Thursday, May 31, 2007

Chinese Paradox: A Shallow Pool of Talent

This article was posted on the International Herald Tribune on April 25, 2006, by David Lague. It discusses the shortage of professional talent which faces foreign business who are hiring Chinese workers.

BEIJING: When Grace Li started a recruiting drive through China's elite universities and technical colleges late last year, she soon turned up about 500 potential employees for her client, a U.S.-based scientific services company.

The company was seeking as many as 150 graduates with basic or advanced degrees to staff a research and development laboratory that it planned to open in China this year.

After careful screening, about 100 candidates were offered jobs to start in June. About 70 accepted.

The drawback was that most of them also accepted offers from two or three other prospective employers and still had not decided which job to take.

For headhunters like Li, competition like this is now commonplace as China's headlong economic growth outpaces the supply of qualified professionals and managers.

"It's become a very big problem," said Li, client partner at Corporate Resources International, a Beijing-based recruiting agency. "Just because people accept your offer doesn't mean they will join your company."

This talent crunch is now hurting many multinational companies, which last year invested a combined $60 billion to fund expansion and new ventures in China.

Local companies are also suffering as they try to grow and meet the challenge of foreign competition.

And, while experts warn that shortages of cheap labor threaten the dominance of China's powerhouse manufacturing industries, the lack of qualified graduates could derail longer-term plans for a transition to producing higher-value goods and services.

"We are not ringing the alarm bells yet," said Andrew Grant, the Shanghai- based managing director in China for the management consultancy McKinsey.

"But unless China starts moving now, this problem will become more acute."

Despite turning out more than three million graduates a year, Chinese universities and colleges cannot keep up with demand from an economy that has been galloping ahead at nearly 10 percent a year for most of the past two decades.

Employers complain that many graduates lack the skills and experience necessary to start work immediately, particularly for foreign companies.

"It is not just a question of numbers," said Gao Yang, the Beijing-based executive director of the nonprofit business education group Junior Achievement International, China. "There is a gap in communication between demand and supply."

A recent McKinsey report, titled "Addressing China's Looming Talent Shortage," said surveys had shown that fewer than 10 percent of Chinese graduates across a range of technical and professional disciplines would be suitable for employment in foreign companies.

Not surprisingly for a country with huge outlays on construction and infrastructure, the report found that China had about 1.6 million young engineers and that plenty more were being trained. About 33 percent of university students in China studied engineering, compared with 20 percent in Germany and 4 percent in India.

Compared with their peers in Europe or North America, however, most of these students had little practical experience in working on projects or in teams.

The report said this was largely the fault of an education system that emphasized theory over practice.

To view the entire article at its original location click on the title of this post.

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