Most Common HR Challenges In China

With China recording consistent economic growth over the last couple of decades, the East Asian nation is threatening to outpace the traditionally giant economies of the West. That’s why many multinational companies are constantly trying to make inroads into the country, with the hope of slicing a sizeable share of the growing market.

China-based companies have been steadily growing their workforce to match the growing need for products and services within the country’s major cities. And as the labor market keeps growing, Chinese institutions of higher learning are thriving to ensure that their graduates are adequately prepared for the job market. It is now safe to say that there is sufficient talent in China, all with a reputable level of training and expertise. But even with that, the current labor market presents employers with a unique set of HR challenges, necessitating every hiring manager to engage a Chinese recruitment agency. That is the surest way of getting hold of the best talents. Without a doubt, Human Resource is an extremely important part of any business. As such, any shortcomings that the department faces must be optimally studied and sufficiently addressed early enough. This post focuses on the 4 major HR challenges that prevent many teams from recognizing and hiring the most skilled, talented, or experienced employees in China. Be our guest.

1. Few qualified and talented natives

This is by far the most teething HR challenge in China. At least two-thirds of all multinational firms in China are affected by HR challenges like this one, most of those ending up hiring people with low-grade skills. Despite the efforts made by local higher institutions, the labor supply in the country is critically unable to meet the demand for sharp performance skills. According to a 2006 market study by McKinsey, only about 10% of the local labor market in China has the needed skills and talents to perform optimally in a multinational company. “Companies based in the country are now forced to compete fiercely for the few available top talents. It has also become a norm for foreign countries to hire foreign talents in a bid to arrest this unfortunate situation” say experts of Sky Executive. Whichever option a company goes by, it is forced to offer higher than usual remuneration packages to the available qualified employee.

2. Difficulty in retaining talented staff over the long term

If a company is lucky enough to attract and hire top talents, probably by promising them high remuneration, HR challenges now shift to sustaining the high salaries over the long term. Some companies often fail to meet their salary obligation, forcing their staff members to look for greener pastures. Also, the nation’s economy is growing too fast and with it the wage inflation. “Multinational companies that are entering China for the first time are also a great threat to the seasoned multinationals because they are more willing to meet the outrageous salary demands that other companies are unable or unwilling to. They promise young talents better salaries, better working conditions, and better career growth opportunities, effectively luring them away from their current employers” add experts of Globalization Pedia.

3. Shifting employee needs

Unlike in the past when all a Chinese professional wanted was a reasonable compensation package, everyone now wants a compensation package that is both fair and competitive. Secondly, many employees here have started prioritizing upward mobility as opposed to settling in comfort zones. This shift in employee needs has sent HR departments back to their drawing boards. On the other hand, Chinese professionals want to be recognized for their individual achievements, no matter how small, and rewarded accordingly. HR departments are now forced to come up with sustainable performance management programs for their staff as a way of ensuring that all top performers get the rightful tokens of appreciation for their efforts. Studies show that approximately 62% of the available workforce in China wants their employers to cater for their health and wellness expenses. On the other hand, more than half of the labor market today desires to work in a flexible work environment.

4. Prevalent cases of falsified resumes

Employees who are insufficiently qualified have mastered the art of falsifying their resumes, particularly because there isn’t a reliable database from which employers can counter check the claims made in applicants’ resumes. As a matter of fact, a recent study by Kroll found that at least 20% of all job applicant resumes in China contains many glaring discrepancies.