Home » Opinion » Chinese Views
Why one-size-fits-all doesn’t work in China: HR dynamics in a multi-tiered country
Print Edition
CHINA’S rapid evolution to a global financial powerhouse is creating a heightened demand for talented Chinese executive candidates and white-collar administrative staff. Gone are the days when multinationals looked to China only for low cost labor to manufacture goods primarily for Western countries.
Today, international HR executives, along with Chinese companies such as Huawei and Haier, are searching for talent, and are all competing in the same pool. Hence, the expression “war for talent” is getting popular.
While job openings in China often attract thousands of applicants, finding the right person can be both difficult and time-consuming. Keeping the right person in the right job is even more of a challenge. For example, in 2010 at least 50 new foreign law firms opened offices in China and began looking for qualified personnel. For these firms and many others, the quickest way to get experienced people was to find candidates in other similar roles. As a result, many multinationals report a turnover among their Chinese employees of 25 percent a year, and in some cases 30 percent or higher. Even employees who are satisfied with their work environment regularly face temptation.
One executive reported getting several telephone calls every week from headhunters offering more and more enticing incentives to switch companies. “It is hard to remain loyal and when you experience that kind of pressure,” he confessed. Such significant shortages are commonplace.
Changing perception
As competition for skilled employees increases, demands on human resource functions are more intense and complex. Only a few years ago, most multinationals could attract the best candidates from the best universities. Foreign companies were considered solid career choices. They offered prestige, foreign travel and other valuable international experience. Nowadays holding on to valuable staff in a competitive market is made much harder because the multinational HR departments face additional challenges.
The rapidly expanding purchasing power of China’s new middle class means most future growth for companies in China is likely to take place in the previously neglected mid-tier markets. The criteria for succeeding in these markets can be radically different from those required for the premium market segment traditionally targeted by the multinationals.
The premium market demands well-educated, multilingual employees who have a certain level of international sophistication and are able to function in two cultures: China’s and that of the company. While brand, technology, product quality and services matter in the premium segment, it is price sensitivity that defines the mid-tier segment. Competing in the mid-tier markets puts the emphasis on understanding the local market in the third- and fourth-tier cities and the low cost structure.
In this context, foreign language capabilities may come across as an unnecessary additional expense.
New criteria
Hiring less sophisticated candidates from second- and third-tier cities may make more sense since they are likely to be less demanding and at the same time they may have a better understanding of the market that the company is trying to penetrate into. On the same score, a candidate who has graduated from a prestigious university is not only likely to demand a higher salary, but may also have a harder time identifying with and understanding the likes and dislikes of the average mid-tier consumer in the third-tier and fourth-tier cities.
A leading multinational company that recently launched its own start-up targeting the mid-tier market decided to pick new hires for their entrepreneurial spirits rather than based on prestigious credentials. The criteria for selecting people and remuneration packages for the mid-tier segment are drastically different from the ones they used for the premium segment, which is consistent globally. Penetrating the mid-tier markets requires a radically different approach.
It’s also important to keep in mind that China is extremely big and diverse in terms of geography and economy. Regional differences with different levels of economic developments all call for nuanced approaches to talent management.
Adding further complexity to recruitment, it’s also important to remember that people at different stages of their lives aspire to different goals.
Winter Nie is a professor of Operations and Service Management at IMD. Shanghai Daily condensed the article for space.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
