This is a key point highlighted in a report issued by McKinsey last November. The report claimed that every year, China produces only 160,000 science majors -- out of the country’s entire pool of 3.1 million high school graduates -- who are capable of working for MNCs. It’s not a number that is compatible with the striking growth rate in the region. About 400 of the Fortune 500 companies have invested in China up to now. The above-mentioned HP Development Center in China, which hired 80 people three years ago, has expanded to 2,000 employees and will probably increase even more. Its development center in India has 30,000 engineers.
“Every year there are 100,000 graduates from medical school and another 100,000 with a biochemical background. But they are not at the same level,” says George Chen, area vice president of GlaxoSmithKline, who oversees R&D operations in Mainland China and Hong kong: “Although not high in initiative and creativeness, China does have a huge base of ‘raw materials.’ One of the biggest challenges for MNCs in China is how to train the local talent so that they mature and meet companies’ expectations. It takes a serious and significant investment.”
Compared with the problem of training and educating young talent, the shortage of experienced leaders is an even bigger challenge for MNCs. “China is short of experienced, seasoned talent,” Chen notes. Adds Johnny Lu, China human resources director at Andrew Telecommunications (China), an American company which produces telecom equipment in China: “In China, you could find a lot of good managers, but it’s very difficult to find people with strong leadership skills.”
Charles Tseng, president of Asia-Pacific for Korn/Ferry, is very optimistic: “Don’t forget that with a market opening up, there will be more people who can go outside China to study and to work. The number of people with international exposure will grow. Chinese people are more flexible, they learn faster, they adjust faster. ... So I don’t think there will be a shortage of returnees. Before, people went out for 10 years and came back; now, people go for four, three or even one year. So later on, there will not be a clear line between returnee and non-returnee. Right now, there is a clear line. Also, people here are more exposed; there are more graduate business schools and people travel a lot. Typical consultants in my office here are not returnees. They travel two to three times every year, to Hong Kong, to the U.S. So there is a lot of exposure.”
Yan has always been consulted by her clients on the question of whether they should continue to hire expatriates or get completely localized. Her answer is explicit: “These two approaches are not in conflict. My view is, the more thoroughly you get localized, the more it is possible for you to attract high-end local talent. There were many middle-level managers in MNCs leaving the company or going back to private or state-owned Chinese companies because they met the so-called “career ceiling.” The fact that many key positions, like marketing director, operations director, finance director, are in the hands of expatriates (including those regional Chinese from Hong Kong, Taiwan or Singapore, for example) makes them feel their career is being blocked. I think there has to be a breakthrough. Otherwise, the MNCs will lose a great many people who are very capable and who hoped to leverage their influence. On the other hand, expatriates have a big market in China as well. With China operations getting more global and complicated, there is a great need for expatriates who have experience in the west.”
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