2010-03-31
So, after the world financial crisis, what can we see is happening on the Chinese market? First of all there is a big belief in the future. Every other day I speak to managers with ambitious expansion plans for their Chinese presence.
Further the focus of the investments has clearly started to shift, as SEB:s China Financial Index also indicates. Raw material prices are going up, the increasing competition and rising labour costs is pressing a lot of western companies margins.
High costs in our already developed countries and the fact that the European companies soon or already compete with Chinese low cost products both here and in the home markets leads to moving whole units to China.
So the hot and new growing demand from European companies is to move or develop R&D units and actively set up a sales force on the spot here.
What happens to the demand and the existing workforce when a country goes from almost no economic market at all, to one of the world’s biggest economies in forty years? From the Cultural Revolution to needing highly educated staff and managers running international companies in less then a lifetime.
Then also adding the whole worlds international and multinational companies entering the Chinese market at about the same time, expecting and demanding a workforce that has the same experience as in west. A development that took us hundreds of years has happened here in an extreme pace. Naturally the amount of people that has had the relevant education, especially for working within R&D and sales and have had a couple of years working experience is very limited - The workforce hasn’t had the time to adjust yet.
Further limiting the workforce for international companies here is as always the language. The amount of engineers that can speak and work in English is very limited, but if it’s an international teem its often a must.
What are the implications then?
Well, most certainly this particular issue will diminish in three to five years when the workforce has started to catch up. Until then there are a few options when setting up an R&D unit or sales office in China.
One is to hire newly graduates and give them the work experience and training in house, which will keep the initial costs down but it will take time and effort to keep the talents. There are a lot of opportunities for talented Chinese people, every company here needs to actively care and reason about their talent and retention management.
Another option is to accept that the salary for experience personnel with a high level of English is quite high. A third way is to go the middle way, and find the high potential talents. As one of my clients says, I can always teach my new employees the technical knowledge, but the personality you can never change.
To summarize, Chinese employees is no different from the employees in west and wants the same things. Good salary, good leadership and a developing job from an employer that cares about them and they respect.
If you have that right – you’re safe!