China Recruitment Marketing

 This overview aims to better understand the state of the talent marketplace in light of rapidly changing and complex conditions in China. I hope that the findings will help provide insights into your own situation and planning efforts. BTW, all content is informational purposes only and data inside from different sources.

• The recent financial downturn has dramatically affected all major economies. Major stock market indices were all down between 30-40%. GDP for most major economies contracted by 3-5%. China remained a bright spot with GDP growing nearly 8.1%. This was mainly due to initiatives laid out in the 11th five year plan (2005 through 2010) and a RMB 908b government spending stimulus plan. Those major economic drivers included:
  • Increase of government spending on social infrastructure such as social security, education and healthcare.
  • Increase government spending through the investment of RMB 908b to fight off the effects of the recent global financial downturn. Rural development and reconstruction to account for 60%
  • Focus on improving industrial restructuring in order to maintain economic growth and promote the global competitiveness of key industries
  • Decrease the importance of exports to drive economic growth. Offset gap by increasing domestic consumption and decreasing reliance on the US dollar.
  • Increase investments in foreign countries, natural resources and technology are a particular focus.
  • Follow a moderately easy monetary policy and give monetary policy a more active role to play in promoting economic growth. Emphasis placed on improving financial controls and oversight and increasing access to credit/lending.

• Although 2009 growth was the slowest in recent years, the IT sector still remains an important part of the Chinese economy. Increased spending on IT products is predicted in the immediate future; Telecom and SMB segments will lead the way. Information technology as a percentage of total GDP has remained around 2.5% over the last three years. Industry growth has been increasing at 8-9% per year and is expected to continue this trend over the next 3 to 5 years. Revenue for China's software industry in the first ten months is up 20.2% from a year earlier The SMB and Telecom market are expected to be the largest spenders on IT products and services in 2010. Expenditures by transportation/logistics companies and the healthcare industry will also experience rapid growth, 19.2% and 8.3% respectively. A slight decrease in expenditures by Financial Service firms is expected and is the result of pressure to cut budgets and increase performance. 

• Taking advantage of opportunities may be challenging; finding qualified staff is a main concern among senior managers. This trend will continue in the future as China faces a quickly graying society. Competition for talent is predicted to remain fierce. On one hand, there is a surplus of low quality labor, on the other companies are facing great challenges finding qualified talent. Among the total population in China, nearly 70% between the ages of 15 and 60. We have 19 million students in 1,500+ universities and colleges and 6.1 million fresh graduates in 2009 as well as 1.6 million engineers, but only 10-20% suitable for employment at MNC’s. Meanwhile, 87% of all turnover workforce attributed employees between the ages of 25 and 35 years of age. This leads to a very complicated recruiting environment and a paradox sometimes referred to as a ‘shortage amid plenty’. In addition, the economic growth experienced by China over the last 10 years has also increased demand for qualified personnel. From demand factors, more than 40,000 new MNCs enter China’s market every year. Recent years has seen a rapid increase in the demand for software engineering talent. This demand is expected to increase at a rate of 20% per year and appears to be closely linked to FDI. But from supply factors, most talent is located in major cities in China’s costal regions. Along with the Geo Expansion strategy by MNCs to Tier II or III cities, they will face a serious shortage of talents in remote locations. Therefore, competition for top talent in China remained fierce. Even though nearly 70% of China’s 1.3 billion people are in the workforce, very few are suitable for employment at high-technology MNCs. This employment paradox is the result of educational, economic and technological factors.

• A clear trend can be observed: during the past three years foreign companies are losing their attractiveness among Chinese graduates, while state-owned company and the government are gaining in appeal. Simply being a MNC is not enough.. State-owned companies are perceived to provide good work/life balance and secure employment. These things are very important career goals for Gen-Y. These companies also are perceived to provide better benefits than foreign companies. Recent layoffs and ‘hiring freezes’ enacted by MNCs during the recent global financial crisis are the main factors that have “pushed” students to other choices. For companies that are still hiring, it is imperative that they make this fact very clear to attract more attention from graduates.Therefore, employer brand is becoming important and must be proactively managed to ensure a high quality candidate pipeline.

• Not only is finding recent graduates a challenge, so is keeping experienced employees. Turnover has become a critical issue. Both economic factors and social factors effect turnover. We have seen decreased satisfaction with pay and benefits because rising costs of living (particularly in real estate prices) makes employees feel compensation is rising too slowly. Meanwhile, employees are no longer satisfied with simply having a job. Many have career goals and lifestyle expectations. So moderate increases in salaries and benefits by other companies or competitors can dramatically improve lifestyle or career opportunities. This leads to frequent ‘job-hopping’. To help combat this issue, many companies have annual salary adjustments; the largest changes have been in Tier II cities. Salary increases in Tier II cities are increasing at a higher rate than in most other markets due to increased competition for talent and rapid development.

            

• Results are mixed. Although salaries have continued to go up, employee satisfaction with compensation has decreased. According to Hewitt Best Employer in China Study and Watson Wyatt 2009 Workforce Engagement Survey, the top reason for leaving from 2007 to 09 keep unchanged - better C&B packages. Employees said: “Other companies can provide better C&B packages, current benefits cannot meet our needs” or “C&B package does not reflect my contribution”, etc. No doubt, it’s not surprising. But the reason for staying is becoming to “Good relationship with my colleagues” from “Good career opportunities”, which really leaves us lot of room for thinking.