How Can We Compete?

Multinational corporations are beginning to struggle in the fight for local talent in China.

There was a time where Multinational Corporations were offering the dream jobs to China’s youth. Local Chinese candidates used to dream of working for multinational companies that would allow them to work with an international team, use English at work, travel to different countries, and receive a higher salary. In China there is a shift in reality; multinational corporations are no longer the best employment option in China.

Within the past century we have seen the rise of popular Chinese corporations such as Alibaba, Huawei, Tencent, Baidu, etc. One side effect of this change in is that multinational corporations are finding their standing with China’s best and brightest youth in a constant state of instability. Chinese corporations are offering higher salaries to retain the best; they are starting to participate in more overseas investment such as opening offices abroad. According to a survey of Chinese job seekers conducted in 2010 by Manpower, a human-resource consultancy, the number of respondents identifying Chinese privately owned companies as their primary choice is up by 5%, with foreign companies down 10%, compared to four years earlier.

Creating new ways to win the human capital battle in China will be imperative for MNCs. Over the past 13 years, the American Chamber of Commerce has conducted annual surveys of U.S. companies in China and frequently cites management-level human resource constraints as the top business challenge. Companies that are doing well in China are taking measures to keep their employees. As one multinational corporation in China noted, “compensation in China is very good, with a tripling of one’s salary three years out. That’s not including housing allowance, company car or interest-free loans you get as you get more senior. We’re not being cheap, but we simply can’t compete with the ridiculous stock options Chinese companies offer when they want a new marketing head” (Wharton).

Sometimes MNC companies just don’t understand how business needs to be done in China, and local Chinese talent may find that many policies and guidelines in larger corporations distracting and potentially limit their ability to get the job done in China. Now that the war on talent is heating up, we will see how the talent market changes in the coming years. There may even be a reverse brain drain from developed nations, to promising emerging economies such as China.

One thing is for certain, MNCs will need to partner up with experienced experts in talent management to gain a competitive edge in the China market from now on.

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