Scarcity in China

A few interesting articles appeared recently on the availability of talent to support China’s economic growth. Even though China has a vast pool of human resources, the Asia Times warns about China’s impending talent shortage. Firms in the south now complain that they cannot recruit enough cheap factory and manual workers. The market is even tighter for skilled workers. As the economy grows and moves into higher-value-added work, the challenge of attracting and retaining staff is rising with the skill level, as demand outstrips supply.

Only a few of China’s vast number of university graduates are capable of working for a multinational company, and the fast-growing domestic economy absorbs most of those who could. Indeed, China is facing a looming shortage of home-grown talent, with serious implications not only for multinationals now in China, but also for the growing number of Chinese companies with global ambitions.

Despite the apparently vast supply, multinational companies are finding that few graduates have the necessary skills for service occupations. According to the Asia Times this can be related to China’s history, which has left it with some peculiar deficits.

They point to China’s Confucian heritage as one explanation. This heritage which emphasizes rote learning and hierarchy, may partly explain why many graduates, despite good paper qualifications and English-language skills, are often cautious about taking the initiative. Another interesting explanation was given by China’s one-child policy: “Some firms complain that China’s one-child policy has made it harder for them to find natural team players”

The Far Eastern Economic Review has an item on the same topic (subscription required) but this focuses mainly on the role of returning overseas graduates in tackling this problem. The author of the article, David Zweig (a professor at Hong Kong University of Science and Technology), claims that if China hopes to make up for its brain deficit by wooing overseas-educated Chinese, then it is in for an unpleasant surprise.

He provides the data that show that the return of overseas workers and students is growing. This is partly because of various (national and local) government programmes which financially stimulate the return of Chinese professionals. But it is also partly due to the improved political and economic environment in the country.

Zweig then asks: “but what about the quality of the returnees? Has China been successful in attracting the return of its best and brightest?” He states that data do not support this. Rather, the theory is that those returning to China tend to have first been unsuccessful overseas:

“The Director of a CAS research institute in Northeast China has said that while the people he attracts usually fall into the top 50% to 80% of overseas scholars, the top 20% still remain abroad. Rao Yi, a neurologist at Northwestern University in Illinois claims that, in terms of international reputation and prestige, few returning scholars are of comparable quality to those who stay abroad. He believes that there are between 800 to 1,000 scientists of Chinese origin running independent labs in the U.S., and that these people are unlikely to return.”

Zweig’s own research confirms this:

“In fact, surveys have shown that only a few scholars returning to China had to sacrifice high salaries or stable, tenured positions, and even fewer were returning with patents for innovative research. What’s more, getting the very talented to return is just the first step; getting them to stay is another matter altogether.”

The Asia Times article is based on a recent article in the McKinsey Quarterly (free registration required) on the looming talent shortage in China. This article again was based on the report ‘The Emerging Global Labor Market’ of the McKinsey Global Institute. Last Year, the McKinsey Quarterly also wrote about India’s looming talent shortage.

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