Recruitment in China Chinese Shanghai head hunter headhunter executive search recruiter in china manufacturing start-up in china china talent leadership recruitment automotive industry recruitment recruiter
China recruitment challenges chinese executive search headhunter head hunter manufacturing
Presented By: Chris BaillargeonTier One Executive Search
Senior Consultant at Tier One ExecutiveSearch Specialize in placing manufacturingprofessionals in APAC (80% China) Mid Management to C-Level Sales, Finance, Engineering, Operations, Quality, Purchasing
Due to their competitive nature, young talent inChina are more open to career opportunities thatwill put them in a visible position. They are often very receptive to recruiters, andwill not hesitate to leave their employers for abetter opportunity. This makes finding the “right candidate” with abalance between strong experience and potentialgrowth with your company, even more of anecessity.
Sourcing Use established network of contacts to identify talent. On campus recruitment for entry level positions. Avoid using job boards or advertising, as this produces “bottomlevel” talent. Source candidates who are passively looking opposed to thosewho are actively looking for new employment. Consider outsourcing recruitment function if you do not havethe resources or experience to smoothly manage the process. Make sure HR and the hiring authority are coordinated.
Resume Scanning Candidate resumes are often not professionally formatted. Language barrier causes frequent spelling mistakes. Work experience may be listed in reverse chronological order. Focus more on the content of the resume rather than theaesthetic. Line items commonly found on Chinese resumes:• Picture• Age• Marital Status• Salary (Sometimes)
Frequency of Career Change High growth in China has led to more need for senior leveltalent, with global experience. Candidates are aware that the China job market is still acandidate driven market. Often will be interviewing for multiple positions at onetime, even if they have just accepted an offer. Employees are less loyal to their employers and are more willingto make a change for a higher salary or better title. Identify why it is that a candidate is considering a career change.
Qualify for Cultural Fit Does the candidate have experience working in a MNC? Has the candidate had previous experience reporting to aninternational? Face to face meetings give more accurate impressions ofcandidates, especially if they have poor English skills. If required, make sure English skills are properly evaluated byconducting some of the interviews in English. Who does the position report to? What is their; age? sex?nationality?
Location Cities in China are classified by tiers. Cities are evaluated on average income, education, population,sophistication, etc. Candidates will often not relocate from a higher tier to a lowertier city. Employers in lower tier cities often have longer searchprocesses, and a smaller candidate pool. Some employers in less attractive locations will pay foremployees living quarters and frequent trips home.
What is your Legal Entity? Are you a Wholly Owned Foreign Entity? Joint Venture? Do you have a majority share in the JV? Candidates like to work for the decision maker in thepartnership. If candidates are employed by a minority shareholder theybecome frustrated that they are not being heard. If there is candidate resistance reporting exclusively to the JV,matrix reporting structures can be beneficial.
Understanding Candidate Needs It is rare that a candidate will make a lateral move, unless thereare other variables involved, i.e. job security, family issues, etc. Job seekers will often look for a functional increase inresponsibility to expand their skill sets. Highlight the companies’ growth potential, and the candidatesrole in that. Be flexible with titles of positions. Candidates in China place ahigher value on title than in North America.
Conducting the Interview Process Be mindful of time zone differences when scheduling interviews. Timing is crucial. If the process takes too long candidates maybecome “turned off” the position, or accept another offer. On first contact, focus on attracting the candidate to yourcompany. Make sure the candidate is aware of the reporting structure, andthat they have built a rapport with upper management. Manage expectations throughout the recruitment process, andmake sure the candidate understands what their duties will befrom day one.
Things to Consider… Fluctuating exchange rates will change the real cost of employeesalaries, budget accordingly. Four Mandatory Benefits in China:• Pension• Unemployment Insurance• Medical Insurance• Occupational Injury Insurance Candidate salary expectations are typically 20-30% increasewhen changing positions. Contracts are structured differently.
How will the Contract Look Different? Due to high tax rates, contracts in China are often broken intomultiple line items:• Base Salary• Bonus• Car/Driver• Home Allowance• Other Salaries are calculated on a monthly basis, with 13 monthssalary being mandatory. Bonus can be calculated on a percentage of salary, but is oftencalculated by month (ex. Variable Bonus: 0-3 months’ salary)
DESCRIPTION REMARKSAnnual income Package(Before Tax)Basic Salary: RMB 70,000 /month.Bonus Based on the individualperformance and determined byEmployer MBO system3-Year Special Bonus(Before Tax)Base on the achievement to the3-year Business goals andobjectives which will beconfirmed between employee andSupervisorYearly Home Leave 15 Days/YearCommuting Car: Provide commuting carHome allowance TBDInsurance National RegulationPhone / Travel expenses Normal and reasonable expenseswill be reimbursed by companyProbationary Period 6 Months
Negotiation Candidates will not always be honest about salary expectationsto potential employers. They are afraid they will appear selfish to their colleagues andcarry a negative reputation. To counteract this, it is often beneficial to have a third partyassist with contract negotiations. Be flexible with job titles, as candidates will base a large portionof their decision on how prestigious they feel the position is. Standard resignation notice period is one month (often longer),schedule start date’s accordingly.
Representative Office (RO) Often, companies looking to invest in China will set up a RO toevaluate market conditions. Not an independent legal entity. RO’s cannot generate business, sign contracts, invoice, etc. Companies with just an RO cannot hire employees in China. It is illegal for a Chinese national to work as a consultant for aforeign entity. How can RO’s staff employees?
Foreign Enterprise Service Corporation (FESCO) Created for hiring Chinese employees on behalf of foreigncompanies. The employee is employed by FESCO. Foreign entity carries all liability on the employment contract. Minimum 2 year contract to qualify. A “premium” is added to candidate salaries for services renderedby FESCO. (Usually RMB 250-350/staff/month)
Wholly Owned Foreign Entity (WOFE) Independent legal entity. Can manufacture, consult, trade, invoice, etc. Can hire employees directly without having to use anemployment agency, ie FESCO. Set up period, normally 3-5 months. Minimum investment requirement for WOFE.
Things to Consider… In order to travel outside of China, citizens must obtain a visaevery time they wish to do so. Consider hiring someone who is based in a neighbouringcountry if the position requires a lot of travel outside China. Be aware that bribery for new business, and other corruption isnot at all uncommon. Discrimination based on age, gender, or race is verypresent, and can even be found on job postings.
Why is Turnover so High in China? Candidate driven marketplace. GDP has averaged 9% growth over the last 20 years. In the mid 2000’s it was not uncommon for a candidate tochange employers and double their salaries. Employees are loyal to their team members, not their employers,and this often causes turnover to be compounded within teams. Changing of leadership causes anxiety.
Proactively Manage Expectations During the interview process make sure the candidatesexpectation is aligned with the duties of the position. If there are any ownership/leadership changes happeningshortly after the candidate is expected to start, make sure thecandidate is aware of and understands this. Consult with employees before making major decisions, at thevery least you will have a clearer idea of the employeesintentions. Make sure senior management understands that they have tokeep employees engaged and involved.
Incentives How is the employee going to grow?• Function• Scope Is there an opportunity for international experience? How visible are they in the company? Make sure the employee understands the organization chart,his/her role and opportunity to gain a more prestigious title. Salary incentives:• Annual wage increases• Stock options• Advanced schooling subsidies
Common Traits Expatriates are compensated at a premium, compared to theirwestern counterparts. Often expatriates are on temporary contracts (3-5 years) , andmay not even sell their homes. Usually they are in the latter half of their career, taking on seniorleadership roles or start-ups. Children are usually out of the house, and do not relocate withtheir parents. Expatriating someone is distinctly more expensive than hiring alocal.
Why Expatriate? There may be a lack of talent in the host country. New or “Green Field” operations often require someone from theparent company to oversee the start up process. Western presence to communicate back to parent organization. Internal promotion, help employees gain a global perspective. Combat corruption, maintain company reputation.
Preparation Culture shock and language barriers can be difficult toovercome. Employers should consider having the employee visit the countryfor a period of time before a decision to move is made. Language and culture training should be provided to allemployees before their contract begins. Women should be aware that they may be treated differentlydepending on the culture. It is important to prepare the entire family, not just theemployee, for the transition.
Differences in Compensation Relocation Costs: The company will pay for the employeeshousing, and movement/storage of goods. Housing: Many companies assist the employee in selling theirhome. This is often backed by a Guaranteed Purchase Option. Vacation/Flights: Family members may be given free flights, inaddition to the employee receiving a set number of trips home. English School: Employees that do wish to relocate their childrenwill likely require that schooling is paid for. (USD $20,000/year) Tax Equalization: U.S. citizens are required to pay income tax inhost country and in home country.
The China job market is very competitive, whichcauses high employee turnover. Identifying the right candidate becomes evenmore important; someone you can build businessaround. Attracting the right candidate requires HR andhiring authorities to operate together. Transparency is important for both recruiting andretention purposes.
Be aware that employment contracts in Chinamay be structured differently than in westerncountries. Can I hire employees directly? Keep employees interested with incentives andgrowth opportunities. When is it a good idea to use an expatriate? It is difficult to capitalize on a growing market ifyou cannot retain talent.