Recruiting in China

http://www.amcham-shanghai.org/AmChamPortal/MCMS/Presentation/Resources/News/News.aspx?Guid={42A31EE1-8559-48A3-8B39-7364BB94B6FF}

SHANGHAI -- Tired of the revolving door of Chinese managers and the rise in salary with each new hire, Paul Stepanek decided it was time to find cheaper talent elsewhere. So he went to India.

For roughly the same salary his previous Chinese quality-assurance manager received, Mr. Stepanek recruited 32-year-old Indian engineer Sandeep Sharma, who speaks English and has about a decade of experience.

"We've had a new manager every year for the past seven years. When you lose a manager...you lose all the history that you've had and all the training that's gone into it," Mr. Stepanek says. His company, USActive, helps U.S. firms buy metal and plastic machine parts in China and helps manage their factories, including that of Milwaukee-based manufacturer Jason Inc., where Mr. Sharma works.

As foreign companies like Jason set up Chinese factories in droves, there is an increasing shortage of competent managers capable of dealing with foreign clients. With English-language skills more important than a mastery of Chinese for these positions, companies are recruiting from India and the Philippines -- a trend that is expected to get bigger before enough local Chinese are trained by multinational companies in English and other skills to begin filling the gap.

"Anybody in Shanghai can go out and look for a job tomorrow and get a job that's going to pay 20% to 100% more than their current salary, because there are so many companies that are coming into China every week, every month," says Mr. Stepanek, an American who speaks fluent Mandarin Chinese and has lived and worked in Taiwan and China for 18 years.

During the next decade or 15 years, China will need 75,000 executive-level managers who can work both in China and in a global setting -- compared with an estimated 3,000 to 5,000 now, predicts Andrew Grant, who last year published a report, "China's Looming Talent Shortage." Mr. Grant leads the Greater China practice of global consulting firm McKinsey & Co.

"A lot of people had the somewhat superficial assumption that China's a very large place with lots and lots of people. Therefore the notion that there is a talent shortage in any way, must just be a misnomer," Mr. Grant says. "But now they are taking the challenge seriously."

For Mr. Sharma, who hails from the northern Indian state of Himachal Pradesh, China's booming growth has been a door to the world. His departure for Shanghai in November was his first trip out of India and his first time on a plane.

"I [didn't] want to be a frog in a well. I wanted to dive into the sea," says Mr. Sharma, who calls Shanghai "a city of dreams." He hopes his work there will eventually lead him to the U.S. or other locations where Jason has operations.

Mr. Sharma doesn't speak Chinese, but is taking lessons. Some of the Chinese staff who speak a bit of English help him, or he manages with body language. The inability to speak Chinese wasn't an issue in hiring Mr. Sharma, Mr. Stepanek says, as most of Jason's client base is in the U.S.

Technology-related companies and those in the service industry that deal with the West are also bringing in employees from India and the Philippines.

Filipino managers and staff are visible in some Shanghai clinics and high-end restaurants. Most don't speak Chinese.

Jesus Yabes, the Philippine consul general in Shanghai since 2002, says he has seen a noticeable rise in Filipino professionals coming to China for work. An increasing number, especially those with some ethnic Chinese background, are learning to speak Chinese, he adds.

But Mr. Yabes doesn't expect demand for Filipino employees to stay strong in the long term, as more Chinese people learn English and receive training or a Western education. Mr. Yabes also hopes for an improvement in the Philippine economy that could support the return of professional managers back home.

Sareet Majumdar, President of IC Intracom Asia, a trade-consulting firm, has a Filipino manager who oversees export projects in southern China. "Eventually, I hope to replace all my foreign managers with local Chinese talent," he says.

It might happen sooner than he expects.

McKinsey's Mr. Grant says he has seen a strong push in the past year by Chinese state-owned companies to hire consulting firms or work with multinational firms to start training employees. Multinationals are hiring smart local Chinese who don't have fluent English skills, and training them, he says.

"That should help close the gap in the short-term," he says. But for China to cope with the demand for managers that can work in an international environment in the long term, Mr. Grant says, a fundamental change is needed in the education system to raise the quality of university graduates.

In the meantime, smaller companies with tight costs may have to find creative solutions. Mr. Stepanek is on his next recruiting search -- this time to the Czech Republic and Slovenia.

(www.dacare-group.com)