a recovery in overseas demand for Chinese goods.

Far more jobs are available these days in China’s interior. Government projects like rail and highway construction have absorbed millions of workers, particularly after Beijing allocated nearly $600 billion to economic stimulus spending in 2009 and 2010. Consumer spending is also rising briskly; auto sales more than doubled last month from a year before, and this has created many jobs in retailing, restaurants, hotels and other inland businesses.

Even before the holiday, companies were struggling to find the employees needed to keep assembly lines running.

At many factories, white-collar managers and engineers were forced to spend time on assembly lines to meet deadlines before the lunar New Year, because laborers were in such short supply. The managers often struggled with the tedious but intricate tasks required to make everything from toys to DVD players

“People working in the office, like me, have been asked to help on the factory floor,” said Sky Niu, the sales manager at the Hengjia Electronics Company in Dongguan. “Of course, we can only help on the simpler tasks, such as packing.”

The labor shortage is not benefiting workers just through higher wages. Personnel managers here say they are also abandoning the informal tradition of not hiring anyone over 35 — they say they are now hiring workers up to 40 years old, and sometimes older, despite concerns about whether they can keep up week after week with the rapid pace of Chinese assembly lines.

It remains to be seen if Chinese factories will learn from their hiring difficulties now and be less quick to lay off workers during the next global downturn.

The current system “is not stable, it’s not healthy,” said Han Dongfang, the director of the China Labor Bulletin, a Hong Kong-based group that advocates collective bargaining.

Though the wage boost increases the prospect of inflation, it may have another more salutary aspect. The Obama administration has been pushing China to let the renminbi rise against the dollar, which would erode some of China’s formidable advantage in export markets. Rising wages in China have the same effect — while also giving Chinese families more spending power.

Letting wages rise benefits workers, said Jing Ulrich, the chairwoman of China equities and commodities at J. P. Morgan. Letting the currency rise benefits currency speculators, she said.

Mr. Liang, the 22-year-old plastics worker, said that he expected his pay to double in the next five years and added that he already had set his priorities.

“For sure, I want to buy a car,” he said. “Car first, then maybe marriage later.”

Hilda Wang contributed reporting.

China’s scope for clever job creation

By DANIEL H. ROSEN

While everyone is glad to put 2009 behind them, 2010 could be an even tougher economic year for China. To climb out of the global contraction, Beijing has engineered a property bubble characterized by oversupply in commercial real estate and unsustainable price gains for residential property. The consequences of this will bite in the new year.

To soak up and justify this excess, China’s leaders are trying to stoke demand by accelerating the already epic urbanization trend, reducing constraints on migration and urban registration. The leadership is betting on the connection between accelerated urbanization and consumption, too. In 2008, 43% of China’s population was considered urban, versus an average of 79% for Latin America, 73% in the euro area and 82% in the U.S: China still has a long way to go.

By front-loading this urban growth, China will bolster prices for upstream raw materials like iron ore and aluminum in the near term and keep construction companies busy. But many people are concerned that China’s urban factories already are overbrimming with overcapacity in almost all sectors, and boosting urban migration will just aggravate overproduction, which will spill into world markets.

If China is already suffering overcapacity in everything, then indeed swelling the urban population would just exacerbate problems. But it isn’t. In fact, there are huge swaths of economic activity and employment simply missing from the Chinese marketplace. Policies that address the reasons for this can create tens of millions of new jobs in traditional and new sectors in the years ahead, adding to domestic consumption and diverting the country from a collision course with its trading partners.

Consider three sectors: healthcare, manufacturing white collar, and education.

Healthcare: China has 1.6 doctors per thousand people; the U.S. has more than 23. Not that China wants to replicate everything about U.S. healthcare, but given rising pathology and mortality due to aging baby boomers, changes in diet, lifestyle, longevity and environmental contamination, filling this shortfall is critical. Reaching the U.S. ratio would mean adding almost 30 million doctors, not to mention multiples of the current low numbers of supporting staff—nurses, palliative-care specialists, hospital administrators and hundreds of other subspecialties comprising the modern healthcare sector.

Manufacturing White Collar: For all its storied manufacturing-sector prowess, China’s goods makers skimp on R&D, quality control, brand management, financial planning, environmental-health safety and almost every other white-collar position that turns a manufactured commodity into a branded product and generates intangible value for the firm: value that makes up a third or more of assets in most Organization for Economic Co-operation and Development firms.

While China Inc. may have overcapacity on the assembly line, it has extraordinary undercapacity in the business functions that turn a $10 generic toaster coming out of a Chinese factory into a $75 Braun-branded toaster sold at retail in the U.S. or Europe.

China would need at least 60 million more white-collar workers to be comparable with the U.S. on this score. Given the different development levels, we might cut that in half, but 30 million missing office-worker bees is a lot of jobs.

Education: The missing-jobs number is also huge in education. China has 10 teachers per thousand people, as opposed to 22 in the U.S. Basic education for urban migrant-workers’ children is a critical task if accelerated urbanization is to generate more prosperity and not just worsening income inequality, social tension and developmental problems like crime and an underclass. China currently needs another 16 million teachers to reach the ratio in the U.S., as well as attendant teacher-trainers, guidance counselors, school administrators, and other related employees.

Of course there are reasons why these jobs don’t already exist.

In the case of healthcare and education, Beijing has chosen to save resources or transfer them to state-owned enterprises rather than make sufficient public expenditures, while simultaneously preventing private enterprises from investing in these areas as businesses. There are some low-price private hospitals and clinics in China, but with limited resources and market shares. In manufacturing, the cost of capital to build up white collar employment for private and SME firms is typically two-to-five times that of the low nominal rates heavier state-owned enterprises enjoy. And when they are able to build a brand and their own intellectual property, poor enforcement of regulations and intellectual-property protection jeopardizes their ability to recover their investment.

These three sectors just scratch the surface of new job potential: China is far from suffering “overcapacity in everything.” The problem is that what is overcapacity doesn’t create many jobs.

Steel, aluminum, cement, plate glass and upstream petrochemicals together create just 14 million jobs in a labor pool of 780 million, which is fewer than the number of service-sector jobs in Guangdong Province alone.

China’s consumption-urbanization policy thinking is the right way to go, but only if policy simultaneously addresses the biases in the financial sector that starve job-creating sectors while larding other industries with capital. What China needs to make its urbanization strategy the solution rather than an unsustainable bubble machine, to put it simply, is affirmative action for labor-intensive industries.

50% of new expats leave China early

Almost half of new expatriates leave China early because they have difficulty adjusting to the lifestyle, a consultancy firm said.

China Transition Institute (CTI) president David Israel-Rosen said most foreigners are unprepared for what life will be like when they arrive in China.

“It is moving from the West to the East,” he said. “It is not like moving from Chicago to Denver.”

“If you look at the literature, between 30 percent and 50 percent of expats go home early. The failure rates are astonishing.”

Alan Kahn, vice president of marketing and communications for United Family Healthcare, said identity loss and depression are more widespread than many people realize.
“These are very real issues and they do have a significant impact,” Kahn said. “It is very hard to ever fit in fully and that can cause lots of serious problems,” he said.

Jessa Parkman, a 28-year-old nurse who recently arrived in Beijing from Baltimore said she misses her family and is worried about losing job skills she spent years acquiring if she cannot find a similar position here in Beijing.

“It is very debilitating to be at home and not be so independent,” Parkman said. “I just feel very helpless at times and very dependent on other people. It is a struggle to get my bearings.”

Last Saturday, Parkman and her husband attended expat boot camp, which is run by the CTI, and offers basic survival training for expatriates.

Cheryl Smith, a psychologist with International SOS China, said spouses of executives who have been assigned to China can have the hardest time adjusting.

“They feel a big emptiness and imbalance,” Smith said. “I see a lot of alcoholism with expat women. I see a lot of depression. I see anxiety disorders and lots of marital issues.”

“There are many who have marital issues,” Smith said. “They don’t have enough time with their partner and there are also lots of infidelity issues that I see.”

Jasmine Keel, managing director of Inspired, a Beijing-based life and transition support company, said it is important to find an outlet for frustrations.

“It is hard when the spouse used to have a very strong professional identity. Maybe she was working so she had a professional world. Maybe she also had a very strong circle of friends so basically when she moved a lot of the world that she had disappeared,” she said.

Helen Zhang, co-author of “Think Like Chinese,” which explains Chinese thought and business culture from a Chinese perspective, said: “When you communicate with the Chinese, if you are open-minded and observant, there are clues you can pick up”.

“There are many ways for Chinese to say ‘no’ even including ‘yes,'” Zhang said. “We think totally differently.”

Israel-Rosen said the CTI would expand the workshop to a week-long boot camp offered in a number of Chinese cities as well as abroad sometime early next year.

“There is nothing fancy about what we are talking about,” Israel-Rosen said. “”We are talking about basic survival.”

Source: China Daily

Olympics STUFF for Beijing, Expo 2010 STAFF for Shanghai!

By Patrick O. Courtois

The Beijing Olympics have had a great impact on the city of Beijing, where a large infrastructure refurbishment initiative, fresh developments and a massive English language training campaign have been some of the elements of a drastic change and an amazing source of business opportunities for both local and foreign companies. Shanghai, with its upcoming Universal Exposition in 2010 is going through the same face-list, with the replenishment of the famous bund area, the accelerated infrastructure changes much needed to ease the megalopolis congestion problem and much more. Commercial opportunities are as well rising fast toward the May opening of the Exposition; opportunities that are being seized by both for local and foreign companies.

I have anticipated a rise in solicitaton from pavilion ran countries. Tendering processes are going on in most country having a pavilion presence, and many overseas third parties have, and still are, gotten in touch with me for solutions in search and selection of the pavilion staff, but most importantly staffing, enabling each pavilion to legally employ staff, local Chinese or foreign nationals, without having to establish a legal corporate entity in China. My firm being fully licensed and resourced for both activities it is of course a solution that we are capable of handling.

However what was not anticipated is the rise in solicitation from overseas SMEs.

Some the challenges faced by SMEs, while trying to seize their share of the tremendous financial and marketing opportunity the Exposition yields, can be briefly summarized as such:

• No local contact / connection in China
• No interest in forking out the additional cost, not to mention the lengthy process, of setting up a corporate legal entity for the limited duration of the Exposition (6 months)
• how to source bilingual and qualified employees locally
• how to legally employ local and eventually foreign national staffs during the Exposition period
• …

The opportunities are there, the challenges as well, but most importantly, solutions exist. Solutions that are legal, hassle free and well… affordable.

When you are operating an overseas SME, with a limited margin for error or financial flexibility, the process of establishing a commercial or operational presence in China can be seen as a daunting task. Entrusting a local business partner becomes therefore a viable solution, as you can stress-free focus on what you do best, that is sell and promote your products/services, while the local partner handles the “Chinese” side of things, like recruitment, employment, payroll, labor law compliance and so on, on your behalf.

Before signing up with a staffing company a few essential points are to be kept in mind:

• Do your research and make sure the firm you are engaging yourself with is LEGALLY LICENSED… that make sense, in the west at least, but I can guarantee you that a casual “sure, I can help” answer, here, is not what you should expect.
• Make sure they do have experience and references available for their staffing activities…
• Compare prices, as tariffs for staffing solutions can go from a few thousand US Dollars to a few hundred Chinese RMB from a firm to another, per month, for pretty much the same service level…
• Make sure that the firm has the INTERNAL resources to provide you with a pro-active and professional service. Too many firms around will be happy to take your money but will outsource payroll, contracts, … In China, quality is not always here while dealing with third parties suppliers…
• Foreign staffing firm versus Chinese firm? This is entirely your choice… but bear in mind that a foreign firm does not necessarily have the flexibility a local firm can have in terms of terms of quick fixes and might not be able to provide additional services like last minute lodging, visa and such… In addition, a foreign firm might have larger overheads and as such that might impact the quote you received.
• Finally, trust your guts. If the few emails you exchanged gave you a somewhat dodgy feeling or your primary contact gives of the sense of being “lost in Translation” at every phone conversation … walk away…

…or better, call me!…

Patrick O. Courtois is the Director of Operations at DaCare Executive Search, a leading executive search and HR services consultancy, based in the heart of Shanghai, China. (http://www.dacare.com/). Patrick has extensive management consulting experience in Asia, as well as European markets. With a current focus in executive talent sourcing in Greater China, Patrick engages with multinational clients in professional services, hi-tech communications and industrial manufacturing. Visit Patrick’s HR blog at http://hrshanghai.blogspot.com/.

Addressing China’s Talent Shortage

In this excerpt from the McKinsey Quarterly, the authors discuss ways some companies are successfully navigating the country’s skilled-talent shortage.

How to Address China’s Growing Talent Shortage

The imbalance between business opportunities in China and qualified executives to manage them will get worse — a lot worse — before it gets better.

By Kevin Lane and Florian Pollner

The growing need for talented managers in China represents by far the biggest management challenge facing multinationals and locally owned businesses alike. In a recent AmCham Shanghai survey of US-owned enterprises there, for example, 37 percent of the companies responding said that recruiting talent was their biggest operational problem — more than the number who cited regulatory concerns, a lack of transparency, bureaucracy, or the infringement of intellectual-property rights.

Separately, 44 percent of the executives at Chinese companies surveyed by The McKinsey Quarterly reported that insufficient talent was the biggest barrier to their global ambitions. …

Continued strong economic growth in China over the next several years will further fuel demand for good people. Mature economies too face a growing talent gap because of longer-term demographic trends such as lower birth rates and the retirement of the baby boomers. Leading multinationals in these countries therefore increasingly compete globally to find talent, intensifying the problem still more.

On the supply side, the gap is widening at all levels in China. For entry-level corporate positions, there is an ongoing mismatch between the sort of graduates most Chinese universities turn out and the type of candidate who would interest local and regional companies, to say nothing of multinationals. People who prove themselves effective will have increasingly high expectations of their current employers, and if those expectations aren’t met they may easily be tempted by lucrative rival offers. The market for experienced hires is even more challenging, especially when international experience beyond China and Asia is required.

Local companies and multinationals therefore increasingly fish in the same small pond of high-potential graduates and experienced managers with the right functional capabilities, leadership potential, and language skills. Many local companies are willing to match or exceed the multinationals’ compensation packages.

Companies that are successfully addressing the talent challenge in China stand out in a number of ways, including their ability to localize techniques that have worked in other parts of the world.

The most effective companies have a clear strategic view of their talent needs four to five years out, identify gaps at all levels of the organization, and segment their executives carefully. They develop and operate both a sophisticated external-recruiting machine and an internal-development and -training program adapted to the local Chinese environment.

Integrate strategic planning and talent planning. In the past, the world was short of capital and innovation but rich in talent, which was therefore a second-order consideration in defining corporate strategies.

In China today, by contrast, a leading company is likely to think of talent as a key input. A superior understanding of the available talent pools — and a realistic assessment of the company’s ability to attract and develop talent from them — shapes its strategic choices.

Know what you need — it may not be what you think it is. Top companies segment their talent base with the same effort and care that a top marketing department employs to segment its customer base.

That means making projections, based on corporate strategy, for perhaps four or five different salary grades and tenure groups, taking into account the expected number of internal hires, promotions, and likely attrition rates.

Given the rapid rate of change and the likelihood that new assumptions about issues such as employee turnover will have to be built into the model, these targets should be reviewed at least twice a year.

Companies should also define the types of functional capabilities they must build and identify the specific types of leaders they will need — for example, “business builders,” who can lead enterprises into new regional markets, or “execution drivers,” who can instill discipline in performance.

The functional skills and leadership abilities required in China will probably differ from those called for in developed markets … .

Managers in China might, for example, need to know more about simplifying or tailoring products, finding low-capital solutions, and managing alliances and government relations. A higher level of comfort with ambiguity or greater cultural openness may be necessary as well. Companies in China must therefore be prepared to recognize and address the difference between their talent needs in that country and in the rest of the world.

A stronger — and sharper — focus on talent. In China, any company’s local management committee should make talent a standing item on the agenda. The top team ought to review important initiatives every two or three months and invest time in devising efficient processes to gather data from factories, in making specific people accountable for acting on talent issues, and in setting and revising targets.

Senior executives need to take this responsibility personally by devoting significant and highly visible time to talent rather than assigning the problem solely to human resources (HR), and they must apply as much rigor and intensity to recruiting, developing, retaining, and allocating talent as they do to financial planning. We often find that companies ignore some of these basics, treating talent as a “soft” issue and thus ignoring its very “hard” financial impact.

…

Longer, stronger pipelines. University recruitment is a key element in the talent strategies of multinationals and local Chinese businesses alike. It requires a highly tailored approach to partnerships with institutions of higher learning, as well as a careful analysis of the top-tier schools, schools with a strong national reputation, and those with solid regional or local standing. (We often find that some of the most successful — and loyal — recruits can be found at universities close to the places where jobs open up.)

Recruitment efforts should begin with a rethinking of a company’s brand attributes and value proposition for Chinese graduates, whose attitudes on these issues often differ from those of their counterparts elsewhere.

Companies have a number of ways to establish a reputation on campus, and all must be explored — for instance, sponsoring a lecture or university chair, hiring student interns during summer vacation, and forging relationships with faculty members to support research. In other markets with similar talent challenges, companies and trade associations have even set up their own schools and universities to alleviate the scarcity of suitable high-potential entry-level talent.

Companies should build a portfolio of relationships with universities, aiming for close ties (developed by a specific team) with a few institutions and for looser links to a number of others. An important objective of these relationships should be to identify talented people at a much earlier stage than companies elsewhere might consider appropriate — as early as the second year of college.

IBM, one of the corporations now building strong bridges to education in China, has formed partnerships with several Chinese universities, donated millions of dollars to educational institutions across the country, and collaborated with the Ministry of Education to improve the teaching and curricula at Chinese universities.

Do-it-yourself development. Since the tight talent market routinely fails to provide candidates who have the right skills and leadership qualities, leading companies build training and development programs and put them at the center of hiring and retention. Global policies and programs may not work; companies in China must tailor them substantially to the mind-set of a highly willing but often relatively low-skill talent pool that nonetheless expects a fast track to senior levels and substantial responsibility.

Employees therefore ought to have clear development paths, which may include unusually fast promotion to intermediate tiers of responsibility, such as assistant brand manager. Apprenticeships and mentoring can promote both learning and commitment, and training should take place in the context of real work as much as possible.

P&G, which uses these tools very effectively, has built one of China’s strongest talent engines, with a high degree of localization. At Motorola, employees can benefit from such tailored offerings as the China Accelerated Management Program, for promising local managers; the Motorola Management Foundation Program, to train new managers in such areas as problem solving and communication; and the Motorola high-tech MBA program, a partnership with Arizona State University and Tsinghua University, which allows high-performing employees in China to earn an MBA in house.

Proactively building the basics is no less important; many Chinese companies either lack the evaluation systems, feedback loops, and other mechanisms regarded as the minimum level of best practice in the West, or they implement them poorly. Companies should not only build these processes but also train employees to manage them effectively (explaining, for example, how to set expectations unambiguously and to have meaningful feedback conversations).

Not the usual suspects. Given the pace of growth in the number of qualified senior managers and the time required to develop them, external recruitment ought to be a regular part of the talent solution in China. Companies should look beyond their own sectors for experienced leaders by identifying industries that have faced analogous challenges, such as similar distribution structures or regulatory barriers.

Often, the types of experiences managers have under their belts indicate their potential more accurately than do the industries where they work. When a top company identifies the key types of leaders it needs, across the ranks, it can define the background, experience, and qualities it wants them to have. Going beyond the usual suspects becomes easier: a company can then methodically identify situations, industries, and companies that have exposed managers to the specific types of experiences it requires.

Turning challenges into opportunities. China poses the dual challenge of aggressive business-building goals and an insufficient pool of talent to achieve them. Top companies turn this challenge into an opportunity by using major initiatives as a chance to develop new leaders from within and to bring experienced leaders recruited from the outside up to speed more systematically.

This approach does require a willingness to give relatively inexperienced people responsibility for major initiatives but can also help companies to develop leaders and capabilities more quickly. The keys to success include matching the right people to the right initiatives, ensuring that the initiatives are truly important, and providing the right support — to build both leadership and functional skills — so that leaders emerge in a “just in time” fashion.

Comprehensive and consistent. Our suggestions address critical aspects of the talent problem in China. But to be effective, they must be integrated tightly with other elements of a company’s operations and organization, including its corporate culture and HR processes.

Employees expect a company’s stated mission, values, and talent policies to hang together consistently; companies that value entrepreneurship highly should reward it highly, for example. This kind of alignment is a distinct challenge in a market where many employees, including managers, are relatively new to the companies they serve.

Companies in China must therefore revisit their HR policies and processes to ensure a good fit with the peculiarities of the changing local talent market; retention policies, for instance, should reflect the priorities of Chinese employees (such as whether they tend to leave for money, advancement, or better learning opportunities), and internal talent markets should be as vibrant and exciting as the external one.

The broad principles of managing talent in China may not differ much from those prevailing in other markets, but the extreme imbalance of supply and demand, coupled with the rapid pace of change in both the corporate and social domains, poses a distinct challenge. Companies hoping to compete successfully in China must raise talent to the top of the agenda. Those that get the solution right will create a real source of competitive advantage.

China draws skilled Chinese back home

Many who migrated to the U.S. are returning to an economy that offers richer career opportunities.

By David Pierson and Don Lee
February 24, 2009

Reporting from Shanghai and Los Angeles — Xun Jia, a doctoral candidate in theoretical physics at UCLA, expected to find a job on Wall Street crunching complex financial formulas upon his graduation.

But after meeting with 10 recruiters to no avail, the Chinese native is looking for new opportunities — in the country he left behind.

“I’m definitely considering moving back,” said Jia, 27, who always envisioned himself establishing a career in the U.S. first but is now firing off his resume to contacts in China. “They need people to go back.”

The Chinese government is counting on people like Jia — nicknamed “sea turtles” because they journeyed across the ocean and then came back — to help retool its economy and find paths to expansion beyond the cheap exports on which the country has relied for so many years.

Late last year, the government launched an aggressive campaign to lure them back and is spending millions to entice accomplished investors, bankers, researchers and engineers to come home.

During a 10-day series of job fairs in December, Chinese banks, universities and government agencies interviewed more than 4,400 people in London, Chicago and New York.

The southern city of Guangzhou has created a $30-million fund to attract overseas financial professionals and along with the city of Shenzhen is considering a multicity recruitment tour of the U.S. this summer.

The economic boom that lighted up China in the last decade had already served as a beacon to many expatriates, drawing thousands home from the U.S. and other places.

A record 50,000 Chinese students who studied abroad returned to China last year, an increase of 6,000 from the year before and more than double the number in 2004, government statistics show.

Though there are no official data, the presence of returning Chinese expatriates and foreign-born ethnic Chinese in China has grown over the years, experts say.

In Shanghai, about 4,000 businesses are said to have been founded by returned students, amounting to more than $500 million in investment, Chinese state media have reported.

Charles Zhang, the founder of one of China’s largest Internet portals, Sohu.com, was educated at MIT. At the prestigious Chinese Academy of Sciences, 80% of the faculty studied abroad, as did more than half of those at the Chinese Academy of Engineering.

“You can find most things you were used to in the U.S. in Shanghai now,” said Greg Ye, a graduate of Harvard Business School who returned to found NewMargin Venture, a private equity fund. “I feel like there’s lots more opportunity here.”

With the global recession slowing the economy to levels last seen in 2002, the Chinese government wants even more of those living abroad to come home in the next few years.

“They want to send a positive message that the government is forward-thinking” by looking overseas for help, said Clay Dube, associate director of the U.S.-China Institute at USC. “That’s the political and public relations side of it. Then there’s a real recognition that moving forward, you’re going to need these folks.”

Senior executives in Shanghai’s financial industry said the interest was so high that they alone carried 330 pounds of resumes from the job fairs back with them.

Although it’s unclear how successful the recruiting campaign will ultimately be, financial firms in Shanghai did recently offer jobs to 53 candidates as a result of the fairs, according to Caijing, an influential Chinese business magazine.

State media also reported that Chinese automaker Futian is eyeing laid-off workers in Detroit, hoping to hire about 10 specialists in research and development, production and sales.

The confidence with which China is courting its diaspora reflects the vastly changed attitudes about the country’s prospects since the economy started to flourish in the 1990s.

In earlier years, many Chinese students preferred to stay overseas while China was still struggling to transition out of a state-dominated economy. A generation of students in the U.S. were helped along by the asylum granted them after the Tiananmen Square crackdown of 1989.

But with China’s economic boom over the last decade, the idea of moving back became increasingly palatable and, in many cases, attractive to the ambitious.

Multinational corporations opened offices, entrepreneurs broke ground and living standards soared in the metropolitan areas along the coast.

“The younger generation has no hesitation going back,” said Henry Zhang of the Chinese Finance Assn., which helped organize a recent recruitment fair in New York. “I think it’s a permanent shift.”

Zhang, of Mountain View, Calif., is part of the older generation. He left China to study physics at the University of Texas at Austin in 1989 carrying all of $245. He knew that heading to the U.S. and staying there offered him the most opportunity.

“Before, you would go to America and never look back,” said Zhang, 45. “You had no regrets. You just had to march forward.”

Now, Zhang says he has the best of both worlds. He travels to China frequently to teach investing at an international business school.

He has turned down full-time job offers in China because he thought it would be too difficult for his family to leave America.

Shanghai, the primary destination for those returning, is looking to seize opportunities created by the global downturn to build an international financial center rivaling those of Hong Kong and Singapore.

Recruiting events now occur regularly. In a low-key affair at the end of December, a group of sea turtles invited 65 people from overseas to spend two days at a Marriott hotel in the Pudong district, China’s financial hub and home to Shanghai’s stock exchanges.

The event was supported by the Pudong government and gave bank executives and agency officials a chance to mingle with people like Will Lu, a Hacienda Heights resident who works for a merchant banking firm out of Los Angeles.

The 34-year-old native of Shanghai, who graduated from USC’s Marshall School of Business, says he was there to network with key people in government and business.

“As in Wall Street, you have to know someone to get into the industry,” he said.

The Pudong event was Lu’s third such recruiting session in China in a month. The others were in Beijing and Guangzhou.

When Lu left China in 2001, he remembers, he and his friends were drawn to the U.S. and its opportunities. That attraction is still there, he said, but the financial crisis has accelerated a shift to the East.

“The focusing point of the world,” he said, “will be changing to China.”

China: Labor disputes up 95 percent last year

BEIJING: Labor-related lawsuits nearly doubled in China last year mainly due to mass factory shutdowns, a senior official with the Supreme Court said.

A manufacturing powerhouse, China’s factories were hard hit when overseas demand for their exports evaporated in the wake of the global financial crisis.

Shen Deyong, vice president of the Supreme People’s Court, said at a news conference Monday that the number of labor-related lawsuits filed in 2008 jumped 95 percent, marking the biggest on-year increase of any type of suit.

He said most of the cases were filed in the country’s coastal southeast, home to a string of factory hubs. In some areas, labor suits increased about 200 percent compared to 2007, he said, without giving specific figures.

The spike in labor lawsuits was “closely connected to businesses slumping and factories being shut down,” he said.

“When they face difficulties, these businesses often reduce their costs by cutting the labor force and salaries,” he said.

He said a new labor contract law that came into effect at the start of last year and rising public awareness of worker’s rights also contributed to the rise in cases.

Unemployment is a major concern for China’s communist leadership because of fears it could trigger social unrest and demands for political reform.