Recruiting in China

Expatriates are a big part of the business life in China. They have brought a good amount of technology, management and practical knowledge to bear on the challenges that face China¡¯s industrial base. In many ways you could say that they brought a new manufacturing platform to China and the economy has been at least partly built around it.

Unfortunately, expatriates tend to bring both the good and the bad with them. It cannot really be any other way, and it¡¯s not in any way a criticism.

For expatriates holding recruiting or HR positions in China this means that they bring the processes and models that relate to the hiring of staff in their home country. They hold these models in their head and they often try to apply them to the market here. Sometimes they know they are doing it, and try to minimize the damage. At other times they are not even aware that their assumptions are not valid.

In China, like much of the world, we are currently experiencing a ¡®War for Talent¡¯. It would actually be more accurate to say that this war continues to rage, but let¡¯s not split hairs. It¡¯s been going on for about 20 years but it ramped up significantly after China acceded to the WTO in 2001. One thing that caught my attention recently was a throw away line by an expatriate workforce development professional that companies around the world are solving their War for Talent, to some extent, by tapping into the pool of mature workers in their country. The suggestion was that this would work everywhere because, obviously, ¡®everywhere¡¯ is suffering from the retirement of the post-War Baby Boomers.

The reaction here in China was a kind of embarrassed incredulity, and a degree of irritation at such a lack of understanding of the market. So what was the basis of this lack of understanding?

Exponential Growths
First a little background material. Without laboring the point too much, demand for skills is a direct result of expansion in industrial production or increased demand for services. There is a lag in this demand but it can be shown that the overall demand has a direct correlation to the GDP growth of the country. Broad GDP growth leads to a broad growth in demand for skills and people.

In China things are a little different. The typical scenario for the growth of a particular industry has been that the government liberalizes the industry and it takes off fast, within a very short time. Latent demand kicks in and the sheer scale of opportunities causes an inrush of suppliers and manufacturers.

Simply put, the government gets out of an industry and allows private players to take the lead. Foreign players then form joint ventures with the local players and the quality and quantity of product increases. Meanwhile, the introduction of newer manufacturing methods drives the price down and this in turn drives more demand.

The problem is that this growth tends to be massively exponential. So what you see is a series of exponential growth curves that represent the take off in telecommunications, automotive, banking, shipping and so on.

If you remember anything about your high school mathematics courses you will see instantly see that it is very difficult to look back through the skills pipeline to find strong skills going back to the time before the market was liberalized. The available skill set for a given age group tends towards zero very fast.

So you are going to find it extremely difficult to find a 20-year veteran in any given industry in China coming to you with a real understanding of modern production methods. And of course you won't find the depth of experience in the younger professional who does have the understanding of modern production methods.