UK Recruitment International Conference
De-mystifying China
Carter YANG, China
Agenda
London
Sept. 10th, 2013
China General
Economy and
Market
China Employment
& Recruitment
Market
Set Up
Recruitment
Business in China
Agenda
3 Cities over 20 Mio Population
BEIJING
20.18 Mio
SHANGHAI
23.47 Mio
CHONGQIN
29.19 Mio
11 Cities over 10 Mio Population
HAERBIN
10.63 Mio
BAODING
11.19 Mio
SHIJIAZHUANG
10.27 Mio
TIANJIN
13.54 Mio
LINGYI
10.39 Mio
SUZHOU
10.47 Mio
NANYANG
10.26 Mio
CHENGDU
14.07 Mio
WUHAN
10.02 Mio
SHENZHEN
10.46 Mio
GUANGZHOU
12.70 Mio
Disposable Income in 2001 - 2010
Urban and Rural Residents
GBP / Year
2500
2000
The Disposable Income of
Urban Residents (GBP)
1500
1000
The Disposable Income of
Rural Residents (GBP)
500
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Active Emerging Business Cities
Fortune China recently conducted its fifth annual Emerging Business Cities survey, hearing from 1,278 Chinese senior
managers who ranked 50 selected cities based on the overall business environment, the cost of doing business, the
local talent pool, and the quality of life. According to the survey, the following sites have the potential to become the
next generation of mega-cities.
SHANGHAI
Today’s
Shanghai
Rural Area
60 Years Ago
Leading Financial
Metropolitan for
the past 10 years
BEIJING
Prosperous
Urban
Development
Old Beijing
Tian ‘An men
Square - Capital
City
GUANGZHOU
High Speed
of the City
Pearl River –
Beautiful Night Fall
Old Guangzhou
SHENZHEN
Easy to live
Dynamic city
close to Hong
Kong
Vibrant Economy made
by Foreign Investment in
TIANJIN
Rural Resort
Scenic view at night
Well-known for its busy
harbor in old times
CHONGQING
Rural Area
A city with largest
population in China
Old City in
CHENGDU
Rural Residency
Downtown
Square
30 Years Ago
Part 2:
General Employment Market
Key Grow Areas
•Development of China’s western regions to narrow the
country’s development gap, as part of the 12th FiveYear Plan is expected to bring more jobs across China.
China's Gross Domestic Product by
sector (%)
100
90
11
11
10
10
10
42
42
43
43
43
47
47
46
47
47
2007
2008
2009
2010
2011
80
•Healthcare, energy and technology will receive a
major boost from the 12th Five-Year Plan since they are
identified as China’s new Strategic Emerging Industries.
70
60
50
40
30
•The country is shifting from labor-intensive
manufacturing to high end technology resulting in
higher demand for skilled workers and technicians, and
increasing wages.
20
10
0
Industry
Services
Agriculture
Source: http://data.worldbank.org
Chinese Key Business Cities
Largest Employer and Regional Workforce
LARGEST EMPLOYERS – mostly state-owned companies
• According to CNN Money’s “Top companies: Biggest
employers for 2011”, companies in the petroleum and
electric utilities industry have the highest number of
employees in China. China National Petroleum, State Grid,
and Sinopec Group are considered three of the biggest
employers in the world.
CHINA’S TOP EMPLOYERS
Sector
Companies
Automotive
• FAW-VOLKSWAGEN
• Shanghai General Motors Co.,
Ltd.
• Shanghai Volkswagen
Automotive Co., Ltd.
Chemical/
Petrochemicals
• Central and Western China are seeing higher job growth
since employers are now looking for cheaper labor. Some
technical companies like Foxconn have set up their
business in these areas, prompting other companies to
follow suit.
• BASF
• Dow Chemical (China) Co., Ltd.
• Genius Advanced Materials
Group
• SABIC
IT
• SAS Institute China
Life Sciences
• Beijing, Shanghai and Guangzhou, on the other hand,
have been expected to increase the need for financial
talent. Foreign and domestic banks are even offering
higher pay to get the needed candidates.
• AstraZeneca China
• Roche Diagnostics Ltd.
Natural
Resources
•China National Petroleum
•State Grid
•Sinopec Group
• Second largest: services sector – postal service, aviation,
telecommunications, banks – which are also on CNN Money’s
top 20 biggest employers lists.
REGIONAL WORKFORCE
Total Number and Regional Distribution of
The New Generation of Migrant Workers
Number of New Generation of
Migrant Workers
848.7 Million
The proportion of the total number
of migrant workers
58.4%
Regional Distribution of the New
Generation of Migrant Workers
Output
Input
East Region
31.4%
72.3%
Middle Region
38.2%
12.9%
West Region
30.4%
14.4%
Human Capital of The New Generation of Migrant
Workers
Migrant Workers
Human Capital Feature
Rural Labor
Total
Years of Education
（years）
Education Degree（%）
Illiterate or SemiIlliterate
Primary
Older
New
Generation of Generation of
Migrant
Migrant
Workers
Workers
8.8
9.8
8.2
9.4
6.6
1.1
2.2
0.4
24.5
10.6
16.7
6.3
Middle School
52.4
64.8
65.2
64.4
Senior School
11.2
13.1
12.4
13.5
Secondary School
3.1
6.1
2.1
9.0
Junior College or Above
2.2
4.3
1.4
6.4
Vocational Training（%）
14.3
28.8
26.5
30.4
Main Industry Distribution of New Generation of
Migrant Workers
Migrant Workers
Industry Distribution（%）
Total
Older Generation of New Generation of
Migrant Workers Migrant Workers
Manufacture
39.1
31.5
44.4
Construction
17.3
27.8
9.8
Transportation, Storage &
Postal Industry
5.9
7.1
5.0
Wholesale & Retail
7.8
6.9
8.4
Hotel & Restaurant
7.8
5.9
9.2
Residential Service & Other
Service
11.8
11.0
12.4
Others
10.3
9.8
10.8
Future Plan of New Generation of Migrant Workers（%）
New Generation of Migrant Worker
Future Plan
Married
Unmarried
Total
Male
Female
Male
Female
Determined not to return to the
countryside
8.1
5.3
5.6
7.6
12.5
Try to stay in city, choose to return in
hopelessness
37.0
31.7
32.2
38.8
40.4
Return to the countryside while making
enough money
22.2
27.9
29.4
21.3
15.6
Will definitely return to the countryside
11.2
15.1
13.7
11.3
7.1
Unknown
21.5
20.1
19.1
21.0
24.5
Market Observation 1
• The service-oriented sector has overtaken agriculture as the leading
employer in the country, driving stronger demand for staffing as
service-oriented firms have continual staffing needs (vs. agriculture
jobs where workforce mobility is limited).
• Talent shortages continue to be a problem for almost 50% of the
employers in the Asia Pacific region. 23% of Chinese firms surveyed
mentioned that they are experiencing difficulty in employing talent - a
slight improvement over 24% in 2011.
• About one fifth of China’s 300 million urban employees are labor
dispatch workers. The number of temporary workers is likely to grow
another 30% to 50% in 2012 as companies scramble to cut costs in the
face of rising minimum wages.
Market Observation 2
• Recruitment market appears due to the change from planned economy
(before economic reform) to market economy;
• More university graduates competing for limited jobs; starting salary
rises;
• Senior level executive and management positions’ salary surpass its
equivalents in the mature market like US or Singapore;
• Contracting (staff dispatching), RPO, Perm Recruitment, Executive
Search are gradually evoluting into its own pace and shape, towards to
international standard;
Workforce to shrink in 5 years
China has capitalized on its large, young labor force
to rise as an economic powerhouse by opening
opportunities for various companies to tap its
seemingly endless pool of workers at lower costs. It
has been resilient during the economic slowdown,
although expanding at a less buoyant pace.
799.54
793.88
786.79
782.45
2007
2008
2009
2010
Workforce to shrink in 5 years (cont.)
• It is expected that in the next five
years, the working-age population will
be smaller.
• This was partly attributed to the onechild policy established in 1979 –
producing a declining young talent
pool and a booming number of seniors
in the market.
• It is expected that by 2030, there will
be 240 million Chinese aged 65 or
older, accounting for approximately
17% of its population.
SOURCE: Why China Is Running Out of Workers, June 2011
Wage Growth in China 1
According to a 2011 Hays Salary Guide,
68% of Chinese employers raised salaries
between 3-10%, and 22% by more than
10%. Increases are expected to be higher
still in 2012, with 51% intending to
increase salaries between 6-10% and
33% by more than 10%. Raises of 10% to
20% are common in China, as talent
shortages make retention vital.
2012 Base Salary Increases
All Sectors
8.15%
Technology
8.21%
Life Sciences
8.87%
SOURCE: 2012 Culpepper Salary Budget Update Survey
In Aon Hewitt’s 16th Annual India Salary
Increase Survey, Chinese wages were
projected to increase by 9.5%. Aon
Hewitt reported in January 2013 that the
2012 national average salary increase in
China was 9.1%.
SOURCE: BusinessWeek
Wage Growth in China 2
Most companies are willing to pay substantial
salary increases when recruiting new managers.
More than one-third (36%) of respondents to The
Hudson Report (Q1 2012) say they expect to pay
raises of more than 20%, while a similar
proportion (34%) expect to pay 11-20%. More than
four times as many respondents are prepared to
offer increases of more than 20% compared to
either Hong Kong or Singapore.
These figures suggest that employers in China are
taking a realistic approach to recruitment. They
are aware that many candidates are reluctant to
risk changing jobs during a time of economic
uncertainty and are therefore prepared to pay
generous rises to offset this risk.
THE HUDSON REPORT EMPLOYMENT AND HR TRENDS : CHINA JANUARY - MARCH 2012
Current Key Active Players
• Search firms
– Egon Zehnder; Heidrick & Struggles; Russell Reynolds;
Spencer Stuart; Korn Ferry;
• Mid level recruitment firms
– Hays; Michael Page, Robert Walters, Hudson, Bo-Le
• Staffing firms
– Adecco; Manpower; Ransdard; FESCO; CIIC
Part 3:
Set Up Recruitment Business in China
• Policies
• Strategies
• Scenario
Part 3: Set Up Recruitment Business in China
- Foreign Firms
Ownership:
• Foreign companies (Excl. Hong Kong and Macao enterprises) shall not establish wholly foreign-owned talent agency;
• Foreign companies (Excl. Hong Kong and Macao enterprises) must jointly establish talent agency with Chinese
personnel intermediary services enterprises.
Establishment Conditions:
• Chinese talent agency should be established above three years;
• Foreign investor should be engaged in more than three years of human intermediary services for foreign companies;
• The newly established joint venture must have full-time employee with 5 or more than 5 years working experience as
well as get a college education qualification intermediary services;
• Have an appropriate permanent office space (construction area of ​500,000 square meters, with more than one year
lease contract period), funding and office facilities;
• Registered capital of not less than $ 300,000, of which the proportion of foreign investment shall not be less than
25%, the Chinese investment of not less than 51%.
Procedures for Establishment:
• Submitted to the administrative department for industry and commerce "Enterprise name approval application", and
attain the "Company Name pre-approval notice";
• Submit the setup application to 21st century talent network to the Human Resources and submit relevant materials
to Social Security Bureau;
• Application report audit is completed within 20 days, you can get approved "talent intermediary services license";
• Access to "personnel intermediary services license" within 30 days, to the commerce department apply for approval;
• Apply for industry and commerce registration in the administrative department after getting approved of certificate
being issued within 30 days.
Part 3: Set Up Recruitment Business in China
- Hong Kong, Macau Firms
Ownership:
• Hong Kong and Macao enterprises can establish wholly-owned talent agency;
Establishment Conditions:
• Hong Kong and Macao enterprises should be engaged in more than three years of human intermediary services;
• Hong Kong and Macao enterprises must have the CEPA agreement;
• newly established company must have full-time employee with 5 or more than 5 years working experience as
well as get a college education qualification intermediary services;
• Have an appropriate permanent office space (construction area of ​500,000 square meters, more than one year
lease contract period), funding and office facilities;
• Registered capital of not less than $ 300,000.
Procedures for Establishment:
• Submitted to the administrative department for industry and commerce "Enterprise name approval application",
and attain the "Company Name pre-approval notice";
• Submit the setup application to 21st century talent network to the Human Resources and submit relevant
materials to Social Security Bureau;
• Application report audit is completed within 20 days, you can get approved "talent intermediary services
license";
• Access to "personnel intermediary services license" within 30 days, to the commerce department apply for
approval;
• Apply for industry and commerce registration in the administrative department after getting approved of
certificate being issued within 30 days.
Part 3: Set Up Recruitment Business in China
- Local Firms
The establishment of qualification:
• Businesses and individuals can establish their talents service agencies;
Establishment Conditions:
• Legal representative and the main person in charge of labor and personnel have more than 3
years work experience;
• newly established company must have full-time employee with 5 or more than 5 years working
experience as well as get a college education qualification intermediary services;
• Have an appropriate permanent office space (construction area of ​500,000 square meters, more
than one year lease contract period), funding and office facilities;
• Registered capital of not less than 100,000yuan.
Procedures for Establishment:
• Submitted to the administrative department for industry and commerce "Enterprise name
approval application", and attain the "Company Name pre-approval notice";
• Submit the setup application to 21st century talent network to the Human Resources and submit
relevant materials to Social Security Bureau;
• Application report audit is completed within 20 days, you can get approved "talent intermediary
services license";
• Apply for industry and commerce registration in the administrative department after getting
approved of certificate being issued within 30 days.
Part 3: Set Up Recruitment Business in China
- Key considerations
•
•
•
•
•
Positioning – which market and level
WOFE / JV (relations with local partners)
Culture – awareness and “culture fusion”
Financials – expectations and timing of ROI
Growth - conservative or aggressive
Part 3: Set Up Recruitment Business in China
- Scenario 1
– WOFE
– Silent local partner
• Migrate Management (DNA) & System
• Core team – how many, service length from
headquarter
• Connection with local team – attitude and daily
operation
• Culture – awareness, respect, fusion
Part 3: Set Up Recruitment Business in China
- Scenario 2
– JV / clear leadership by local partners
• Core team – set up, responsibility share, trust,
mutual agreement
• Localization – value, management system,
know-how transfer
• Culture – awareness, respect, fusion
Part 3: Set Up Recruitment Business in China
- Scenario 3
– 50 / 50 equal partners (challenging)
• Core team – how many, service length
• Connection with local team – attitude and
daily operation
• Culture – awareness, respect, fusion
Challenges in managing recruitment
business
• Staff turnover
˃ 10% to 30% are regarded as very normal range, some up to 50%!
• Talent acquisition
˃ Hire no business background or non-sales attribute quality lead to
failure
˃ Challenging to hire good people due to the industry reputation
• Training
˃ Systematic training not yet available for most of the firms;
• General mentality – long-term vision, quality expectation
˃ Frequent job hopping for short-term benefit rather than long-term
and quality
Opportunities for Recruitment Business
• Clients and candidates are getting used to the service and
expecting more and higher level of services;
• Market is fragmented – no “superpower” yet appears in the
perm market having over 2% of the market share; (no firm is
having over 20Mio UK Pounds per year);
• International firms not localized, large enough, and they are
slow! While local firms are not up to the scales and international
standard; (eg. Productivity level);
To re-cap for China market:
• Exciting, young, dynamic market, full of opportunities yet
challenges; the market is more open;
• No clear No. 1 player in each level, category of recruitment
market;
• Very different market from political and culture perspective, so
be fully prepared;
• International experience and network are effective resources for
the market;
• Having right local partner, developing local leadership is the key
for long-term success;
Thank you!
Welcome to China!
carter.yang@outlook.com