Positions at foreign firms less attractive

Updated: 2011-10-26 07:37

By Wu Wencong and Li Jing (China Daily)

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 Positions at foreign firms less attractive


Li Min / China Daily

Professionals opt to join State companies, report Wu Wencong and Li Jing in Beijing.

Vincent Chen is ready to change jobs, moving from a world-famous foreign aircraft manufacturer to a State-owned aviation group. And three colleagues are going with him.

A 27-year-old engineer, Chen often complained to friends about his low salary compared to others in the same field, but it is not the 20 percent pay increase that makes him so determined to quit.

"It depends on where I can get to in the State-owned company. If I work hard, the chances are that I'll get a generous bonus at the end of the year," Chen said. "Counting on a fixed wage won't do, you know."

Over the past 18 months, about half of Chen's colleagues in Beijing have left their jobs. Seventy percent ended up in State-owned enterprises.

Chen's case is part of a wider trend seen by some headhunters and human resources consulting firms: multinational companies are losing luster as the most attractive career destinations for young and senior professionals in China.

"Chinese firms are luring talented managers and executives away from multinational corporations by offering generous compensation, more decision-making power and a faster career track," said a report published in June by The Korn/Ferry Institute, the world's largest executive search firm.

For years, multinational companies have been vigorously tapping into China's vast market and benefiting from the country's fast economic growth. They have attracted numerous Chinese professionals with competitive salaries, handsome benefits business training opportunities, and the possibility of an overseas assignment. All seem to be irresistible for ambitious Chinese professionals eager to improve their social and career mobility.

"What they (multinational companies) seem not to have anticipated is that Chinese companies might poach their critical managerial talents," the report said.

The pre-IPO lure

Positions at foreign firms less attractive

Now, in a changing business sphere where big Chinese companies rise both domestically and internationally, Chinese employers have begun to offer similar benefits, making fresh university graduates and senior executives alike view Chinese enterprises as a legitimate, even preferable career option.

"I recently lost an employee who went to a Chinese enterprise for four times the pay," said a global food and beverage company's head of talent recruitment for greater China who was quoted in the Korn/Ferry report. "And there is no way we would ever match that."

While a good salary provides motivation for switching jobs, the prospect for financial gain when a Chinese company goes public is even more enticing. Such initial public offerings have made many people millionaires overnight.

The Korn/Ferry Institute surveyed 43 senior executives and managers working in China and found 45 percent of them would consider joining a pre-IPO Chinese company. Others switched from foreign companies to State-owned companies for a better sense of security, even if it meant a smaller salary.

Betty Xin, 26, of Beijing quit her job at a foreign investment bank as soon as she decided to get married last year. She joined a Stated-owned securities company, at the cost of about 30 percent of her income. "I was exhausted at the previous job, working six days a week, half of them over 12 hours a day.

"Working for a foreign company is not as cost-effective as it used to be," Xin said. "The tempo of work is more intense, but the pay does not rise accordingly. Competition is fierce, so colleagues are scheming against each other, making me completely exhausted both physically and mentally.

"Now my working hours are fixed at 9 am to 5 pm, five days a week. And I can finally have a life!"

Meanwhile, the global recession has forced many multinationals to give priority to reducing operational costs, which means the employees have to face shrinking salaries and bonuses, or even being fired, according to the institute.

In contrast, Chinese companies, especially those owned by the government, are known for offering stable positions and pay.

Besides, Chen said, there are many barriers to Chinese employees being fully accepted by some foreign companies.

"We don't get access to many files and materials," Chen said, "and it has nothing to do with rank. Co-workers in Europe at my level can read those files any time they wish."

Domestic advances

Positions at foreign firms less attractive

A few years ago, fresh graduates tended to shun State-owned enterprises because compensation was often based on tenure at the company rather than an employee's contributions.

However, along with the transformation of corporate structure at big Chinese companies in the past decade - a major step in reforming State-owned enterprises - changes also have been made in the management of human resources. Some young professionals see that as a better direction.

Xin said her current employer, the State-owned securities company, offers different salaries for employees at the same level according to their performance, which was uncommon at State-owned enterprises in the past.

"And they used to set the threshold with a master's degree, but now they welcome a bachelor's, too, which, as I see it, is also a leap forward," Xin said.

As a result, Chinese companies became increasingly popular among fresh graduates, according to annual polls by ChinaHR.com, a leading online recruiter.

In 2003, the poll's first year, 34 foreign companies made the list of Top 50 employers. This year, only 10 are multinationals.

Chinese companies, in their fast expansion domestically and internationally, are also seen as offering employees a more flexible career path. That makes them attractive to Chinese executives who have reached a certain level in a foreign company and find it difficult to be promoted further.

Multinational companies generally adhere to globally standardized grading scales, resulting in slow and controlled career growth, according to the Korn/Ferry report. "This is regarded as too slow for some, especially as Western firms retrenched during the global recession," the report said.

"In a foreign company, every position is very clear. It's very specialized," Russell Flannery wrote in Forbes magazine on a trend he sees of Chinese software professionals now preferring homegrown firms. "However, in a local company, their platform is very big.

"So the appeal of local companies, including private companies and State-owned enterprises, is becoming stronger for human resources," Flannery wrote.

'Right thing to do'

Chen and Xin don't think they have sacrificed future career development for the choices they made in moving from a foreign company to a State-owned one.

"Even though the salary at the foreign bank was much higher, there are still chances at the State-owned company," Xin said. When she gets promoted to IPO sponsor, facilitating the company's going public, the salary gap will disappear.

"Recalling the choice I made a year ago, I still think it the right thing to do."

And there is not much hindrance for them to jump back to a foreign company in future, they said.

The Korn/Ferry Institute found that not all senior appointees who moved to a Chinese enterprise remained there for the long-term. It estimates that 15 to 20 percent of managers who join a Chinese company leave before 18 months, citing reasons such as a different corporate culture, ineffective internal communication and unfulfilled promises at the Chinese employers.

But is it a trend?

Others doubt whether the changes can be called a trend.

A consultant from another executive search firm, who did not want to be named, disagreed with the Korn/Ferry report on that issue. He said successful examples of foreign-to-State job-hopping can be counted on the fingers of one hand, and are mainly found in technology-driven businesses.

"Senior executives heading for State-owned enterprises from foreign companies usually stay out of the core decision-making team in the new company, and are often recognized as backbones of a certain business unit, in many cases, a brand new business," he told China Daily.

"Senior executives with rich experience in foreign companies don't speak the same language as those from State-owned companies, especially in large monopoly enterprises. The cultures are just vastly different."

But he confirmed the growing popularity of State-owned companies among junior executives in foreign companies.

"Perhaps the number of those who finally make the hop successfully is not large, but the desire is certainly strong." He put it down to the unstable market that jeopardizes job security in foreign companies and to the growing need for talent at State-owned enterprises.

A former human resources staff member at a State-owned company, who also didn't want to be named, shared the consultant's assessment that most who make the change are engineers and technical personnel.

"However, though State-owned companies are trying hard to recruit managerial executives who have experience in multinational companies, the successful cases are really limited, because the corporate culture is still very different in the two types of the companies."

(China Daily 10/26/2011 page1)