Foreign companies losing their edge as more professionals turn to Chinese companies for jobs
After studying in the US for five years and then taking up a job with a US technology company in China, many thought that Cui Nan had made it in life. But last month, the young engineer surprised everyone when he decided to leave his job and take up employment with a State-owned enterprise.
Though the new job came with a salary hike and other perks, in Cui’s case almost double his current earnings, the job shift was more due to a combination of several factors.
“Salary counts but it’s not what determines whether one should change a job or not,” says the 31-year-old engineer. “What really attracted me to the new job was the long-term career development opportunities.”
Cui says Chinese employees often get stuck at a certain level after the mandatory promotions in a foreign company, whereas they have better career prospects in a domestic firm.
Like Cui, a growing number of Chinese graduates and professionals feel that domestic firms are a better bet than multinational companies in terms of job benefits.
A survey conducted during 2010 and 2011 by Li Hongbin, a professor at the School of Economics and Management at Tsinghua University, shows that about half of those surveyed chose SOEs as their ideal workplace.
Despite foreign-funded organizations offering better pay, the survey says that the majority of Chinese employees consider State-owned enterprises as the ideal job destination.
Western companies have for long held the upper hand in recruiting top professionals by offering higher positions, better benefits and the possibility of overseas assignments. But that advantage is fast diminishing.
According to a survey conducted by Korn/Ferry Institute, one of the world’s largest executive search firms, Chinese companies are now luring talented managers and executives from multinationals by offering generous compensation, more decision-making power and a faster career track.
“They (multinational companies) did not anticipate that Chinese companies would poach their critical managerial talents,” the report says.
But with global economic power shifting from the West to the East, domestic companies have also begun to offer higher compensation, better working conditions and career advancement opportunities, in many cases far better than those provided by the multinational companies.
Wang Xiuli, a professor at the Business School of the University of International Business and Economics in Beijing, says the halo of multinational companies is slipping and the days are gone when salaries at foreign companies were several times higher than those at the State-owned and private companies.
“Domestic firms have demonstrated their competitive strength both at home and abroad, and they have become more attractive by offering salaries and bonus packages that are competitive with their foreign counterparts,” she says.
A generous salary is certainly a strong motivation for employees switching jobs, but a gain from a possible IPO (initial public offering) seems to be even more attractive.
Smaller local startups with the potential for rapid growth in the Chinese market offer handsome payment and stock options for their employees.
Success stories like the IPOs of Youku.com and Dangdang.com have triggered interest among young professionals to work for early stage and pre-IPO companies in China, as in many cases the employees have made handsome financial gains.
The Korn/Ferry Institute polled 43 senior executives and managers working in China and found 45 percent of them would consider joining a pre-IPO Chinese company, while 30 percent wanted to work for publicly traded Chinese enterprises.
Many foreign companies have taken a considerable beating due to the global financial turmoil and have been forced to curtail their overseas operations and trim jobs to keep the overall costs under control. On the other hand, Chinese firms have been on a hiring overdrive, thanks to the booming Chinese economy.
Many Chinese employees also feel that their career would stall after a certain point at MNC firms as the higher management jobs are often reserved for expatriates.
Luo Rui, who works as a department manager at an Italian food and beverage company, says she wants to work with a Chinese company as she feels that local employees and managers are often excluded from strategic discussions, while many of the senior positions are for foreign staff.
“It’s unfair and sometimes it means a lack of opportunities to prove our worth,” she says.
State-owned enterprises overtook foreign and private enterprises as the top destination for job-seeking graduates in 2011, according to a survey of 200,000 students conducted by ChinaHR.com. Eight of the top 10 companies named in the survey are State-owned.
Sophie Li, marketing director of RMG International Business Consulting (Beijing) Co Ltd, a recruitment consulting company, says most of the young recruits are eager to get on the fast track. Domestic companies can offer them “skip-level” promotions that put them straight into jobs with senior positions and expanded responsibilities.
“Young professionals are keen to see a clear leadership development path, and domestic firms with faster growth can offer more rapid promotion, a more challenging environment and greater decision-making power than some foreign companies,” she says. “All these factors are something that potential employees will consider, because they tend to think more about the long term rather than the short term.”
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