Recruiting in China

By Melinda Liu and Sudip Mazumdar
Newsweek International

Aug. 20-27, 2007 issue - Earlier this year, students would show up for class each day at the Jalpaiguri Engineering College in West Bengal—and find no teachers. The Department of Electronics, Computer Science and Information Technology had just one full-time teacher (it's supposed to have 20). Finally, in May, the students—who faced impending exams despite having had no instruction—went into the streets to protest. Eventually, the government announced it would enlist teachers from other schools. But that proved easier said than done: when administrators went looking for recruits at one of India's oldest educational institutions, the Bengal Engineering and Science University (BESU) in Kolkata, they found that it couldn't spare any teachers—it didn't have enough of its own.

Wait a second: this isn't what the picture is supposed to look like. For years, pundits and the press have been warning that the millions of engineers and scientists India and China produce each year would soon challenge the United States' technical superiority. Just a few months ago, the London-based think tank Demos warned in a report that "the center of gravity of innovation has started moving from the West to the East," and that China could become a "scientific superpower" by 2050. Indeed, the raw numbers are impressive. China cranked out more than 600,000 engineers in 2005 alone, and India produces nearly 500,000 technical grads annually.

But these stats only tell half the story. Many of the graduates can't find work, and corporate recruiters in both countries lament a dearth of qualified applicants. "Out of the huge number of engineering and science graduates that India produces, only 25 to 30 percent can be regarded as suitable," says Kiran Karnik, head of the National Association of Software and Services Companies. The reason? Underfunding and a range of other factors have produced serious educational crises in India and China. These problems could soon wreak havoc on their economies. To sustain their breakneck growth, the countries will need lots of high-quality engineers and scientists. Yet neither have enough reliable universities to produce them. M.A. Pai, who taught at the prestigious Indian Institute of Technology in Kanpur, warns that the "lack of highly trained people at the Ph.D. level in both sciences and engineering will be a serious setback to India becoming a knowledge economy."

For China, the problem can (at least in part) be traced back to the Cultural Revolution, when ultraradical Maoists paralyzed universities. Many students and instructors were shipped off to farms—if they didn't wind up in "re-education" camps. Higher education started to rebound in the 1980s, and in the 1990s Beijing launched an ambitious program to expand college enrollment. But in the process, standards slipped. "Once you get in, it's [too] easy to graduate," says Prof. Mao Shoulong of Renmin University.

Experts also complain that Chinese schools emphasize rote memorization, which often "detracts from the quality of education," says Mao, who believe China's system fails to teach practical applications or to instill creativity. "That's why students in the United States might not have good marks in class but can produce effective missile technology, while students in China enjoy good marks in class but might not be able to make sufficiently good missiles," he says.

Chinese universities also face another common problem: poor funding. Many schools must now support themselves largely on tuitions. "This makes some of them lower their enrollment standards," says Prof. Chu Shulong of Tsinghua University. And the model just doesn't bring in enough cash. At U.S. universities, tuitions run into the tens of thousands. "But in China it might be one twelfth as much," says Mao. Thus while many U.S. students enjoy comfortable dorms, students in China have to share cramped and poorly maintained facilities. Many colleges are also short on equipment, labs and classrooms.

India faces similar deficits. Pay for university teachers is pitiably low (it starts at about $400 a month), especially compared with what they could make in the private sector (more than $10,000 a month). As a result, says Madhusudan Datta, an economist at Kalyani University, "talent gets soaked up by lucrative offers from industry." To make matters worse, India's educational establishment (like China's) is far too rigid. A recent example from BESU is revealing. A few years ago, science teachers there began keeping their labs open around the clock so enthusiastic pupils could drop in at any hour. Their students responded in droves and a more relaxed atmosphere began to prevail, with students sometimes showing up in shorts—a common sight in the West but comparatively rare here. After several years of this experiment, however, the administration abruptly ordered labs to return to their normal schedule and mandated that students must wear trousers, shirts and shoes on campus. "It seemed as if the dress code was more important than rigors of study," says Biplab Kumar Sikdar, an assistant professor of computer science.

Adding to India's problems is a conspicuous lack of vision amongst the bureaucracy and corruption at every level. "All this has affected the quality of our technical education," says Sikdar. One result: despite the large number of new graduates India rolls out each year, it only produces about 50 Ph.D.s in computer science, about the same number as an average public university in the United States.

To meet their rapidly growing demands for trained manpower, more and more top companies in both states have begun taking matters into their own hands, creating in-house training programs. In China, the trend was kicked off by Microsoft years ago. And in India, Infosys leads the way with 16-week comprehensive training courses that cost the company nearly $5,000 per employee. "The biggest challenge for India today and going forward will be how to create a skilled work force," says T.V. Mohandas Pai, an Infosys board member focused on human resources. "And the government is not waking up to this fact."

In fact, Delhi and Beijing are slowly moving in the right direction. In India, industry and scholars recently persuaded the government to ask two state education bodies to recommend ways to improve the country's high-tech and science programs. And in China, authorities have launched a drive to boost the reach and sophistication of technical training schools. Yet getting either country up to speed will be an enormous task. Which means the West can rest easy, at least for the moment—neither India nor China will leapfrog ahead anytime soon.

Employers in China who are fretting about surging salaries on offer to talented staff may be encouraged by evidence that employees are looking for more than a fat pay packet.

While job-hopping is rampant amid a talent shortage, there are growing signs that many mainlanders would be happy to stay with an employer if staying meant career development and a good working environment.

“Clearly the China market is hot and people are changing jobs for better pay. But pay is not the be-all and end-all,” said Gary Burnison, chief executive of U.S.-based recruitment firm Korn/Ferry International.

“People want to feel they are treated well and that they belong.”

In China, people often leave a company because they cannot get on with their immediate boss or feel they have no role to play, Burnison said.

Now some companies are making employee relations a big priority.

Nanfang Lee Kum Kee, maker of sauces and health products in Guangdong province, has introduced a “happiness index.”

Any time a manager meets a member of staff he’ll ask how happy the employee feels on a scale of one to 10. “If the number drops the supervisor needs to find out why,” said Sammy Lee, managing director of Nanfang.

“We want to make sure everyone is happy.”

This approach may be unusual in China but Nanfang enjoys a staff turnover rate of less than 10 per cent — in manufacturing where turnover rates of 50 per cent are not unusual — and was voted among the 10 best employers in Asia this year by global human resource company Hewitt Associates.

“Pay is not the key issue,” said Lee. “You’ve got to pay the market rate if you want to be competitive, but you also have to encourage staff to engage in their work and be happy.”

In a Hewitt survey, conducted every two years, career prospects replaced pay this year as the top motivation for employee engagement at 154 foreign and local companies in China.

“Compensation is critical in attracting staff but in terms of retaining people in China other things such as working environment, training and career opportunities become more important,” said Heather Wang, head of human resources for General Electric in China.

As a global company, GE can offer long-term careers in a variety of industries and countries but says it faces a challenge in developing staff quickly to keep pace with business expansion in China.

“We want people in China to get to the next level a year earlier than we would in more mature markets,” Wang said.

Career development requires investment in personal skills because Chinese workers often are held back by a rote-learning-based education system that stifles creativity, employers say.

GE says its China leadership program puts more emphasis on training in negotiating skills and working on projects outside an employee’s normal sphere of business.

A survey of multinationals by Korn/ Ferry shows a lack of innovation and creativity as the biggest challenge to finding leadership talent in China, after lack of international experience and poor ability to adapt to Western corporate culture.

Lee at Nanfang advocates “invisible leadership” that forces staff to take initiative.

He says he probably spends more time on the golf course, where he can think about strategy, than at work; delegates staff to deal with his e-mails; and does not possess a Blackberry or a computer, even in the office.

If the company is entertaining clients or holding events, staff decide how it will be organized.

“In most companies managers make the decisions and employees follow. We try to turn that upside down,” Lee said.

SHANGHAI: Wall Street bank JPMorgan said on Monday that it had won final approval to set up a wholly owned unit in China to strengthen its wholesale banking business in the world’s fastest growing major economy.

This move will make JPMorgan the second US bank to incorporate in China, after Citigroup did so early this year, while more than a dozen foreign banks queue to secure regulatory approval for their China-incorporated units.

Most foreign banks choose to incorporate in China because they want to tap the country’s retail banking sector through fast branch expansion across the country. Local incorporation makes it much easier for foreign banks to apply, to open new branches and offer a full range of local currency-denominated retail banking services to Chinese customers.

However, JPMorgan said it would still focus on its wholesale banking business — such as trade finance, cash management and financial derivatives — but may tap the retail market when it finds the right opportunity.

“We do see that China’s consumer banking and card markets have great potential for growth and we are very optimistic on the future growth of the market,” Charles Li, JPMorgan China chairman, said. “We would like to consider exploring the opportunities if we could find the right approach.”

Besides expanding the wholesale banking business in China, JPMorgan is making efforts to win underwriting deals for Chinese companies’ overseas listings. Currently, JPMorgan does not have any retail business outside the United States. China fully opened its banking markets to overseas lenders late last year, as part of Beijing’s commitment to the World Trade Organisation, which it joined in 2001.

Foreign banks not incorporated domestically are not allowed to issue bank cards independently and are required to impose a minimum deposit of 1 million yuan ($1,32,200) on retail customers. “The local incorporation won’t immediately accelerate the pace of growth and lead to aggressive recruiting of branch expansion,” said Mr Li.

“However, there is no doubt that the incorporation will form a strong foundation for progressive and long-term expansion.” JPMorgan will locate the headquarters of its China-incorporated subsidiary in Beijing, making it the first foreign bank to incorporate in China’s capital instead of Shanghai, the country’s financial hub.

JPMorgan currently operates three branches in first-tier Chinese cities including Beijing, Tianjin and Shanghai. “After local incorporation, all the three branches will be fully licensed for local and foreign currencies and products, and all branches will have a derivatives licence,” Carl Walter, JPMorgan China’s chief operating officer said.

About 40 percent of the top students in college entrance examinations have chosen overseas universities for their postgraduate studies, according to a survey.

Most of them have stayed overseas after finishing their intended courses, showed a survey that tracked 130 top performers in college entrance exams from 1977 to 1998.

Dubbed zhuangyuan, which means top contestants in the imperial examinations in feudal China, these students have been lauded by the media as examples for their younger peers.

The survey, released on the China Alumni Association website, found it worrying that many of the top students would not stay in China for higher studies despite the country's rapid development in the past few decades.

The government should find better ways to hold back talented students, said Cai Yanhou, a professor with Central South University in Changsha, capital of Hunan Province.

UNESCO figures show Chinese students comprise 14 percent of international students, the highest in the world. Their favorite destinations for higher studies are the US, Britain and Japan. Some experts said handsome scholarships, better job prospects and more opportunities to pursue further studies are the main attractions of foreign universities.

But Cai, who also led the survey team, said "top in exams" does not necessarily mean "top in career" because the study found none of the top students at college entrance exams had become a top Chinese expert or academic.

The entrance exam is just one of the numerous exams a person will go through in his life and that can't foretell his future achievements, said Wang Xuming, a spokesman for the Ministry of Education. He criticized the media hype over the so-called zhuangyuan.

Some of them are just more adaptable to exam-oriented education than their peers, experts said.

The media fill pages and time slots with their "success" stories to gain wider readership and viewership. High schools promote their former students proudly to attract new ones, and universities want to show their superior status by recruiting them, they said.

Wang hoped future reforms would do away with the score-oriented method so that students can be judged from all aspects.

China Daily - Xinhua

BEIJING (XFN-ASIA) - China's 51job Inc, a Nasdaq-listed provider of human resource services, and Recruit Co Ltd, an information services company in Japan, said in a joint statement that they have signed an agreement to establish a new company to provide coupon advertising services in China.

The company will be independently incorporated and is expected to have a total capitalization of up to 82 mln yuan provided over several years.

Recruit is expected to provide 60 pct of the funding in cash, up to 49.2 mln yuan, and the remaining 40 pct will be financed through convertible bonds of up to 32.8 mln yuan to 51job (nasdaq: JOBS - news - people ).

The zero coupon convertible bonds will include conversion rights for 40 pct of the share capital of the new company.

In April 2006, 51job and Recruit entered into a business alliance to form a corporate planning group to assess opportunities in the human resources industry and other new businesses in China.

51job operates 23 editions of 51job Weekly and distributes several mln copies each week throughout China.

Recruit, a printer and distributor of free coupon magazines, publishes Hot Pepper, which was launched in 2001 and has expanded to 49 area-specific editions in Japan.

(1 usd = 7.56 yuan)

According to China Times, the China Insurance Regulatory Commission has approved the establishment of Taikang Pension Insurance in Beijing this September.
The pension insurance firm, founded by Taikang Life Insurance and Taikang Asset Management and headed by Ma Yun, vice president of Taikang Life Insurance, has a registered capital of 200 million yuan (US$ 26.4 million) and mainly focuses on group pension insurance and enterprise annuities.

Sources from the new company said currently the company has decided upon its management while the process of recruiting talent is still underway.