Recruiting in China

Article by Jie Chen and Jianwei Zhang

As China’s strength in the global economy continues to grow, businesses need to consider the prospect of establishing operations within its borders. In order to successfully transact business in China or with Chinese enterprises, foreign investors, including financial investors and entrepreneurs, should consider setting up a subsidiary in China. This article provides general information on establishing a subsidiary by foreign investors, to help provide guidance and demystify the process.

Purpose Of Establishing A Subsidiary In China

Establishing a subsidiary in China should be considered by those who have long-term business objectives in China. Although foreign companies can enter into some commercial contracts with a Chinese entity or individual, such as sales contracts, license agreements, and distribution agreements, they cannot do business directly in China without an approved business license....

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HONG KONG -- Executive hiring by multinationals in Japan is set to reach a six-year high this quarter but a global credit squeeze will affect staffing plans at IT and finance firms in Hong Kong, according to a survey by recruitment firm Hudson.

The report was slightly less upbeat than a previous survey three months ago because hiring expectations in China and Singapore have dipped. Hudson said rising concern that the United States is heading for a recession would make banks and finance firms in the region more cautious about hiring.

Still, 66 percent of managers at multinationals in Japan expect to increase recruitment this quarter, according to the survey released on Thursday, up from 65 percent three months ago and the highest level since the Hudson report was launched in late 2001.

In China, 61 percent of managers at multinationals plan to increase headcount in the next three months, down just slightly from 64 percent in the previous quarter.

The survey by Chicago-based Hudson Highland Group Inc. covered responses from 2,500 managers at multinational companies across industry sectors in China, Hong Kong, Japan and Singapore.

"The market in Asia is still looking buoyant and it is quite separate from issues in the United States," said Gina McLellan, Hong Kong manager for the US firm.

"But from February to April we'll start to see the actual size of bonuses and whether recently announced global headcount cuts by some investment banks will come in Asia."

Asia's financial services sector is booming, helped by China's and India's rapid economic development, and international finance companies are expanding in the region.

JP Morgan says it could hire up to 1,900 people in Hong Kong in the next three years and Credit Suisse plans to hire at least 70 bankers in the Asia-Pacific this year.

However, there could be job losses too in financial centres Hong Kong, Singapore and Tokyo as investment banks including Citigroup, Lehman Brothers and UBS have announced plans to lay off thousands of staff worldwide in the wake of the credit squeeze, even though those cuts are likely to focus on the United States and Europe.

In Hong Kong, 58 percent of managers surveyed plan to add staff this quarter, up from 54 percent three months ago, but nearly a third of IT&T companies and 23 percent in finance and banking say the global credit squeeze triggered by problems in the US subprime mortgage sector would have an impact on hiring.

In Japan, 12 percent of managers across sectors say hiring plans will be affected by the credit squeeze compared with less than 10 percent in Singapore and China.

"Hiring expectations remain at a high level in all the markets surveyed and the outlook is positive," McLellan said. "But employers are caught between sharply rising salaries and bonuses on one hand and high staff turnover rates on the other. This is most marked in China."

The survey showed a third of managers in China expect to increase managers' starting salaries by more than 20 percent to attract candidates and 47 percent reported turnover rates above 10 percent.

In Singapore and Hong Kong, 19 to 20 percent of managers said they had to offer pay increases of more than 20 percent but in Japan only 4.0 percent of managers saw such a need.

* 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).

Chinese mainland employers across all industries, and the service sector in particular, remain optimistic in their recruitment plans in the first quarter of 2008, according to a recent survey.

The employment outlook survey, conducted by Manpower, a world leader in the employment services industry, questioned nearly 52,000 employers around the world, including more than 16,000 in the Asia-Pacific region and 4,100 in the Chinese mainland.

The Chinese mainland net employment outlook improved by two-percentage points since last quarter, but dropped slightly compared to the same quarter of 2007, according to the survey.

In the first quarter of 2008, the net employment outlook for the Chinese mainland stands at 14 percent. That figure is the percentage of employers anticipating an increase in hiring activity, minus that of employers expecting to reduce their workforce, said the Manpower.

The survey also found the strongest recruitment plans in the service sector, for the second consecutive quarter, as services gear up for the 2008 Olympic Games.

"The Chinese mainland, faced with companies' over-cautious recruitment activities, is drafting related detailed laws and regulations to clarify its labor contract law," said Lucille Wu, managing director of Manpower Greater China. She added, "Once this is complete, we believe employment relationships in the Chinese mainland will achieve standardization."

Among major cities of the Chinese mainland, employers in Chengdu, capital of Southwest China's Sichuan Province and where the outlook index has reached 19 percent, report the strongest recruitment expectations. That figure is a 10-percentage point improvement over the previous quarter and the strongest quarter-over-quarter increase to date.

"The result of the survey reflects a growing demand for talent in Chengdu, one of the most important cities in southwestern China," said Wu.

Last September, the Sichuan provincial government signed a strategic cooperation agreement on talent development with Manpower, in an effort to take advantage of Manpower's network to improve the local talent pool while attracting foreign investment.

In the other 26 countries and regions covered by the survey, first-quarter hiring is also expected to be positive although degrees of optimism vary, according to the survey.

In the Asia-Pacific region, employers in Australia, Japan, New Zealand, Singapore and Taiwan Province indicate they will slow the pace of hiring compared to the same period of last year. The strongest recruitment plans were reported in Singapore and India.

Atkins has started recruiting in Mandarin to attract Chinese engineering undergraduates studying in the UK

The country's biggest consultant takes on nearly 400 graduates a year - a third of them civil engineers.

Now Atkins head of recruitment Karen Wallbridge said the company had hit on the idea of recruiting directly in Mandarin to make sure it was reaching the widest possible audience.

Atkins has decided to use native Mandarin-speaking recent graduates within the company to address students from China who are studying for engineering degrees in the UK.

Wallbridge told a skills conference organised by Construction News: "Many people in India and China view engineering as a blue riband qualification, the way it used to be viewed in the UK. There are a lot of good young people coming to this country that we would like to bring on board."

She said the events had been extremely popular among Chinese students pleased to be addressed in their first language and that rooms had been filled with undergraduates keen to find a high-profile job.

She said: "It's made us review our policy on communication altogether. We look at recruiting good communicators.

"But now we are re-thinking whether this is the same thing as being able to speak good English."

The firm has already held a number of events at UCL in London and one in Manchester, the largest centre for Chinese students in the UK. It is planning more events at other universities.

Wallbridge said the Chinese recruits would be used not just in the UK but back in their native China where Atkins employs several hundred consultants.

She added the company had not ruled out expanding the plan to cover speakers of other languages.

Sourced from Construction News

By Maureen Fan

CAOTANG, China - This week in Caotang village, members of the Huang family were preparing for the Chinese New Year by making traditional dishes, scrubbing their already spotless homes and paying their respects to the family patriarch.

They were also discussing the fortunes of one of their most promising members, Huang He, a film and television student. In 2006, after 10 years of study in Northern Virginia and Michigan, Huang returned to China. Now, at the dawn of the Year of the Rat -- a symbol of prosperity -- he is contemplating heading back to the United States for work.

"I'm caught in between. My friends think I should set my feet firmly in the U.S. because I have already spent so much time there," said Huang, who wonders who will look after his parents if he leaves. "I'm not really lost. I'm not panicked. I'm just looking for my next opportunity and my next home."

Huang, 36, is a "sea turtle," one of the thousands of students who return to China each year after spending time abroad. For many of them, a visit to their family villages during the Lunar New Year, or Spring Festival, is near mandatory. But such visits also force them to confront changes in modern China -- changes that may prompt them to swim away again.

A rising tide of sea turtles

More than 1 million Chinese have studied abroad since this country began opening up in 1978, with just over a quarter of them returning after their studies. As the number of Chinese studying in the United States has risen over the years, so, too, has the number of sea turtles, so named because "overseas returnee" in Mandarin sounds like the word for the animal. According to the official New China News Agency, 42,000 students came back to this country in 2006, up 21 percent from the previous year.

But the China those students return to is not always the China they left. The phenomenal economic growth here has led not only to the development of villages and towns, but to a shift in Chinese values and priorities. Meanwhile, the sea turtles have experienced changes of their own.

After a decade studying communications, broadcasting and cinematic arts at Shenandoah University in Northern Virginia and Central Michigan University, Huang is a faithful mimic of President Bush, a regular viewer of "The Daily Show With Jon Stewart," a fan of the Green Bay Packers and a lover of steak. But he is also a citizen of China who misses his hometown dishes and his aging parents.

Caught in between

Fluent in two cultures, he is not quite at home in either.

"After living in the U.S. for so long, all sea turtles have to relearn their own culture," said Huang, who has been working in Beijing for a company that makes historical television dramas. "China is not the same China I remember. People's values have changed."

The media business that he recalls focusing only on propaganda is now driven by ratings. Deals that depended only on relationships now also require creativity and money. "People think in a more complicated way. I'm more straightforward now, but they're all zigzagging," said Huang, who also goes by Derek.

Even the village here of his father and grandfather, just 20 miles outside the central Chinese city of Xian, where his parents now live, has been marked by change. Most of the old-style houses with gently sloping roofs and mud walls have been replaced by modern brick and tile boxes. The street named after his late grandfather, a village leader who helped build the local irrigation system, is now just a numbered road.

Caotang used to be blessed by three crops a year. But graffiti attest to the recent sale of village land to a developer who has cut off water pumps, reducing the harvest to two crops a year. Across the main road from the village, residents can glimpse brand-new townhouses that overlook a golf course. The houses start at $280,000 -- to most villagers, an unthinkable sum.

"A cousin told me many of the young people in the village did not want to be farmers anymore, so they didn't oppose the sale of the land," Huang said. "Many who received money spent it on motorcycles."

Annual culture clash

At Chinese New Year, the village's population of 5,000 can grow to up to 10 times that number. Some traditions persevere: On Wednesday, a New Year's address from village officials will be carried to homes by loudspeaker. Officials will make their rounds delivering liquor and pastries to dozens of village elders.

Next week, the village square will fill with people selling paper and silk lanterns, plastic toys, cold rice noodles and sweet desserts. A sign above an outdoor stage, erected during the 1966-76 Cultural Revolution, declares that art and literature should be for the common people, not the bourgeoisie. But traditional opera performances are now supplemented by amplified pop music. For the first time, there will be a village-wide basketball tournament, to make the traditional holiday more relevant for younger residents.

For Huang, going home means visiting his village relatives whenever he returns to his parent's apartment in Xian. He has been trying to persuade a poor cousin to go out and find work.

"My plan this year is to add a few rooms to the house and then go out to look for a construction job," said the cousin, Huang Gang, 35, from the bed where he spends most of his time. "Can you tell me where I should go look for work?" he asked his more successful cousin.

Huang He, meanwhile, has difficult career decisions of his own. He has walked away from his Beijing job and plans to return to the United States in order to make more use of his valuable green card.

Some parents lose faith in foreign studies

That's a prospect that worries his father, Huang Ruike, a music professor who has changed jobs only twice in his life. He can't quite understand how his amply educated son has switched jobs four times already.

"Many years ago, I was very proud of sending both my children out to the U.S. to study. Many of my friends were jealous. But now that feeling has faded," Huang Ruike said over a lunch of fish and scallops.

Turning to his son, he added, "The American education you and your sister received is no doubt very positive. But many of your peers who did not study overseas, they all seem to be better off. Many of them were not as outstanding as you were in school. But those who didn't leave got caught up in the fast-paced development of China. If you didn't choose to go out, you'd probably have a car, a house, a wife."

Those are crucial barometers of success to most Chinese families, as opposed to the abstract ideas that Huang has in mind: a dream career and job satisfaction. His father, after all, gave up conducting and composing for the stability of teaching.

Nevertheless, Huang's parents are proud of him and his sister. And this being a new year, they tell him so.

"When your sister used to say, before the 1990s, that she wanted to study in the U.S., I always said, 'Stop dreaming!' " Huang's mother, Wang Lianyun, chimed in. "But now look at her. She didn't stop dreaming, and it happened."