China Tops the World

By Frank Mulligan - Recruit China

In China we are used to being first, the biggest or the highest. It may come as a surprise to people in other, more powerful countries, but it is a fact.

The country has the highest Foreign Direct Investment (FDI) in the world (US$60 billion per annum) and the biggest mobile phone market. The consumption of steel and cement is greater in China than any other country. We have 1.3 billion people and the fastest growing economy in the world. We have the maglev, the Beijing Olympics and the World Fair in Shanghai. I could go on.

No, seriously, I could actually continue in this vein for about another 10 sentences.

So itís a bit of a shock when China is only in the medals, and not first. The cause of this angst is the recent report by Hays Group that China, India and Eastern Europe will top the global pay rise ladder in 2007. What, only Top 3? Whereís the gold medal?

The Hay Groupís World Pay Report ably demonstrates that economic growth in India, Eastern Europe and China is having a huge impact on salaries in those territories. China does manage to top some tables however. It has a predicted 7.9% increase for administrative workers, 7.8% for professionals and an 8.9% increase for senior management. British workers by comparison can only look to a 1.5% real increase across the board this year. Ouch!. And thatís an improvement over their Mainland European neighbours, who are actually below 1.5%.

The salary news is good but the challenge the report points out for China is a lack of senior management talent. They donít seem to deal with the broad skills shortages in everything from basic production to aeronautics to public relations to customer service. But thatís a story for another day.

The report suggests that companies in China are offering insufficient incentives to managers to solve this problem. They point out that real senior level salaries in China amount to around Ä42,000 ($52,500). This, apparently, is less than a graduate starter salary in Switzerland. I would assume this is based on Purchasing Power Parity.

Companies in China, both overseas and local, need to look at this in a different way, and understand that they are not competing with Dalian or Chengdu for senior talent. They are competing with Paris, New York or Tokyo. This was not the case many years ago and many companies still have not absorbed the change.

China is no longer a low cost country, and for senior staff it never was.

(This report is not available for download, but Hays do have an excellent report on the impact of China. It can be downloaded here)

Email frank.mulligan@recruit-china.com
Frank Mulliganís blog - english.talent-software.com