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Getting ahead of the gang
(China Daily)
Updated: 2008-09-01 11:23
Jack Niu is a busy man. As a North Asian service operations director for US multinational industrial manufacturer Honeywell, he spends his days hard at work on the 22nd floor of his office building in downtown Tianjin, which neighbors the Chinese capital. When he's not in his 15-sq-m office teleconferencing with colleagues on his global marketing team, setting up meetings with key customers and exploring new service opportunities to further grow his company's business, Niu, a native of Beijing, is traveling across northern Asia to further consolidate corporate plans and partnerships. Today, Niu holds one of the highest senior management positions at his company on the Chinese mainland; it is a job that also includes junior executive responsibilities. The 40-year-old is indeed a far cry from where he was when he first started out in the business 17 years ago, earning a mere 300 yuan ($43) a month. These days, local and foreign directors at multinationals in China can earn up to 100,000 yuan ($14,633) a month - and sometimes more depending on the industry, size of company, and the executive's skill set, experience and bargaining power. Last year, Niu landed his current job - it was a position previously filled by an expatriate in China. As the country's red-hot economy continues to develop, so do career opportunities for local professionals like Niu, who are bilingual, university-educated at home and abroad, and have accumulated years of valuable work experience at multinational companies in China. "Ten years ago, I think my expectation for my career in the 20-year range is for me to be a China leader in the service business for some multinational company, but I did not imagine I could manage Hong Kong, South Korea, Japan, the Chinese mainland and Taiwan," says Niu. "Ten years later, it comes true - and I can manage them."
Mainland professionals are rising through the ranks and increasingly replacing expatriate hires that previously dominated middle to senior management positions at foreign-owned entities in China. Numbers on the trend, which has become most evident within the past decade, are hard to track because new companies are constantly entering the Chinese market. However, research conducted by Mercer China, a global provider of consulting, outsourcing and investment services, shows a steady decrease in the distribution of expatriates within foreign-owned entities in China between 2005 and 2007. The study from last year focused on 1,200 expatriates working in first-tier Chinese cities. "There are more of these management positions being filled by locals, and there is increased evidence of a career path and opportunity for locals to advance their career within foreign-owned entities," says Jill Malila of Mercer China. "So, a career ladder is emerging within multinationals for local management talent." Well over a decade ago when world-class international companies first began entering China, companies had little choice but to bring in expatriates because there was no homegrown talent available on the mainland, says Larry Wang, founder and CEO of Wang & Li Asia Resources, a professional recruitment agency in China that offers services to leading international companies and top professionals in the Chinese market. "The whole approach was to be here until the market took off," says Wang. "Particularly in the last 10 years, the market has arrived and the potential for earning money has really turned to opportunity." Most companies were initially willing to give out generous expatriate compensation packages. But, because China today has become the major market for many of these companies, they are constantly looking for ways to better manage operating costs. Therefore, the practice of handing out large expatriate packages has become less common nowadays, particularly at the middle to senior management level. "The mindset of the company is to localize," says Wang. "It's not so much to localize the staff, but the compensation structures."
Localized salaries open more doors for local professionals. Because the local workforce has advanced alongside the quickly developing Chinese market, companies can now look to recruit locally. "The local talent is getting more competitive, not just for foreigners, but for locals, too," says Wang. "Yesterday's competitive advantages are now just baseline requirements, and a good example of that is (knowledge of) English." "Companies don't need to pay a premium because the local workforce is getting more mature," says Wang. "Their caliber, skill set and experience are starting to meet the requirements of what corporations need at the manager and senior level." While management salaries at foreign-owned entities in China are wide-ranging, industry estimates put current salaries for middle managers between 10,000 yuan ($1,463) and 25,000 yuan ($3,660) a month. Senior managers are placed between 25,000 yuan ($3,660) and 40,000 yuan ($5,856) a month, while directors earn between 40,000 yuan and 100,000 yuan ($14,633) a month - and sometimes more. Guy Rotberg sees more local professionals being hired into such managerial positions everyday. The co-founder and co-CEO of www.Meijob.com, a major Chinese jobs website that posts roughly a million jobs per day, says that beyond the localization of salaries and the maturing Chinese workforce, locals offer additional value that expatriates with expertise cannot match. "The Chinese management has another advantage over the expat, which is the ability to be able to work within the Chinese market," says Rotberg. And, as more foreign-owned entities become increasingly focused on the domestic market rather than the export market, demand for local talent will only increase, particularly in the sales and marketing areas, says Malila. "The best way to accelerate business growth in the local market is to get people that understand the culture and language," says Malila. "This is where the locals are in hot demand." The confidence seen in China's rapid economic development also adds fire to the belief that foreign-owned entities will continue to hire more local talent in the future. "Today's wave of local mainland talent will be more suited to people in director positions in the future," says Wang. "In three years from now, people who are at the senior level of experience are going to have at least 12 to 15 years of experience, which is international caliber." "There is not a need like before to send out an expat," says Wang. "But, there is always going to be a need for expats for different reasons." Still, the practice of hiring local versus expatriate for managerial positions today simply boils down to the better hire, says Wang. Foreigners or non-regional locals are still hired when they are better suited to the position than locals, but they are being offered localized salaries - fringe benefits for expatriates are a thing of the past, he says. Currently, Wang estimates compensation structures for middle management positions at multinationals in China to be 90 to 95 percent localized while senior management positions to be roughly 60 to 70 percent localized. Director positions are probably about 50 percent localized, he says. Yet, despite the fact that rising Chinese professionals are replacing more expatriates than ever before in middle to senior management positions at foreign-owned entities in China, the trend seems to stop short of the top jobs, at least for now. "Our observation is that the C-suite executives are predominantly expats for foreign-owned entities - and continue to be," says Malila. Rotberg says this is because the relationship between the locals and overseas foreigners at the top level still needs time to further develop in most cases. "The only thing that is left problematic is the compatibility and the connection between the headquarters abroad and the Chinese subsidiary," says Rotberg. "The top level management, which is basically the C-level, is still left to the expats because this is the highest level of connection between the two companies." |
