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Negotiating Employment Contracts in the Year of the Dragon

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SHOCK! An average worker in China costs more than the average worker in any other emerging Asian economy, excluding Malaysia and Thailand, when considering in terms of combined salary and welfare …

SHOCK! An average worker in China costs more than the average worker in any other emerging Asian economy, excluding Malaysia and Thailand, when considering in terms of combined salary and welfare payments. What’s more, China leads the Asia region for companies intending to increase headcount. These two facts will make operating in China more expensive than ever before in 2012!

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  •  Ted - ForDoing business in china (book by Ted)Can't manipulate the rules anymore - not a bad thing but less free.Establishing better rule of lawMoving towards a more predicatble business climate change Difficult to pull out. Chris Murphy - AgainstIncreasing taxation laws 32% and a half tax rate 10%holding tax, in reality 20%.Crazy import taxesCambodia has no export tax in to EEC. from China, 12% heavy protectionism Adrian LiTalent pool is getting betterDriven by market factors65 million empty apartments in China interesting business model from Adrian Biggest mobile internet population World bank 2030 report - damning for China Adrians figures show a housing bubble Buying up our brands on the cheap is not a business model Social, government and tax structure supports export over import - but selling into local market is an issue. 
  • Approximately 46% of HR professionals who are involved in negotiations have never had negotiation training in any form. And yet, the need for more staff across China is going up, but the talent pool is not growing at the same rate.
  • What is the difference between us, and emerging markets like China?‘Hardware’ and ‘software’. Rote learning Steven Hankin of McKinsey & Co, back in 1997670 executives in China 73% stated that it would still be tough to recruit top talent, citing ‘skills shortage’ One of the earliest reforms in the Deng Xiaoping era was the reopening of China’s universities, which had been closed during Mao’s Cultural Revolution; the World Bank’s first loan to Deng’s China was to support various aspects of higher education. So in the early 80s the universities reopened, but the Compulsive Thinking Disorder of the past survived the purge, and today rote learning continues on in classes as it has done for thousands of years. Unique Talent ChallengesThe War for Talent was first coined by Steven Hankin of McKinsey & Co, back in 1997. Hankin was originally referring to the demographic shift, primarily in Europe and the US, as retirees outstripped new, and qualified, recruits. However, while China is in a war of its own, it is not the ageing population that is the cause – most Chinese retiring today grew up when relationships, not computer skills, determined career advancement. Instead, it is enormous economic growth coupled to the mismatch of Chinese education and international business acumen. The cultural phenomenon of rote learning, a focus on grades before experience, and a society that is only now realising the importance of innovation has caused this mess. So much so, that while 6.6 million university graduates entered the workforce in 2011, Hudson reported that of 670 executives in China 73% stated that it would still be tough to recruit top talent, citing ‘skills shortage’ as the top challenge.This kind of news is terrifying for Australian and Asia-Pacific HR directors who have the mission to build a workforce linked to a China expansion strategy. But then again, nothing in China is easy, so why should recruitment be any different? Operation directors complain of poor quality, sales directors complain of corrupt buyers, and finance directors complain of erratic changes to taxation and reporting legislation. All this ‘ma fan’ (Chinese for ‘trouble’) is just the barrier to entry. The proverbial ‘toll you must pay’. Accept it, and focus on building a competitive edge – talent attraction.The steps to recruitment building a talent pipeline in ChinaSince you will probably be hiring a large bulk of your staff within the youth market, it’s important to understand how they tick. You might be surprised. In 2011 The MRI China Group conducted a survey, which included 2,265 Chinese aged between 25 and 37. One question that drew considerable attention was ‘Why do you choose to remain in your company?’ The top three answers were:Career developmentTeam camaraderieWork-life Balance‘Pay’ was not in the medal rankings.Asked what attracts them to a job, a separate study by Aon Hewitt on a similar Chinese demographic reported (as one, two, three):L&DCompany reputationCareer opportunities Again, no mention of salary within the top three motivators.This should come as a shook for anyone who has spent time in China over the past 10 to 15 years, since job hopping, over the barest of salary rises, were commonplace amongst white-collar workers. Unfortunately, those job-hoppers are still prevalent, only this time it’s less over pay and more over maintaining a 40 hour work week and being home for dinner.Aon Hewitt’s report, while supporting the research of MRI, is also a reminder that a strong employer brand is beneficial to increasing the access to talent – 20% more by some accounts. But what’s more interesting is the move away from multinational companies towards some unexpected benefactors. In 2010 the Chinese English language newspaper, Global Times, reported that while “just 10 years ago, only about 2,000 university students joined the People's Liberation Army (PLA) each year” that number in “last winter's intake was more than 130,000 university students”. To paraphrase, just ‘being foreign’ is no longer enough. Now, not only do Australian brands need to compete against the Global 1000 companies for top quality staff, but local government and State-Owned Enterprises are now taking a chunk of the talent.  But smart (and that means tech-savvy) companies need not fret. They understand that nowhere is there a bigger internet penetration than China, with 384 million active users – an irony, that is not lost on many, who complain of internet censorship. But while Facebook, Twitter and Youtube (amongst a growing list of around 2,600 sites) are blocked in China, there are home-grown SNSs (that’s ‘geek-speak’ for Social Networking Sites) that are ideal platforms to connect to your potential employees and build a strong employer brand. SinaWeibo and TencentWeibo are Twitter copies, and Kaixin and RenRen both mirror Facebook. While LinkedIn isn’t blocked (although it’s had its ups-and-downs in the past), it also has a decent Shanghai-born competitor called Ushi. LinkedIn boasts around 1.5 million active users in Mainland China, compared to Ushi’s 700,000. However, Ushi’s founder, Dominic Penaloza, boasts that half of LinkedIn’s China-based numbers are expatriates, and they are not growing. Ushi, by contrast is predicted to “hit three million users in China within a year”. That’s why Australian businesses are recommended to add ‘social media expert’ to all HR job descriptions.
  • What is the difference between us, and emerging markets like China?‘Hardware’ and ‘software’. Rote learning Steven Hankin of McKinsey & Co, back in 1997670 executives in China 73% stated that it would still be tough to recruit top talent, citing ‘skills shortage’ One of the earliest reforms in the Deng Xiaoping era was the reopening of China’s universities, which had been closed during Mao’s Cultural Revolution; the World Bank’s first loan to Deng’s China was to support various aspects of higher education. So in the early 80s the universities reopened, but the Compulsive Thinking Disorder of the past survived the purge, and today rote learning continues on in classes as it has done for thousands of years. Unique Talent ChallengesThe War for Talent was first coined by Steven Hankin of McKinsey & Co, back in 1997. Hankin was originally referring to the demographic shift, primarily in Europe and the US, as retirees outstripped new, and qualified, recruits. However, while China is in a war of its own, it is not the ageing population that is the cause – most Chinese retiring today grew up when relationships, not computer skills, determined career advancement. Instead, it is enormous economic growth coupled to the mismatch of Chinese education and international business acumen. The cultural phenomenon of rote learning, a focus on grades before experience, and a society that is only now realising the importance of innovation has caused this mess. So much so, that while 6.6 million university graduates entered the workforce in 2011, Hudson reported that of 670 executives in China 73% stated that it would still be tough to recruit top talent, citing ‘skills shortage’ as the top challenge.This kind of news is terrifying for Australian and Asia-Pacific HR directors who have the mission to build a workforce linked to a China expansion strategy. But then again, nothing in China is easy, so why should recruitment be any different? Operation directors complain of poor quality, sales directors complain of corrupt buyers, and finance directors complain of erratic changes to taxation and reporting legislation. All this ‘ma fan’ (Chinese for ‘trouble’) is just the barrier to entry. The proverbial ‘toll you must pay’. Accept it, and focus on building a competitive edge – talent attraction.The steps to recruitment building a talent pipeline in ChinaSince you will probably be hiring a large bulk of your staff within the youth market, it’s important to understand how they tick. You might be surprised. In 2011 The MRI China Group conducted a survey, which included 2,265 Chinese aged between 25 and 37. One question that drew considerable attention was ‘Why do you choose to remain in your company?’ The top three answers were:Career developmentTeam camaraderieWork-life Balance‘Pay’ was not in the medal rankings.Asked what attracts them to a job, a separate study by Aon Hewitt on a similar Chinese demographic reported (as one, two, three):L&DCompany reputationCareer opportunities Again, no mention of salary within the top three motivators.This should come as a shook for anyone who has spent time in China over the past 10 to 15 years, since job hopping, over the barest of salary rises, were commonplace amongst white-collar workers. Unfortunately, those job-hoppers are still prevalent, only this time it’s less over pay and more over maintaining a 40 hour work week and being home for dinner.Aon Hewitt’s report, while supporting the research of MRI, is also a reminder that a strong employer brand is beneficial to increasing the access to talent – 20% more by some accounts. But what’s more interesting is the move away from multinational companies towards some unexpected benefactors. In 2010 the Chinese English language newspaper, Global Times, reported that while “just 10 years ago, only about 2,000 university students joined the People's Liberation Army (PLA) each year” that number in “last winter's intake was more than 130,000 university students”. To paraphrase, just ‘being foreign’ is no longer enough. Now, not only do Australian brands need to compete against the Global 1000 companies for top quality staff, but local government and State-Owned Enterprises are now taking a chunk of the talent.  But smart (and that means tech-savvy) companies need not fret. They understand that nowhere is there a bigger internet penetration than China, with 384 million active users – an irony, that is not lost on many, who complain of internet censorship. But while Facebook, Twitter and Youtube (amongst a growing list of around 2,600 sites) are blocked in China, there are home-grown SNSs (that’s ‘geek-speak’ for Social Networking Sites) that are ideal platforms to connect to your potential employees and build a strong employer brand. SinaWeibo and TencentWeibo are Twitter copies, and Kaixin and RenRen both mirror Facebook. While LinkedIn isn’t blocked (although it’s had its ups-and-downs in the past), it also has a decent Shanghai-born competitor called Ushi. LinkedIn boasts around 1.5 million active users in Mainland China, compared to Ushi’s 700,000. However, Ushi’s founder, Dominic Penaloza, boasts that half of LinkedIn’s China-based numbers are expatriates, and they are not growing. Ushi, by contrast is predicted to “hit three million users in China within a year”. That’s why Australian businesses are recommended to add ‘social media expert’ to all HR job descriptions.
  • Wan might have a solution. “Many Asia-Pacific executives spend part of their work commitment in mainland China, and another part in, say, Singapore or Hong Kong. In this case, it is possible to split an employee’s salary across both countries, and therefore reduce the mainland China tax burden,” says Wan. “Personal income tax can be as low as 8 to 10 percent in Singapore, whereas in China it can be over 40 percent.”If this is the case, says Wan, a contract can be created that allows for two separate payments into two separate bank accounts in two separate countries. He adds that if an employee spends less than 183 days in a year in China, then they do not have to pay any tax to the PRC.
  • What is the difference between us, and emerging markets like China?‘Hardware’ and ‘software’. Rote learning Steven Hankin of McKinsey & Co, back in 1997670 executives in China 73% stated that it would still be tough to recruit top talent, citing ‘skills shortage’ One of the earliest reforms in the Deng Xiaoping era was the reopening of China’s universities, which had been closed during Mao’s Cultural Revolution; the World Bank’s first loan to Deng’s China was to support various aspects of higher education. So in the early 80s the universities reopened, but the Compulsive Thinking Disorder of the past survived the purge, and today rote learning continues on in classes as it has done for thousands of years. Unique Talent ChallengesThe War for Talent was first coined by Steven Hankin of McKinsey & Co, back in 1997. Hankin was originally referring to the demographic shift, primarily in Europe and the US, as retirees outstripped new, and qualified, recruits. However, while China is in a war of its own, it is not the ageing population that is the cause – most Chinese retiring today grew up when relationships, not computer skills, determined career advancement. Instead, it is enormous economic growth coupled to the mismatch of Chinese education and international business acumen. The cultural phenomenon of rote learning, a focus on grades before experience, and a society that is only now realising the importance of innovation has caused this mess. So much so, that while 6.6 million university graduates entered the workforce in 2011, Hudson reported that of 670 executives in China 73% stated that it would still be tough to recruit top talent, citing ‘skills shortage’ as the top challenge.This kind of news is terrifying for Australian and Asia-Pacific HR directors who have the mission to build a workforce linked to a China expansion strategy. But then again, nothing in China is easy, so why should recruitment be any different? Operation directors complain of poor quality, sales directors complain of corrupt buyers, and finance directors complain of erratic changes to taxation and reporting legislation. All this ‘ma fan’ (Chinese for ‘trouble’) is just the barrier to entry. The proverbial ‘toll you must pay’. Accept it, and focus on building a competitive edge – talent attraction.The steps to recruitment building a talent pipeline in ChinaSince you will probably be hiring a large bulk of your staff within the youth market, it’s important to understand how they tick. You might be surprised. In 2011 The MRI China Group conducted a survey, which included 2,265 Chinese aged between 25 and 37. One question that drew considerable attention was ‘Why do you choose to remain in your company?’ The top three answers were:Career developmentTeam camaraderieWork-life Balance‘Pay’ was not in the medal rankings.Asked what attracts them to a job, a separate study by Aon Hewitt on a similar Chinese demographic reported (as one, two, three):L&DCompany reputationCareer opportunities Again, no mention of salary within the top three motivators.This should come as a shook for anyone who has spent time in China over the past 10 to 15 years, since job hopping, over the barest of salary rises, were commonplace amongst white-collar workers. Unfortunately, those job-hoppers are still prevalent, only this time it’s less over pay and more over maintaining a 40 hour work week and being home for dinner.Aon Hewitt’s report, while supporting the research of MRI, is also a reminder that a strong employer brand is beneficial to increasing the access to talent – 20% more by some accounts. But what’s more interesting is the move away from multinational companies towards some unexpected benefactors. In 2010 the Chinese English language newspaper, Global Times, reported that while “just 10 years ago, only about 2,000 university students joined the People's Liberation Army (PLA) each year” that number in “last winter's intake was more than 130,000 university students”. To paraphrase, just ‘being foreign’ is no longer enough. Now, not only do Australian brands need to compete against the Global 1000 companies for top quality staff, but local government and State-Owned Enterprises are now taking a chunk of the talent.  But smart (and that means tech-savvy) companies need not fret. They understand that nowhere is there a bigger internet penetration than China, with 384 million active users – an irony, that is not lost on many, who complain of internet censorship. But while Facebook, Twitter and Youtube (amongst a growing list of around 2,600 sites) are blocked in China, there are home-grown SNSs (that’s ‘geek-speak’ for Social Networking Sites) that are ideal platforms to connect to your potential employees and build a strong employer brand. SinaWeibo and TencentWeibo are Twitter copies, and Kaixin and RenRen both mirror Facebook. While LinkedIn isn’t blocked (although it’s had its ups-and-downs in the past), it also has a decent Shanghai-born competitor called Ushi. LinkedIn boasts around 1.5 million active users in Mainland China, compared to Ushi’s 700,000. However, Ushi’s founder, Dominic Penaloza, boasts that half of LinkedIn’s China-based numbers are expatriates, and they are not growing. Ushi, by contrast is predicted to “hit three million users in China within a year”. That’s why Australian businesses are recommended to add ‘social media expert’ to all HR job descriptions.
  • In 2006 the Corporate Leadership Council found that “strong employer brands provided access to 20% more of the potential talent market than weak or unmanaged employer brands” which is supported by Aon Hewitt research (see graph 1) which found ‘company reputation’ to be a ‘selling point’ by 75 percent of respondents. And the better the reputation, the more candidates will apply for any vacant position. In negotiation terms this is a BATNA – or Best Alternative To a Negotiable Agreement – which will be covered later. But right now, understand that goodwill and reputation builds trust. And trust is why someone would consider leaving their safe job, and work for your company.
  • I’m a Zombie fan.So much so, that back in my early 20s I wrote, directed and stared in my own movie – ‘The Dead Will Rise’. Pig brains and a VHS video camera were the only expense, and while the movie did run up to 45 minutes and receive an A+ for my co-producer’s high school project, it never saw the big screen. It never received an AFI, BAFTA or Oscar award, but it did instill a passion for the genre.Now I’ve learnt about another type of zombie. This time not on celluloid, but online. These zombies, or 僵尸粉, are more sinister because they are beginning to invade our real lives.Internet Zombies are fake Weibo accounts, the Chinese Twitter, used to boost egos and brand credibility. For as little as 5 RMB a Weibo account can gain 1,000 ‘fans’. For 120 RMB, 5,000 fans, equipped with personalities – followers, a history of posting, a profile photo and personal description – can adorn a user’s account. Deceit or simply a cry for cry for attention?One Beijing based recruitment firm, a recent start-up, has jumped from a few hundred fans in 2011 to boasting over 31,000 fans in March of 2012.  In comparison, the founder’s previous company, Antal International, which has been in the market since 1993 has only 1,400 fans.Of course a crowd draws a crowd, and this is probably the strategy for this start-up, who are in the recruitment business after all,  where volume is important and a looking ‘new’ wins no awards.  Innocent ego tripping, you might say. But when established brands hire the services of marketing and PR agencies in China, to help boost their brand’s awareness, not ego, internet zombies are useless, and may be detrimental to the brand.Take the case of a Norwegian Salmon company, which was pleasantly surprised when their contracted PR company was able to attract over 100,000 fans to its corporate Weibo account. Clearly, Chinese netizens who had ‘fanned’ the Norwegian Salmon company were passionate about their fish, and so it made sense to run a competition to further engage their fan base. This time, when they were surprised, it wasn’t pleasantly. Only 4 fans responded – a pathetic 0.004% response rate, and evidence that most of the fans had been bought.Domestic companies are also not immune to such deception.HaomenJipin Abalone Restaurant in Shuozhou, in Shanxi province, announced a promotion in cooperation with chinamil.com.cn, a website sponsored by the PLA Daily. In an advertisement posted on the company’s Weibo account in late September, the restaurant asked for fans to “Tell us your feelings about seeing the launch of the spacecraft Tiangong-1.” Whoever forwarded the message the most, the advertisement declared, would win an iPad or iPhone. The contest would end by October.Subsequent inquiries indicate spam software was employed to run up the numbers, so much so that by October 7th, the last day of the competition, the initial posting had been reposted or forwarded on SinaWeibo 13 million times. This was a Chinese record. Unfortunately it wasn’t marketing genius – it was simply a façade. SinaWeibo reported that only 3,000 participants in the online promotion were subscribers with real profiles. And the message was actually posted and reposted only 9,000 times, not 13 million. The suspect accounts have since been banned. All this deceit has damaged both the reputation and usefulness of microblogging as a marketing tool in China. In a country where loop holes are quickly exploited, it is also a reminder that without checks and balances between departments and suppliers zombies might infiltrate your best ethical barriers and run amok with your brand.
  • I’m a Zombie fan.Aged barely in my teens, the organisers of the Scout bike hike inadvertently hired ‘Return of the Living Dead’for some 100 or so scouts who were camped out in a hall, surrounded by forest, not unlike the movie’s own setting. Needless to say, no kid snuck out for a smoke that night. This passion for zombie movies has continued, even culminating into my own B-grade movie – The Dead Will Rise – filmed in the suburbs of Glen Waverley, and utillising pig brains and a VHS video camera. It got an A+ for media studies, but was ignored by the AFI award judges.But that is where my love of Zombies stop.You see in China, there are a more sinister type – the internet Zombies. Internet Zombies are fake Weibo account, used to boost egos and brand credibility. For as little as 5 RMB a Weibo account can gain 1,000 ‘fans’. For 120 RMB, 5,000 fans with personalities – that is their own followers, a history of posting, a profile photo and personal description – can adourn your Weibo account.So which type of companies are engaged in this deceit.RMG Selection, is a start up in Beijing which went from 150 fans in 2011 to over 31,000 by March 2012. In comparison, the founder’s previous company, Antal International, from which he split, has currently 1400 fans. Of course a crowd draws a crowd, and this is probably the strategy for RMG, who are after all a recruitment firm, where volume is important, and a Start up wants to look anything but.But when established brands hire the services of marketing and PR agencies in China, to help boost their awareness, not ego, Zombies are useless, and often detrimental to the brand.Take the case of a Norwegian Salmon company, which was pleasantly surprised when their contracted PR company was able to attract over 100,000 fans to its corporate website. Clearly, Chinese netizens who had ‘fanned’ the Norwegian Salmon company were passionate about their fish, and so it made sense to run a competition to further engage their fan base. This time, when they were surprised, it wasn’t pleasantly. Only 4 fans responded - 0.004%. Domestic companies are not immune to such decption. HaomenJipin Abalone Restaurant in Shuozhou, in North China's Shanxi province, announced a promotion in cooperation with chinamil.com.cn, a website sponsored by the PLA Daily, a newspaperof the Chinese People's Liberation Army. In an advertisement posted on the company’s Weibo account in late September, the restaurant asked for fans to “Tell us your feelings about seeing the launch of the spacecraft Tiangong-1.”Whoever forwarded the message the most, the advertisement declared, would win an iPad or iPhone. The contest would end by October.Subsequent inquiries indicate spam software was employed to run up the numbers, so much so that by October 7th, the last day of the competition, the initial posting had been reposted or forwarded on SinaWeibo 13 million times. This was a Chinese record. Unfortunately it wasn’t marketing genius - it was simply a façade. SinaWeibo reported that only 3,000 participants in the online promotion were subscribers with real profiles. And the message was actually posted and reposted only 9,000 times, not 13 million. Sina has since banned the suspect accounts.So what can we learn from the Norwegian Salmon and Abolone Restaurant. Simply put, loop holes are quickly exploited in China, and you must maintain checks and balances, and promote transparency within and between your departments and suppliers.
  • Business Challenge With numerous locations across the nine country region, Kimberly Clark needed visibility into each market’s recruiting activities as well as talent pooling capability. Kimberly Clark knew the solution would only work if we could ensure regional adoption and PageUp People gave them the flexibility to incorporate the local languages and hiring methodologies that each region needed Solution In just under eight weeks from contract to deployment, PageUp People activated the enterprise recruiting system across the nine countries, and six languages, including English, Thai, Vietnamese, Bahasa (Indonesean), Chinese and Korean. To alleviate the challenges generally faced by employers when operating in high-growth markets, PageUp People utilized its scalable global recruitment gateway interface that allows employers to configure the system to accommodate local process and language preferences while maintaining compliance with corporate policies and create localized talent pooling to rapidly fill positions.The new global recruitment gateway system provides Kimberly Clark with continuity of recruiting processes, data security and talent pooling while allowing the flexibility to map to the specific regional requirements used across nine Asia Pacific countries. Key Takeout PageUp People has a long-standing history of helping large multinational companies address their talent management challenges with relevant solutions such as global recruitment gateway that help them grow into emerging markets. This depth of experience makes PageUp People uniquely qualified to support leading employers like Kimberly Clark in these regions, and in particular high growth markets such as China About PageUp PeoplePageUp People helps multinational employers improve talent management practices across borders, business units, cultures and languages, to maximize the strategic value and business impact of their talent resources. With its comprehensive, SaaS-delivered solution for Talent Management, PageUp People unifies Recruiting, Performance, Compensation, Development, Career Planning, Succession Management and Workforce Analytics, to give employers company-wide visibility to talent resources and executive-level, predictive analytics for intelligent decision making. Underpinned by a comprehensive capabilities framework, PageUp People Talent Management supports more than 90,000 users in over 180 countries.PageUp People solutions support multinational organizations from a broad range of industries, including financial services, retail, mining and refining, transportation and telecommunications. PageUp People is headquartered in Melbourne, Australia with additional office locations in Sydney, London, Shanghai and Atlanta. Learn more about how PageUp People can help transform your organization’s multinational HR initiatives by visiting www.pageuppeople.com.
  • What is the difference between us, and emerging markets like China?‘Hardware’ and ‘software’. Rote learning Steven Hankin of McKinsey & Co, back in 1997670 executives in China 73% stated that it would still be tough to recruit top talent, citing ‘skills shortage’ One of the earliest reforms in the Deng Xiaoping era was the reopening of China’s universities, which had been closed during Mao’s Cultural Revolution; the World Bank’s first loan to Deng’s China was to support various aspects of higher education. So in the early 80s the universities reopened, but the Compulsive Thinking Disorder of the past survived the purge, and today rote learning continues on in classes as it has done for thousands of years. Unique Talent ChallengesThe War for Talent was first coined by Steven Hankin of McKinsey & Co, back in 1997. Hankin was originally referring to the demographic shift, primarily in Europe and the US, as retirees outstripped new, and qualified, recruits. However, while China is in a war of its own, it is not the ageing population that is the cause – most Chinese retiring today grew up when relationships, not computer skills, determined career advancement. Instead, it is enormous economic growth coupled to the mismatch of Chinese education and international business acumen. The cultural phenomenon of rote learning, a focus on grades before experience, and a society that is only now realising the importance of innovation has caused this mess. So much so, that while 6.6 million university graduates entered the workforce in 2011, Hudson reported that of 670 executives in China 73% stated that it would still be tough to recruit top talent, citing ‘skills shortage’ as the top challenge.This kind of news is terrifying for Australian and Asia-Pacific HR directors who have the mission to build a workforce linked to a China expansion strategy. But then again, nothing in China is easy, so why should recruitment be any different? Operation directors complain of poor quality, sales directors complain of corrupt buyers, and finance directors complain of erratic changes to taxation and reporting legislation. All this ‘ma fan’ (Chinese for ‘trouble’) is just the barrier to entry. The proverbial ‘toll you must pay’. Accept it, and focus on building a competitive edge – talent attraction.The steps to recruitment building a talent pipeline in ChinaSince you will probably be hiring a large bulk of your staff within the youth market, it’s important to understand how they tick. You might be surprised. In 2011 The MRI China Group conducted a survey, which included 2,265 Chinese aged between 25 and 37. One question that drew considerable attention was ‘Why do you choose to remain in your company?’ The top three answers were:Career developmentTeam camaraderieWork-life Balance‘Pay’ was not in the medal rankings.Asked what attracts them to a job, a separate study by Aon Hewitt on a similar Chinese demographic reported (as one, two, three):L&DCompany reputationCareer opportunities Again, no mention of salary within the top three motivators.This should come as a shook for anyone who has spent time in China over the past 10 to 15 years, since job hopping, over the barest of salary rises, were commonplace amongst white-collar workers. Unfortunately, those job-hoppers are still prevalent, only this time it’s less over pay and more over maintaining a 40 hour work week and being home for dinner.Aon Hewitt’s report, while supporting the research of MRI, is also a reminder that a strong employer brand is beneficial to increasing the access to talent – 20% more by some accounts. But what’s more interesting is the move away from multinational companies towards some unexpected benefactors. In 2010 the Chinese English language newspaper, Global Times, reported that while “just 10 years ago, only about 2,000 university students joined the People's Liberation Army (PLA) each year” that number in “last winter's intake was more than 130,000 university students”. To paraphrase, just ‘being foreign’ is no longer enough. Now, not only do Australian brands need to compete against the Global 1000 companies for top quality staff, but local government and State-Owned Enterprises are now taking a chunk of the talent.  But smart (and that means tech-savvy) companies need not fret. They understand that nowhere is there a bigger internet penetration than China, with 384 million active users – an irony, that is not lost on many, who complain of internet censorship. But while Facebook, Twitter and Youtube (amongst a growing list of around 2,600 sites) are blocked in China, there are home-grown SNSs (that’s ‘geek-speak’ for Social Networking Sites) that are ideal platforms to connect to your potential employees and build a strong employer brand. SinaWeibo and TencentWeibo are Twitter copies, and Kaixin and RenRen both mirror Facebook. While LinkedIn isn’t blocked (although it’s had its ups-and-downs in the past), it also has a decent Shanghai-born competitor called Ushi. LinkedIn boasts around 1.5 million active users in Mainland China, compared to Ushi’s 700,000. However, Ushi’s founder, Dominic Penaloza, boasts that half of LinkedIn’s China-based numbers are expatriates, and they are not growing. Ushi, by contrast is predicted to “hit three million users in China within a year”. That’s why Australian businesses are recommended to add ‘social media expert’ to all HR job descriptions.
  • Foreigners are now becoming cheaper than locals. Althought Yang Rui is creating a scandal with his inflammatory comments regarding “Foreign Scum” the vast majority of ‘BendiLaowai’ are great resources. Perception is also changing when it comes to hiring foreigners. Even as little as five years ago, foreign employees were unaffordable to consider for the middle ranks, but thanks to the Global Financial Crisis, the continued stagnation of economies in Europe and the United States, and the pull of China as the ‘place to be in business’, foreigners are eager to take up jobs at local wages.Says Chris Hughes of PIBB, “It’s possible to hire 20 foreign insurance experts for around 25K to 30K. But for every 20 experts there’s only one Chinese expert, and so the local talent expects 80K or more.” This opinion was also voiced by the COO of Bayer Healthcare, who stated that he was struggling to hire senior Chinese managers, as their wage requests were too high, and therefore, while Bayer wanted to hire locally, they still had to bring Europeans in to fill the senior positions.With this in mind, increase your BATNA by considering extending your talent search overseas. 
  • Transcript

    • 1. NEGOTIATING EMPLOYMENT CONTRACTS
    • 2. CONTENTS The Talent Landscape The Talent Acquisition Equation The Candidates’ Needs Your Company’s Leverage
    • 3. The TalentLANDSCAPE
    • 4. “China costs more thanthe average worker inany other emergingAsian economy,excluding Malaysia andThailand, whenconsidering in terms ofcombined salary andwelfare payment.”- Chris Devonshire-Ellis , China Briefing
    • 5. “China has the lowestengagement (17%) andhighest disengagement(29%) of all regionssurveyed globally. ” - BlessingWhite 2010/2011 Global Employee Engagement Research
    • 6. “ Mexico ranked highest (75.8%) and China ranked equal third last (63%) ” alongside the UK. - Hay Group employee engagement index
    • 7. Top 10 issues in China in 20111. Soaring commodity prices (59.5%)2. Health care availability and prices (42.9%)3. Income and wealth gap (31.6%)4. Government corruption (29.3%)5. Unemployment (24.2%)6. House prices (24%)7. Retirement pension for the elderly (16.6%)8. Food safety (15.9%)9. Education Costs (10.9%)10. Environmental Pollution (10.3%) Source: Chinese Academy of Social Sciences
    • 8. The Talent AcquisitionEQUATION
    • 9. Candidate Your Company NEEDS + FEATURES = BENEFITSGOODWILL + REPUTATION = TRUST You and your Employer Brand line manage BENEFIT + TRUST = AGREEMENT
    • 10. The Candidates’NEEDS
    • 11. “80% of employers admitted theyare worried about losing their topperformers.” - Hudson, Salary & Employment Insights 2012
    • 12. MRI Aon vs. Hewitt New Challenges Learning & DevelopmentTeam Camaraderie Company Reputation Work/Life Balance Career Opportunities Source: Network HR
    • 13. 40% Tax In China 8 – 15% Tax In Hong Kong & Singapore
    • 14. Building yourEMPLOYERBRAND
    • 15. STRONGEMPLOYER Evonik Degussa (China) Co. Ltd FAW-VolkswagenBRANDS Source: CRF Goodyear Tire Management Company (Shanghai)Amway (China) Co. Ltd HSBC Life Insurance Company LtdAstraZeneca (China) LANXESS Chemical (China) Company LtdAutodesk (China) Manulife TEDA Fund Management Co. LtdBacardi Wines & Spirits Ltd. Roche Diagnostics (Shanghai) LimitedBASF SAS Institute China Co. LtdBayer Group in Greater China Saudi Basic Industries Corporation (SABIC)Bekaert Management (Shanghai) Co. Ltd Shanghai General Motors (SGM)China Telecom Shanghai Shanghai Genius Advanced Material GroupDanisco (China) Co. Ltd Co. LtdDeloitte Touche Tohmatsu CPA Ltd Shanghai Highly Group Co. LtdDHL-Sinotrans International Air Courier Ltd Shanghai Tospur Real Estate Consulting Co.Dow Chemical (China) Company Limited LtdDow Corning China Shanghai Volkswagen Automotive Co. LtdElement Fresh Food & Beverage Tenneco ChinaManagement Co. Ltd Walmart (China) Investment Co. Ltd
    • 16. China’s Most Desirable Employer www.networkhr.comAntal International and Network HR magazine
    • 17. What are internet zombies?
    • 18. Antal International RMG Selection Founded 1993 Founded 20101440 FANS 31,000 FANS
    • 19. Case Study Norwegian Salmon
    • 20. Norwegian Salmon Company100,000+ FANS 4 replies
    • 21. Your Company’sLEVERAGE
    • 22. LEVERAGE NEEDINESS BATNAEmotion & Timing Best Alternative to a Negotiated Agreement
    • 23. NEEDINESS
    • 24. “The employmentmarket is broadlypositive foremployees, withsalaries continuing torise as organisationscompete for the bestperformers.”- Hudson, Salary & EmploymentInsights 2012
    • 25. Industries under pressure 95 % Expected management hires China 90 AP Average 85 80 75 70Antal International Q1 2012 Salary Snapshot
    • 26. Topics most commented on
    • 27. “The Chinese robotmarket is currentlygrowing at an annualrate of about 30%.China will take thelead amongindustrializedcountries withprojected sales of30.000 units in 2014.”- Wolfgang Heller, Infonaut AB