Talent Squeeze, Bottom and Top

This was a recent post on the China Business Blog, by Jeremy Gordon. it discusses the lack of capable workers at both the factory levels and at the managerial level, in some cities.

Reports of recruitment challenges are emerging from the factory floor, in places like Shenzhen and Dongguan, as well as in offices and boardrooms in China’s major cities.

Labour shortages at the factory level, caused by competition from the service sector, have driven recruiters into the countryside to find new talent and are driving up wages…and even improving work conditions. The increase in production costs is already causing some to look for cheaper, inland (or overseas) locations, or to move into high added-value markets.

At the other end of the market there is also a lack of management expertise, with the most difficult positions to fill being in IT, human resources and finance. According to research carried out last year by Hewitt Associates “half the foreign companies in China plan to add expatriate staff, particularly specialists and middle managers”. This is despite spite years of efforts by companies to localise their management teams.

And increasing numbers of expatriates are there (qualified or not). It is estimated by the government that the number of (legally employed) expatriates in China almost doubled to 150,000 between 2002 and 2005, according to the China Daily. Of course the real number of foreigners, let alone overseas Chinese, is much higher. One estimate (from MSNBC) puts the number of westerners in China at 300,000, including 110,000 Americans.

The challenge is set to continue, but innovative new services are never far behind. The latest development comes from the leading European “interim management” firm, Executive Interim Management, or EIM, which has just established operations in Shanghai.

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