Recruiting in China

Chinese companies are energetically wooing execs away from multinationals

By just about any measure, Aaron Tong was a success. He was pulling down $100,000-plus as a senior manager of Motorola Inc.'s (MOT ) cellular division in Beijing and had worked in Singapore and the U.S. But two years ago, when TV-and-phone-maker TCL Corp. asked if Tong might accept a position as vice-president, he jumped at the chance. Although the modest salary hike and stock options were welcome, that wasn't what really attracted him. "They were offering me a more challenging job," says Tong, 42. At "a Chinese company, you can do a lot more important things than with a multinational."

Tong isn't the only Chinese manager being poached from the global giants. Tang Jun, president of NASDAQ-listed online gaming company Shanda Interactive Entertainment (SNDA ), served as president of Microsoft Corp.'s (MSFT ) Chinese operations. Jean Cai, head of corporate communications at Lenovo, is a veteran of Ogilvy & Mather Worldwide and General Electric Co. (GE ) Telecom equipment maker Huawei has hired people away from Motorola and Nokia, while Haier (appliances), China Netcom (telecoms), and Brilliance China Automotive Holdings (CBA ) have lured staffers from consultants McKinsey, A.T. Kearney, and Boston Consulting Group.

This migration is a big change from five years ago, when no self-respecting white-collar worker in China would have dreamed of quitting a foreign company to join a local outfit. These days the turbo-charged growth, global aspirations, and deep pockets of China's ambitious private companies are looking better all the time. In 2000 locals made up just 20% to 30% of the managers recruited in China by headhunter Heidrick & Struggles. Today that figure is 60% to 70%. Local companies are "cherry-picking the best talent," says by a managing partner for a headhunting company.

Managers say working for local companies lets them take on more responsibility and make a greater contribution. That's what made Wu Xianyong, a 34-year-old native of the southern province of Yunnan, quit flogging Crest toothpaste and Pringles potato chips for Procter & Gamble Co. (PG ). In 2004, after nearly nine years at P&G, he jumped at the chance to serve as vice-president for marketing at Li-Ning, China's top athletic-shoe maker and sports apparel marketer. He has since taken on oversight of international business as well. "Li-Ning can provide me with a much better platform to play on," says Wu, who also snagged a 50% raise plus generous stock options. "I'm not just managing a brand. I do sports marketing, events, and PR, and I manage research." In fact, Li-Ning is chock-full of multinational alums: The vice-president for sales formerly worked at Avon Products Inc. (AVP ), the vice-president for footwear came from Nike Inc. (NKE ), and the chief financial officer left news wire Reuters Group PLC. (RTRSY ).

Much of the shift stems from global aspirations. By hiring execs with experience at multinationals, the Chinese figure, they'll have a leg up when they go abroad. For instance Gome, China's No. 2 retailer, has ambitious plans to expand. So in January it recruited Weng Xiangwei, a 37-year-old former vice-president in Morgan Stanley's mergers-and-acquisitions team, as its strategy chief and financial guru. "When a company grows to a certain size, it needs to think about more than just where to open its next store," says Weng, a Shanghai native with a PhD in biophysics from the University of California at Berkeley.

Some managers take a pay cut when they jump ship -- although stock options often fill in the gap. That trend will accelerate as more private Chinese companies list on overseas stock markets. Deng Kangming, for example, saw his salary drop by 20% when he left his job as head of human resources at Microsoft in Beijing for a similar job at Net auctioneer Alibaba Technology, but he was granted a generous dollop of options. Two years ago, 27-year-old Zhou Donglei took a 35% cut when she left Japan's Softbank Infrastructure Fund in Beijing to run business development and investor relations at Shanda. "What drew me was the opportunity, definitely not the salary," says Zhou.

Yet salary can play a role in many searches, especially for sought-after talents such as finance. One veteran of the Bank of China saw his pay jump in just six months from $70,000 to $180,000 after a bidding war broke out for his talents among a foreign bank and two Chinese companies, according to Heidrick & Struggles: The manager ended up as CFO for a local valve maker.

China's state-owned giants are also likely to pay a premium to woo talent. For instance, Ping An Insurance Group, China's second-largest life insurer, has hired managers away from Canadian Imperial Bank of Commerce and American International Group -- often upping their pay by as much as 50%. Ping An just hired a manager with five years of experience at an international bank for $65,000 per year -- a huge sum in China, and 40% more than he was making at his old job.

Most telling of all, Chinese companies are even starting to look overseas for talent. Michael Zhang, a 37-year-old native of Sichuan province, worked for four years at medical device maker Guidant Corp. (GDT ) before being recruited as CEO of Microport Medical (Shanghai) Co., which makes stents used in unblocking arteries. He, in turn, hired 33-year-old Zhao Ruilin, who had joined rival device-maker Medtronic Inc. (MDT ) in Minneapolis after earning a PhD from a Harvard University/Massachusetts Institute of Technology joint program in health sciences and technology, as well as an MBA from the Wharton School. Zhao now serves as Microport's vice-president for business development and strategic planning. He earns just $60,000 -- a bit more than half what he made at Medtronic, though he also gets free housing. Still, he says, the greater responsibilities he has, coupled with Microport's hypergrowth -- sales this year are expected to triple, to $30 million -- make up for the pay cut. "Working for this company is so much fun," Zhao says. "Now I'm interacting with bankers, private equity shops, lawyers, and accountants."

The drive for talent by China's best companies feeds into the boom for middle and upper managers at both multinationals and local firms. One recruiter estimates managing directors at Chinese state-owned companies can earn up to $300,000 a year plus a car and housing, while middle managers with the right skills pull down $70,000 or more. Annual raises of about 13% to 14% are necessary to hold on to employees, while poachers offer pay jumps of 20% to 30%, according to Hong Kong recruiting firm Bo Le Associates. "For mid-level management, the market is really hot," says Bo Le managing director Louisa Wong Rousseau.

And don't expect things to cool off anytime soon. China will need 75,000 globally capable execs in the next five years but has fewer than 5,000 today, estimates McKinsey. As long as multinationals in China train locals to run their operations, there's likely to be no shortage of mainland rivals eager to snatch them away.