By Brad Steiner

China’s top talent is in demand, and their preferences are changing rapidly

Universities in China are turning out more highly qualified and motivated graduates each year. In addition, more and more Chinese professionals are going back to school for advanced degrees - not just in Chinese universities, but also at global institutions abroad.

In the past, multinational corporations have been the top choice for this ambitious group, as they offered better compensation, working conditions and advancement opportunities compared to Chinese companies. This has been particularly true in industries where global firms are dominant, such as consulting and automotive manufacturing.

But this balance is changing. Chinese firms today often offer faster growth, and more rapid promotion. This can provide managers and executives with a more challenging environment and greater decision-making authority than they would have in an MNC. Staying close to home, and being a part of the China growth story are also factors potential employees will consider.

As recently as a few years ago, employment in the China office of a multinational firm was the goal of China’s high potential graduates. There are several reasons for this. Western firms often have a more open leadership style, and employees are given the feeling that they will be promoted based on their performance and ability. Also, training and employee development is an integral part of the work environment, and constant and detailed feedback is the norm. Lastly, global firms tend to deploy international best business practice, giving the employee the most competitive skill set.

Moving forward

But many now also recognize that Western MNCs took a significant hit in the recent economic turmoil, while the Chinese economy, and many China domestic firms, continued to grow. Chinese firms are continuing to recruit talent, while many MNCs are laying people off.

When hiring Chinese management staff, MNCs tend to focus on graduates from just the top global universities, which may only represent 5% of the available labor market. Chinese companies often adopt a more flexible recruitment policy, recognizing that impressive degrees may only indicate good test-taking ability.

But Chinese-born managers who have studied and worked abroad may find challenges coming back to domestic firms. They are usually accustomed to a very entrepreneurial business environment in global firms, and may not be familiar or comfortable with Chinese business culture. Policies and procedures which they may take for granted will usually not be implemented as robustly as at firms who deploy global best practice.

Work-life balance

Foreign companies tend to offer more of a work-life balance compared with Chinese firms, who put more emphasis on efficiency. This is increasingly an issue of concern for a younger generation of employees in China. Some may even refuse a promotion rather than sacrifice their own personal time.

Chinese graduates are changing their preferences from working with MNCs to working for Chinese firms. Many domestic brands are established globally, and can offer opportunities which were previously only available from foreign employers. The added benefit of working for a Chinese company can give employees a sense of commitment and understanding not always available in more international firms.

One drawback of global organizations is that central headquarters tend to be relatively uninformed about China, making decisions about taking advantage of unique opportunities difficult. A continual need to educate senior executives about the complex and dynamic operating environment can lead to missed opportunities. This trend has been reinforced by a continued preference for expatriate senior managers.

Expectations of English ability can also be an impediment for those seeking jobs with Western companies. Most multinationals insist on high speaking proficiency, even when the role involves working almost exclusively with Chinese counterparts. This is an understandable concern, and Chinese managers are keenly aware of the importance of solid English ability. But foreign firms can miss out from the start by not providing language support and training for otherwise highly-qualified candidates.

Cultural differences

Different communication styles and abilities is a key challenge for multinational teams. Some of this is related to language skills, but it also includes cultural awareness and sensitivity on both sides of the equation. It is often a delicate balance to match a global corporate culture to the needs of staff and business in each location.

A difference in English proficiency can hold back otherwise bright managers from integrating with senior executives. Not understanding jokes and subtle nuances of meaning can make it difficult to establish trust and reciprocity. There are also strong differences in group interaction.

A lack of concrete experience in a ‘Western’ culture can be seen as an impediment to moving up the corporate ladder. In a survey conducted by Community Business, many Chinese executives at MNCs said they struggled with business practices which were often at odds with the business environment. Western firms tend to have a stronger focus on policies, procedures and internal communication, while in China personal relationships and agreements may play a larger role in getting things done. A lack of understanding of this dynamic at global headquarters can frustrate very capable managers in the field.

Some other benefits that employees see in Chinese firms include a better work-life balance as well as higher job security.

Glass ceiling

The above points have lead to a perception among many Chinese managers in MNCs that they are not seen as potential global leaders. Research from the Corporate Executive board shows that 40% of Chinese employees at MNCs believe that influential senior positions are reserved for expatriate staff. This causes many to feel their long-term success with Western firms is limited.

There is a perception of a glass ceiling for Chinese employees at MNCs, meaning that real decision-making is made at the headquarters, and staff in China have less influence than they had some time ago. By reducing overseas staff, local executives can be cut off from strategic discussions. This can feedback into a lack of opportunities for those employees to prove their worth.

These recent developments are putting Western companies at a disadvantage in the increasingly competitive race for China’s top talent. Young recruits are eager to get on the fast-track, and are keen to see a clear leadership development path. International work assignments used to be viewed as a benefit of working with a global MNC, but younger Chinese managers are often reticent to accept them, as it would mean missing out on growth and dynamism in China.

A common practice is for Chinese firms to aggressively recruit from middle-management positions in MNCs, offering the Chinese candidates senior-level job titles and expanded responsibility. These “skip-level” promotions are an increasingly common way to poach talent from Western firms. The target is often high-potential Chinese employees who are frustrated with their prospects for advancement in a global firm.

However, the advantage that Chinese firms have in the domestic labor market doesn’t necessarily translate to the global scale. Attracting international candidates to work within a Chinese corporate structure is also fraught with challenges, and can restrict the ability of domestic firms to scale internationally.

Staying competitive

The combination of real opportunities and cultural sensitivity are giving Chinese firms an advantage. There are several strategies that companies can adopt to ensure they remain competitive in their search for top talent, both in terms of cultural sensitivity and leadership development.

When developing future leaders, language training is one obvious area to focus on, addressing the most prevalent challenge. Promoting mutual understanding in international offices is also essential. Increasing the length of time expats spend in China assignments as well as providing international opportunities for domestic staff can improve internal cohesion and improve retention. The use of virtual meeting technologies has decreased the number of face-to-face meetings, making bridging this cultural gap more difficult.

Creating a more inclusive work environment is essential to retaining high-potential staff. The quickest way to do this is by appointing Chinese leaders where possible. This not only gives an example of commitment to career development, but also injects deeper knowledge of the local environment to management decisions. Empowering local offices to make important business decisions can have a similar effect.

Multinationals can still be competitive in attracting the best Chinese graduates, but they will have to get smarter about it. A rapid increase in domestic competition means that global firms will have to adapt quickly to the changing talent pool by both being more sensitive to different cultural expectations as well as committing to mainstreaming the development of Chinese leaders to the highest levels. While this may mean a sea change in some more conservative corporate environments, the benefits will be felt in a closer understanding of the Chinese economy and society.