Shortage of talented workers in China concern for Australian multinationals

13 October 2010

Australian multinationals working in China need to develop holistic talent management systems if they are to win a ‘war for talent’ in the country, a Deakin University researcher has argued.

International business expert, Dr Jane Menzies, from the Deakin Business School, said her investigation into 20 multinational corporations’ talent management problems had supported concerns about a so called war for talent in China.

“China is an attractive market because of its economic growth and population size of 1.3 billion people, however western multinationals still face major issues with regards to skill shortages, recruitment problems and difficulty in retaining workers,” she said.

“In China the supply of talent is lacking in all facets of business - for every 10 management positions advertised, there is only one qualified Chinese applicant; and for every 88 blue collar jobs advertised there is only one skilled and qualified applicant.”

Dr Menzies said her investigation had shown Australian-based multinationals had difficulty finding employees with the right skills at both managerial and non managerial levels.

“Australian multinationals prefer to use western managers in their foreign operations, but crucially they need to have five to 10 years well-developed China experience,” she said.

“Firms also try to use local Chinese, especially Chinese nationals with Western experience as they can understand both cultures.

“This too can be problematic, especially, if the person has been away from China for a while as they may not be accepted by other Chinese staff, being seen to have lost their Chinese values.”

Dr Menzies’ study also confirmed Western expatriates were unwilling to go to culturally distant countries.

“Firms reported staff were willing to go to London but not so keen to go to say Tianjin,” she said.

“For companies operating in provincial areas finding staff can be even more problematic.”

Dr Menzies said once companies had found staff they faced difficulty retaining them.

“As more foreign businesses go to China the pressure for suitable talent increases,” she said.

“The result is that half of the Western multinationals interviewed were forced to poach talent from other organisations by offering workers a higher salary, causing a “war for talent” between employers.

“One organisation reported that it was difficult for them to invest in training when employees leave shortly after.”

Dr Menzies said one company tried to improve retention by instilling a company culture and treating employees as long term.

“While they did not believe in paying employees more money, they did believe that the employees who left, left for higher paying jobs,” she said.

“Past research has shown that Chinese employees place an emphasis on compensation being competitive, and therefore compensation is important in retaining staff.”

Dr Menzies said the findings were thought provoking as without the ability to recruit and retain competent and skilled workers, Australian multinationals would face productivity issues into the future.

“Australian multinationals in China need to develop appropriate and holistic talent management systems to attract, and retain skilled workers,” she said.

“It was apparent from the interviews that none of the firms had these types of systems in place.”

Dr Menzies said it would also help if a joint task force was created to resolve skills shortages issues.

The taskforce could include state-owned enterprises, private organisations, multinationals, the government, communities, labour unions and universities.

About the study:

Participants for the study were identified through the membership list of the Australia China Business Council (ACBC).

A total of 20 managers, from 20 different organisations were interviewed for the study, which was conducted in 2007.

News facts
  • Investigation into 20 multinational corporationsí talent management problems supports concerns about a so called war for talent in China
  • Western multinationals still face major issues with regards to skill shortages, recruitment problems and difficulty in retaining workers
  • Western multinationals forced to poach talent from other organisations to meet shortage

Media contact

Sandra Kingston
Deakin Media Relations
0422 005 485

Deakin University acknowledges the traditional land owners of present campus sites.

13th October 2010