Recruiting in China

VANCOUVER - Canadian companies doing business in China are having trouble finding people - the right people - in the world's most populous country.

As multinational corporations race to set up shop in the economic powerhouse, China's supply of experienced, English-speaking workers is rapidly dwindling.

"There is intense competition for well-educated, English-speaking, professional staff who have experience working with multinational companies," said Diana Barkley, director of public affairs for Vancouver-based Methanex Corp.

Partly to avoid that problem, Methanex, the world's biggest methanol producer, decided not to establish its Asia-Pacific headquarters in mainland hot spots such as Beijing and Shanghai when it moved from New Zealand earlier this year.

The company maintains a small marketing office of three workers in Shanghai, but it chose, instead, to base its regional head office in the former British colony Hong Kong, where the pool of talent is wider. ''When we chose to relocate our Asia-Pacific logistics office that was, in fact, one of many criteria we looked at," Barkley said.

Despite a population of more than a billion, China is facing a critical talent shortage, according to a report released last month by the international employment services company Manpower Inc.

Managers and executives are in greatest demand, the report, titled The China Talent Paradox, stated.

Older managers arising from China's Cultural Revolution lack the education and training needed to work as senior managers for foreign-based companies, while recent university graduates lack management experience, it said.

Most Chinese employees also have low English-language skills, and those who do meet companies' standards for high-level positions tend to be difficult to retain, especially when they're presented with higher salaries, career advancement opportunities and benefits by competing firms.

Although Chinese students and workers recognize the need to learn English, the shortage of fluent English-speakers is "still a very big issue," said Vincent Wong, president of Richmond, B.C.-based ACT360 Solutions Ltd., which markets its language-skills testing software to universities and companies in China.

Most university graduates have good English reading and writing skills, he said, but their ability to speak the language is often poor.

"Even in some of our own dealings there, the English standard isn't as fluent as needed for high-level business discussions," Wong said.

With the exception of some of the "more progressive" multi-national companies in China, most business operations there don't provide internal corporate training, leaving it up to employees to learn English themselves, he said.

But, in light of the strong competition for talent, Wong said he expects more companies in China will start offering language training for their staff.

According to the Manpower report, the number of university graduates in China is expected to increase by 22 per cent in 2006 to 4.1 million, which will add to the pool of educated potential employees.

Even so, demand is outpacing supply, and the report estimated it will still take six to eight years before graduates gain sufficient work experience to ease the current competition for mid-level and senior managers.

In a survey of 141 companies, Manpower found two in every five are struggling to fill senior management positions in China.

Manpower's spokeswoman Britt Zarling said recruiting and retaining qualified staff can be even more of a problem for small and mid-sized businesses.

Nearly 75 per cent out of more than 300 Chinese job candidates surveyed by Manpower said they would prefer to work for a wholly owned foreign company rather than a joint-venture or domestic Chinese firm because they tend to offer higher wages, and better training and working conditions.

But with large multinational corporations clamoring for the best workers, the competition among smaller foreign companies is all the greater, Zarling said.

In the report, Manpower noted China's talent shortage deals a "quadruple blow" for many companies. They aren't able to quickly jump on growth opportunities because they can't recruit workers needed to expand their businesses; they face higher attrition rates as staff defect to other companies; they are forced to replace people that have significant knowledge about their products and services; and they are distracted from their core business while they train new employees to replace those leaving.

As well, higher labour costs boosted by the rising demand for trained professionals is squeezing companies' margins, the report added.

Still, Manpower said, foreign-based companies find it more beneficial to hire local Chinese employees, rather than bring in expatriate managers.

"Local managers have an advantage over their western counterparts when it comes to working with their local staff, given cultural considerations," Zarling wrote in an e-mail.

It's important for western companies to adapt to the local environment and adopt an insider's perspective, she said.

"For those hardest-to-fill positions, companies may bring in their foreign managers (expats) to run the business but sooner or later it is likely that they will be replaced by local people," she added.

And despite rising labour costs, foreign companies still find it more affordable to shell out for local staff than to bring in foreign workers, said Alison Winters, general manager of the Canada China Business Council's Vancouver office.

Winters said some sources have indicated that companies can, on average, hire five Chinese workers for the same amount of money required to hire a single North American worker.

"They know it's terribly expensive to hire expats and the expats don't want to stay that long," she added.

Winters said that many of council's member firms have been able to weather the talent shortage in China by building loyalty among their staff over time.

The fundamentals of attracting and retaining employees are the same in China as anywhere else, she said. Employers need to select people that fit well within their company, offer strong leadership, and provide opportunities to move up in the company, as well as bonuses or other incentives.

"It's not any different from any other country," she said.