China Recruiting Gets Harder
As foreign companies increase their presence in China, some are finding that local companies’ growing success is making it harder to attract Chinese managers. In the past, foreign or multinational companies often hired expats from the company’s home country for China-based management roles. But now many companies are opting for local talent who speak the language, know the culture and understand the market. At the same time, the prosperity of Chinese companies is heating up competition for talent, forcing foreign companies to alter their recruitment strategies and work harder to match salaries. “In the past, there was a lot of flow from one multinational to the next. Nowadays you see the interflow of executives from multinationals into the domestic companies,” says Grace Cheng, country manager for executive-recruiting firm Russell Reynolds Associates Inc.’s Greater China division.
In the first quarter, China had the highest number of initial public offerings world-wide, with 110 deals accounting for 38% of total deals globally and 52% of global funds raised, according to Ernst & Young LLP. Last year saw a spate of large Chinese IPOs from Agricultural Bank of China Ltd., E-Commerce China Dangdang Inc., and AIA Group Ltd. The trend continued with Renren Inc., Phoenix New Media Ltd. and others following suit this year. As Chinese companies go global, their appetite for managers with international experience has grown, making employees at multinational companies prime targets, says Ms. Cheng.
A recent survey by executive search firm MRI China Group of over 2,200 employees in mainland China found that 64% had received at least one offer from another company in the past 18 months. John Stroup, chief executive of cable manufacturer Belden Inc., based in Richmond, Ind., says his company has had a harder time lately recruiting and retaining Chinese employees. Chinese managers “are beginning to realize that multinational corporations are not their only option,” he says. Mr. Stroup’s company has also had to pay more to compete with local businesses, he says. “It’s not uncommon for people to have offers from other companies in your category with pretty sizable increases in pay,” he says. Belden has 1,900 employees in China, of which 80 are middle and upper management. In order to keep a steady pipeline of qualified managers, Belden changed its recruiting strategy: For the first time last year, it began taking on entry-level staffers it plans to groom into managers.