Bureaucracy Down in China - Talent Shortages Way Up

By Frank Mulligan, Talent Software

The ongoing War for Talent has been identified by the American Chamber of Commerce (AMCHAM) as the top challenge for U.S. companies operating in China. Talent has now replaced bureaucracy as the No. 1 headache. Staff loyalty is moot.

This may be excellent news for the Chinese government as it shows their commitment to the opening up that started way back in 1979. Itís an excellent measure, or metric, for how well they have rolled back the restrictions on operating here. Look for some movement up country rankings on competitiveness and transparency.

But for companies this is a double edged sword. Sure, itís easier to operate but itís exceptionally hard to find the people that you need to manage operations.

AMCHAM released the 2006 China Business Report last Wednesday and they polled 274 of the AMCHAM member companies to get the results. The primary challenge cited by 80% of companies as írecruiting capable Chinese managers and retaining themí

But itís not just professionals, as we know. The companies also cited a scarcity of lower skilled staff. They may have heard of the factories in the East of China that have lost up to 50% of their production staff after the Chinese New Year holidays. They went back for a holiday and just didnít come back to work.

There was also an issue with salary increases. 82% of companies said this was a problem for them. Bureaucracy has not gone away and continues to pose a challenge. In addition, US companies still complained of a lack of transparency and inconsistent regulatory interpretation.

Most companies saw profit margins increase by less than 10 per cent and only a quarter reported higher margins for China than for their worldwide operations. This is not actually worrisome yet but it could be a problem if there is a dip in exports coming off a slowdown overseas.

Fortunately, we are looking at twin economic peaks in the world right now. The US and China. Itís not a double-dip but a double-boom.

Comments to: frank.mulligan@recruit-china.com