China offers an abundance of job opportunities for its masses, but there are skills shortages, a looming labor shortage and high employee turnover, all of which is increasing the need for expats on the mainland.
By Mary Anne Thompson, founder and president, Goinglobal, Inc.
In spite of an economic slowdown, China remains one of the world’s fastest-growing economies. The country’s unemployment holds at a low 4.1 percent, as employment opportunities increase across multiple job sectors in all regions of the country.
In just the first quarter of this year, China created 3.24 million new jobs, most in the services sector. In the coming months, hiring activity will likely increase, according to the latest survey from human resources firm Manpower Group, but there are issues the country needs to face as it moves forward.
High turnover: Employee turnover and skills shortages present some of the greatest challenges businesses in China are facing today. The majority of Chinese workers surveyed by human resources firm Hudson are willing to change jobs.
Skills shortages in tier 2 and 3 cities: Tier 2 cities (provincial capitals and others, e.g., Harbin) and tier 3 cities (less well-known cities with significant economic development, e.g., Urumqi) -- especially those inland -- lack the skill sets that are available in Shanghai and Beijing.
Shrinking labor force: China’s labor force is shrinking rapidly. In fact by 2050, China will see its workforce contract by 17-18 percent, according to the Economist Intelligence Unit (EIU). The number of employed people in China will decline from 753 million to 709 million in the next decade alone.
According to Manpower, large companies in China have the strongest hiring intentions, with medium-sized business showing active hiring as well. Small, micro-sized companies have the least optimistic hiring outlooks.
Companies’ first choice is to hire bilingual local candidates with experience working in multinational corporations (MNCs). However, although there is a large pool of recent graduates, they often lack the skill sets needed in the current job market. Until this changes, China’s talent shortages will persist.
When local or returning Chinese candidates with the required skills are not available, MNCs turn to expatriates. In fact, the number of foreign professionals in China is on the rise. Most frequently expats are assigned to Shanghai or Beijing, and this trend is likely to continue, at least into next year, according to global relocation consultant Cartus.
Multinational corporations employ the vast majority of the expatriates in China:
Only a few expats work for Chinese companies, primarily as engineers or managers in high tech manufacturing firms, according to executive recruiter Hudson. However, that may be changing. As Chinese businesses grow, especially those in logistics and technology, they are seeking candidates with international experience. IT marketing professionals are increasingly in demand, as are managers with strategic vision who can manage global communications, according to recruiting firm Michael Page.
Though reports confirm that China’s economy has slowed, its growth is still surpassing that of many other countries. Its job opportunities span the sectors, and each region of the country is enjoying expansion. But, despite having the world’s largest population, China may still need to look beyond itself to fill all the jobs available; as a shrinking labor force and skills shortages loom, expats may provide the answer.