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Four Ways to Stop Worrying About Talent in China

May 10, 2012 by Jean-Michel Caye, David C. Michael, Rachel Lee , and Christoph Nettesheim
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In This Article
  • Companies in China are going to find it increasingly difficult to find and keep talent: China’s available working-age population will peak in 2015, wages are rising faster than productivity, and the level of competition is increasing.

  • Because of their perceived “glass ceiling” and local companies’ competitive compensation packages, multinationals are likely to find it a little harder than local companies to attract talent.

  • Companies thus must get serious about investing in talent management in China—crafting a strong employer brand, building a structured talent-management engine, and transforming leadership.

 

Little more than a generation has passed since the Chinese Communist Party charted a reform course for moving from a planned, largely agrarian economy to a more market-oriented economy. In that short period, mainland China has become the world’s second-largest market, and the country’s huge supply of relatively low-cost workers has allowed China to become a manufacturing powerhouse serving the entire world.

With incomes rising steadily, China’s middle and emerging-middle classes have grown at astonishing rates, fueling demand for previously unattainable goods and services. Local companies and multinationals are betting that they can find new sources of growth in China.

But economic growth and the eager new players have run up against a substantial challenge in China: talent is increasingly difficult to find and keep, and this talent shortage will only worsen over the next decade. By talent, we mean the set of employees, usually highly skilled, who help give a company its competitive advantage. The talent shortage applies across all ranks of the organization, although the challenge takes a slightly different shape in each group.

China’s talent situation is just as pressing for homegrown companies as for multinationals. Global challengers such as Huawei Technologies, Mindray, and Chint are finding that they must be increasingly aggressive in their recruitment of Chinese talent, especially the recruitment of managers who are familiar with both the local and the global context.

No wonder, then, that The Boston Consulting Group’s recent survey of HR professionals found talent management cited as the highest-priority issue in China. Companies that compete in China will need to raise their investment in talent management and to treat human capital with the same rigor as a capital asset investment. They will have to professionalize every stage of their approach—from recruiting and training to engagement and development.