Recruiting in China

* Mainland executives lead the talent contest
* Talent wars tougher than Europe
* Multinationals only compete long-term by sharing know-how
* Chinese companies going global need leadership due diligence

SHANGHAI, China--(BUSINESS WIRE)--A growing pool of extremely talented Mainland Chinese executives are gaining internationally competitive compensation as the best in class among all nationalities, according to The Boyden Report – Exploding the Myths in China released today by Boyden Global Executive Search. The report is based on interviews with senior executives of Chinese and multinational subsidiary organisations.

“Mainland companies are beginning to pursue international ambitions and attracting Chinese executives back from Western companies, where global exposure has been gained in a local context,” says Charles Bien, Managing Director of Boyden China. “The combination of a Chinese culture, internationally competitive remuneration and the chance to learn best practices is very powerful.”

The report explores eight commonly held myths about business in China including:

The Chinese Economy as a Threat
China vs. India: Zero Sum Game?
One China, One Market
Human Resources Best Practices
Chinese Returnees
“War for Talent”
One Country, Two Systems
Proprietary Technology
Following are highlights of the report:

Learn How to Ride the Tiger

The opening myth of report examines the fear among Western Companies that the rapid development of the Chinese economy is a competitive threat. Respondents explain how this prevents multinationals benefiting from the significant advantages China has to offer. “The Chinese have an expression: ‘learn how to ride on the tiger’s back,’” says Mr. Francis Yuen, President of Trane Asia in the report. “Western companies need to realise that you should never try to fight the tiger—learn to leverage the tiger.”

HR: Organisational Landscape and Competitive Advantage

Interviews with Mainland and multinational executives found that China’s Organisational Landscape is far more heterogeneous than many Westerners appreciate. Most respondents agree that Chinese companies tend to lag behind multinationals in making human resources part of their strategic planning. Businesses that do focus on HR strategy gain a notable competitive advantage.

“We adopted many HR policies from the legacy of China business across our international operation including the legacy of the IBM PC division,” says Reid Walker, Lenovo’s Vice President of Global Communications. “Our new performance management system is based upon many of the ‘pay for performance’ practices of our original China operation. These practices helped Lenovo grow from a small start-up to a leading global multinational.”

Local Market Knowledge is King

The general consensus is that it is a mistake to focus on returnees for international perspective in China operations. Senior executives interviewed believe returnee managers are helpful in the short-term and for transitional periods, but they have often adopted a Western perspective that doesn’t always fully embrace or comprehend the Chinese perspective. Companies in China need managers with local market knowledge, including an ability to communicate well with key officials and understand regional business practices.

“Just as it is very difficult for companies to expand or market nationally in China, it is hard to move executives from one province to another,” explains Brian Renwick, Managing Director of Boyden China. “The logistics of moving people can be as challenging as the logistics of moving goods.”

Talent Wars Worse Than in Europe

Senior executives interviewed for the report concurred that there is as big of a war for talent in China as in other markets, and perhaps even more so in China. Opportunities and salaries are rising fast in China and labor costs are going up. Competition for managers changes in relation to the competitiveness of the sector or industry.

“The war for talent is very fierce in China,” said Bengt Hamsten, Former CEO of MAN Truck & Bus China; Professor, Mechanical Engineering, Chongqing University. “If anything, the talent wars are worse than in Europe.”

Change programs tend to include a comparison of the company’s values with an individual’s perception and preferences. Companies should view the recruitment of a key executive as a microcosm of change. The rapid pace of development in China means that companies need to hire with a view of how a role will evolve in the near future.

The Boyden View for Multinationals in China and Mainland Companies

For multinationals in China, the overriding challenge to overcome is fear of sharing their know-how and intellectual property with their subsidiaries. If they fail to do this, Chinese competitors will soon outperform multinational subsidiaries, and the advantages of having operations in China will be lost. Boyden’s Brian Renwick explains, “The potential shift in manufacturing jobs is having greater global benefits in quality of life and access to goods. Mature economies have a rare chance to transform themselves through the opportunities offered by China.”

The challenge for mainland Chinese companies with global ambitions means focusing on executive talent during the due diligence phase of an acquisition.

“For Chinese companies wanting to expand overseas, understanding the management culture and the executives they are buying is as important as financial due diligence,” says Boyden’s Charles Bien. “Assessing the senior executives in an acquisition target enables Chinese companies to gain a greater understanding of the real value of the deal.”

About Boyden World Corporation

Boyden is a global leader in the executive search industry with more than 70 offices in 40 countries. Founded in 1946, Boyden specialises in high level executive search, Interim Management and Human Capital consulting across a broad spectrum of industries. For further information, visit the firm’s website at www.boyden.com.

About The Boyden Report

Other reports in The Boyden Report series include The Boyden Report: India – the Sun Rises on the Indian Executive (3Q 2007) and upcoming The Boyden Report: South America (1Q 2008).