More headhunting companies are coming to the fore in finding candidates for domestic firms
Each time Li Yunqing, the director of human resources at Digital Leader Tech Co in Beijing, tries to fill a new position in the company, she struggles to find the right person from a list of candidates on the Web. Often, she finds that an Internet search for talent frustrating. What’s worse, she says that when candidates come in for an interview, most have not bothered to read the job description. “This is seriously a waste of time for my work as well as for the company,” says the 30-year-old executive at the high-tech firm.
But help is, and has recently been, popping up in greater numbers in China in the form of headhunting companies, which Li says has made her work much easier. As more and more Chinese companies strive to compete against multinational companies and find success in the global economy, more are using recruitment services as a way to find top-level talent and stay ahead.
According to the report for Executive Search Industry in China, in 2006 there were approximately 3,000 headhunting companies in major Chinese cities such as Beijing, Shanghai and Guangzhou. This year, there are currently 23,000.
Foreign headhunting companies first established offices in China 15 years ago but their practices initially focused on multinational companies, helping them find employees to work on the Chinese mainland.
In most cases, the recruiters gravitated toward hiring Malaysian Chinese, Singaporean Chinese, candidates from Hong Kong or Taiwan or Chinese returnees from the United States.
But during the financial crisis in 2008, as many multinational companies suffered and put a temporary halt to global recruiting, demand for talented employees from domestic companies grew. And as China surfaced from the recession as one of the most dominant players in the global economy, the need for local talent from Chinese companies skyrocketed.
“When we first entered into the Chinese market in 1998, 90 percent of our clients were multinational companies, but today we see half of our clients from multinational companies, and half from local companies,” says James Darlington, Asian regional director of Antal International, a global HR consulting firm. “This is very impressive as more local Chinese firms started to see how important it is to get the best people.”
Ma Rong, director of headhunting at Sam’s Party, a leading domestic recruitment firm in China, says she believes at least 50 percent of enterprises in China, such as Haier Group, Inner Mongolia Yili Industrial Group Co, Inner Mongolia Mengniu Diary (Group) Co, Midea Group and Gree Electric Appliances Inc, are using headhunting companies to find management-level talents to compete on the global stage.
“A few years ago, these Chinese enterprises were not concerned with using headhunters to find middle or top talents for their management team, but now they want to beat the multinational companies,” Darlington says.
Mark Carriban, managing director at Hudson, an international recruitment company that established offices on the Chinese mainland 11 years ago, expects a balance in their portfolio of international and local clients.
Currently, 85 percent of Hudson’s clients are multinationals in China, while 15 percent are domestic. “As many local companies internationalize and acquire business overseas, their HR policies will become more refined. Therefore they will demand more quality recruitment service from foreign headhunting companies,” Carriban says.
He says that as the government shifts economic focus from exporting to increasing domestic consumption, Carriban says there will be more opportunities for Chinese companies to hire domestic talent.
“We have found there is a bigger demand from retail and the luxury sectors as people’s living standards in China get better,” Carriban says.
According to Hudson’s January figures on recruiting in China, 66 percent of companies in the country said they would increase hiring in the first quarter of 2012, an increase from 64 percent the previous quarter. Sectors such as automobiles, healthcare and life sciences, green energy, retail and industrials in China are showing a picture of health and growth this year.
The big question with recruitment services in China, however, is how quickly will a country based on the traditions of using guanxi – which translates to relations and is the central Chinese idea of personal networking – accept recruitment service companies? Is there any room for headhunters in a country where the right guanxi makes all the difference in ensuring that a business venture is successful or a job position is filled?
Robert Parkinson, founder and CEO of RMG Selection, a recruitment consulting company based in Beijing, says Chinese companies will take a long time to truly embrace the concept of recruitment services because guanxi still plays an important role in Chinese society.
Liu Qinghui, a 28-year-old engineer who specializes in designing in antennae for electronics, found his current job through the recommendation of his tutor at college.
“I know I was qualified for this position, but there are so many people out there. Without a recommendation from my tutor, I might not able to pass the resume screening,” he says.
Often it is acquiring the right guanxi with the right people that will determine whether a company is successful in China. Moreover, the inevitable risks and barriers entrepreneurs encounter while doing business in China will be minimized when they have the right guanxi.
“It will take five or 10 years for Chinese people to use headhunting companies for outsourcing,” says Parkinson, 34, who has been in Beijing for almost seven years.
Nonetheless, it is clear to many recruitment consultants like Parkinson that more Chinese companies are finding that the best way to be successful is finding the right personnel.
“I think we are seeing two trends in the Chinese side: Some companies are trying to build a stronger local management team with individuals who have international work experience. So for them, they are looking for more returnees,” says George Fifield, managing director of Korn/Ferry International’s Beijing office. “On the other side, I expect to see a lot of demand from Chinese companies to help them find people in Europe, Australia and North and South America as they start overseas operations.”
“By using these headhunting companies, we could find candidates more efficiently, and most importantly, they are very focused and the candidate they find for us very much meets our requests,” Li of Digital Leader says. “It’s good to use headhunting companies as they have a bigger database of the talent pool.”
Li says many headhunting companies in China provide candidates for their clients until the client is totally satisfied with a candidate. If a candidate is not up to par, the person will not be hired full time after a three-month probation period.
Despite the need for managers among Chinese and multinational companies, there is one major challenge for all of them: a dwindling supply of talent.
Francois de Yrigoyen, deputy general manager of Manpower Group China, says “because (more and more seniors are coming into the period of) retirement and (because of the) one-child policy in China, there is not enough talent for this booming market”.
“The challenge here I think is to build supply – a supply of people who have years of speaking foreign languages, who have lived overseas, studied overseas and have some understanding of what it is like to work in different companies,” Fifield says.
Carriban says they are facing a shortage of high-performing candidates who can make a difference at companies. He also says there is a certain shortage in candidates with leadership skills, sensitivity to multiple cultures and strong English language proficiency.
Many foreign recruitment consulting companies in China have addressed this shortage by offering training courses in English and leadership programs for their clients.
Today, the hottest sector looking for talent is in research and development. According to China’s Ministry of Commerce figures, there are now 1,200 foreign multinational R&D centers in China, representing a $12.8 billion (9.3 billion euros) investment. There are no fewer than 353 such centers in Shanghai alone. Top level talent will clearly be in high demand over the next 10 years.
“When I came to China seven years ago, mostly our practice in China was predominately with multinational companies and very little work with Chinese companies. Today, one-third of our business is with Chinese companies and two-thirds of it is with multinationals in Beijing, Shanghai, and Guangzhou,” Fifield says. “But I hope that ratio will flip because we are in China, so our practice should be China-based or China-oriented.”
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