idealpeople blog

China isn’t for the faint hearted, and as our former MD, Michael Wright is soon to leave UK shores for the Far East we are writing a series of articles to ease the tension he’s feeling and actually validate his thinking about why setting up in China is a good thing.

Dateline 2007, January: A Big Cheese VP from one of the prominent investment banks looked out of the window of his 22nd floor of his office in Soho, Central Business District in Beijing, and pondered on the budget for the wages he had to offer talented staff for their newest branch in Dalian City. He felt satisfied that the 5000 Yuan/RMB (Equivalent to about £350) per month was sufficient for him to attract and retain great Audit staff, even those with Multinational Company experience. He had to front up nearly 6 times that (£2100 or 30,000 Yuan/RMB) per month for their Hong Kong Branch.

12 Months on, and the story was a very different one. The new office growth had stalled, and they even shed newly hired people. Why? Mr Big Cheese, the VP at the bank was no unique case. This wasn’t an isolated incident.

The first problem was that less offers of employment were being accepted. Mr Big Cheese VP simply couldn’t fathom why HR had been previously managing a conversion ratio of 88% on offers made, and this had dropped to 50%. Why? - becuase local people were pocketing more job offers - they had more chance not to choose his bank to work for. The second problem was one known only too well by the kings of the Indian BPO scene (TATA, Wipro, Cognizant) - Wage Inflation. Remember the new hire he was so happy to poach for £350 per month? They just left for a post in Shanghai at nearly five times that sum! Even Bangalore hasn’t seen such rocket-powered wage inflation. Job hopping hasn’t always been a Chinese habit. In fact, many non-Chinese assume that Chinese have loyalty embedded into them. This is a common misconception and is now rife, owing to a vast difference in compensation from place to place and a wealth of opportunities, from both internal and foriegn investment in China.

All of these factors are part of the growing pain of a rampant economy and pronounced supply/supply demand. How can there be supply/demand issues in a country with more than 1.3 billion people…? (ED - That’s another blog article… more on this later)

The fight for qualified talent in the financial sector, especially in Shanghai, has led to outright restructuring of executive compensation that’s extending to many other sectors, including our favourite - high tech.Since 2006, and the ‘democratization’ of the Chinese banking scene - every foreign bank worth it’s salt has been looking China-ward. But will the above problems hold them back? We at Idealpeople towers think this is likely.

In a survey by PWC last year, 40 overseas banks polled said that finding and retaining good personnel was the second-most difficult job in the Chinese banking industry.
Twenty-five banks will more than double their China staffs by 2010, while six plan to add more than 1,000 employees over the next three years, and three will hire 3,000 people. Good luck folks, you’re gonna need it

It’s not hard to find someone with lower qualifications in the market, though what the overseas institutions really need are experienced and trained workers to support their rapid growth.And it’s not just seasoned, senior people - it’s the front office people too!

“There is an escalating need for staff, especially frontline workers, to support our fast-expanding retail banking business,” says Paula Ko, head of human resources at Standard Chartered Bank (China) Ltd. “The demand is so fast and huge, and happens across the country,” says Ko, whose bank doubled its China staff from about 2,000 in 2006 to its current 4,000. Nice footwork in 2006… but the landscape has changed more than a little since then.

HSBC, one of the largest financial groups in the world, made the race for private banking professionals more intense by launching offices on March 31 in Beijing, Guangzhou and Shanghai.The bank expects to grow the number of its private banking managers from 9 - all local Chinese - to 18 by the end of the year, and to about 40 shortly after that. What HSBC needs are mature, intelligent professionals who have a lot of networks in China, says Yvonne Hsin, deputy chief executive of HSBC’s private banking for Asia. HSBC kept tight lipped when we asked them how much exactly they would stump up for qualified & talented people in this market - we were told: they would stick to “benchmark prices” on the market and stresses that people the bank hires will be trained in both China and overseas. Ambitious? We think so!

Foreign institutions are taking steps to find and retain their best employees with diversified recruitment drives (chuckles) and significant salary boosts (better late than never) whereas Standard Chartered keep a close eye on salary fluctuations in the job market to keep salaries for its own employees hunky-dory.

“It is critical to build a pool of talent as we grow our business in China,” says Leong Wai Leng, chairwoman of OCBC China, a Singapore-based bank.

“People are our most valuable asset.”

All great rhetoric, and sure, they are saying the right things… but… wait a second… “People are our most valuable asset?” haven’t I heard these words somewhere before.

Our advice to all the large financial institutions and tech firms with ambitious, multi-faceted growth plans for China is pretty simple. Call a good headhunter. Call us. We can really offset your risk by embedding our recruitment expertise into your business and delivering agile work-arounds for these many issues. Empty statements about ‘Putting People First’ and ‘Diversified Recruiting Campaigns’… “Campus Recruiting” etc isn’t all bad, but it’s going to take more than words to solve the challenges in China moving forward.

So, we hope this article gives Michael greater comfort that… if he can only find the candidates, he won’t struggle for business in China! I can see him on the keyboard now reaching out to that VP at HSBC about their opening of the Beijing office in March right now….