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CHINA: "Chemicals in China: Responding to New Challenges" report

CHINA: "Chemicals in China: Responding to New Challenges" report. 28-page report by KPMG China.

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back to index backCHINAtalk December,  2016


Winning the War for Auto Talent in China's "New Normal"

After years of runaway economic expansion, China has settled into a new normal” driven by lower economic growth, higher costs, stricter regulations, and the disruptive pressures of e-commerce. As a result, automotive companies operating there are finding it ever more challenging to attract the leaders they need. Thriving in this environment will require executives to recalibrate not only their business strategy but also their approach to talent recruitment and management.

In theory, additional talent should be available as growth slows in sunset industries such as heavy industry and low-value manufacturing for export. Yet leaders of multinational corporations (MNCs) in China still consistently cite talent among their top concerns due to a shortage of skilled workers and high attrition rates.

China’s demographic trends explain some of this challenge. Workforce numbers are declining as the one-child generation starts to enter the management pool. According to China’s National Bureau of Statistics, from 2014 to 2015 the number of workers aged 16 to 59 fell by nearly 5 million people, its biggest decline ever. In addition, the continued exodus of educated professionals seeking opportunities outside of China in search of better air quality and lifestyles drains the talent pool further. In 2014, for example, more than 76,000 Chinese were awarded permanent residency status in the United States, up by more than 4,200 from the previous year. While this number is small when viewed against the nearly 800 million–strong Chinese workforce, it is a telling indicator nonetheless. Collectively, these trends provide some insight into the growing gap between demand and supply of experienced executives.

The local labor pool is improving, but competition is intensifying

The quality of local executives has risen rapidly in recent years, with candidates touting improved educational qualifications, language ability, and management skills. In our experience, MNCs in some sectors are accelerating their efforts to localize the leadership of China operations. We find that more than 50% of the lead positions with jurisdictional authority over China are now filled by Chinese citizens, many of whom also serve as executive officers within their global business.

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Source: Gregg McDonald, Managing Partner at Heidrick & Struggles via LinkedIn - GAI





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