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2018 China Leadership Report
Joint Bain & Company and LinkedIn research finds rising tech companies are shaping China `s business landscape and multinationals must adjust their hiring practices in order to attract the country `s top tier talent

Shanghai – Dec 13, 2018 – With fierce competition to attract the best talent in China, multinational companies are continuing to lose out to local companies according to a new report by Bain & Company and LinkedIn China. The 2018 China Leadership Report: Updated Insights for Talent Seekers, found that roughly 40 percent of business leaders who began a new job at a local company in China over the past five years transitioned there from a multinational corporation, compared to around 33 percent in 2016.

This is a stunning turnaround, as in the past Chinese grads have looked to foreign companies for career growth and opportunities. This switch is due to the growth of the Chinese economy and the fact that now employees of every level of experience are looking to the opportunities that working for local companies can provide. Additionally, Chinese talent are choosing alternative methods of gaining experience and are choosing roles at local companies in order to have a greater amount of control over leadership decisions.



This movement of talent from international companies to local has meant that human resources departments at multinationals have had to adjust how they attract local talent in China. By choosing to work at a Chinese company, leaders can expect to have a more hands-on role in key decision making and corporate strategy –- an opportunity that is very appealing to many business leaders, especially younger employees, who are still building their experience.


“Local Chinese companies are redefining our entire thinking of the talent market as they continue to attract leaders due to their experience, salary, training and opportunities which go hand in hand with their fast growing operations and opportunities,” said James Root, a Bain partner and co-author of the report. “Multinationals need to rethink and adapt their value proposition to ensure that local talent feel they will have both opportunities and feel valued, thus ensuring that they don `t lose out on this important generation of leaders.”

Whereas in the past, Chinese leaders looked to join a foreign company, either in the country or overseas, and then to stay with that company for their entire career, there is now a trend to choose a Chinese company instead and then move more rapidly between different companies, gaining a wider range of experience over a shorter period of time. This trend is especially true among young people, with more than 70 percent of leaders under the age of 30 having switched companies over the past three years.



One of the biggest findings from this year `s report is that rising tech companies are now actually shaping China `s business landscape, led by the “rising tech stars,” which are companies that place among the top 100 Chinese internet companies by market cap and were founded within the past 10 years such as Didi-Chuxing, iQiyi and ByteDance.


Bain and LinkedIn examined this group separately as it may have bearing on future hiring and recruitment trends across China, not just in the technology sector. Compared with other industries, the rising tech stars had five unique characteristics:


Younger leaders. Local companies commonly have younger leaders, but the predominance is exaggerated among the rising tech stars. Nine out of 10 rising tech star leaders are younger than 45, and more than one-third of the leadership is younger than 35.


Attractive to C9 graduates. Rising tech stars are able to recruit business leaders from C9 universities at a higher rate than other local companies or multinational corporations. More than one-quarter of rising tech star leaders graduated from C9 universities, compared with only 21 percent of local company leaders and 20 percent of leaders overall.


More global exposure. Rising tech star leaders also have more global exposure than leaders in other local companies. Nearly 20 percent of rising tech star leaders have a global education, compared with only 15 percent at other local companies.


Industry-based talent pools. While most industries poach talent from other industries, the rising tech stars frequently trade talent from within their sector. More than 70 percent of rising tech star leaders made career transitions within the same industry.


Based in Beijing. The rising tech stars are also relocating the geographic hub for talent. Forty percent of rising tech star leaders are based in Beijing, whereas only 20 percent of leaders in the total sample were based there.


“Recruitment in China is now getting far more competitive due to these new trends as employees are continuing to seek out new roles and opportunities, more in line with their desires and demands,” said Stephen Shih, one of the report authors and a Bain partner. “As the quality of leaders in China has increased dramatically, so too has the quality of local firms and so multinationals must now rethink their strategies on how to both attract and retain the best talent to help them succeed in the market.”

Bain & Company analyzed 66,000 business leaders in LinkedIn China `s proprietary member database. The sample set came from 350 major corporations across 18 industries (see Figure 1). These companies represent some of the world `s largest corporations, with about 30 percent of the companies appearing in the Global Fortune 500 and around 15 percent in the Global Fortune 100.




“The talent market in China is seeing an exciting shift in both how local talent is developing, but also in how new tech companies are making companies think about their leadership pool,” said Hua Lin, General Manager of LinkedIn Talent Solutions at LinkedIn China. “It `s clear that both local firms and multinationals have areas to work on in terms of engaging with talent, but the future is bright for the market, so we expect the competition to intensify for local talent in the years to come.”


Local companies will continue to win talent from multinational companies in the coming years. However, the uneven flow of leaders from multinational companies to local companies is unsustainable.  As they grow, local companies must manage the development of their business leaders carefully. While Chinese companies appear to have an advantage, or at least certainly momentum, they also have obstacles to overcome. Their leaders are young and untested, and they display a high propensity to change companies. Local companies also have skills and experience gaps that will affect their ability to expand geographically.

Multinational corporations must address the outpour head-on, calibrating their value proposition to match the career aspirations and connectedness that Chinese nationals desire. To reverse the leadership departures, multinational companies must be willing to redefine career development for the Chinese population.

 
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