Rising Costs, Relocation Struggles Plague China

Companies in China’s major coastal cities — such as Beijing and Shanghai — are battling rising costs, forcing many to consider relocating or setting up new operations further inland.

This is according to Mercer Human Resource Consulting, which contends that such measures will present major challenges in finding professionals to perform key jobs in these areas.

For example, organizations planning to operate in less-developed cities face a serious shortage of professional staff, and moving workers between cities can create a number of challenges.

In addition, employee benefits will become a considerable factor in luring and retaining quality workers in these competitive markets, according to the global consulting firm.

“Despite improvements to education, multinationals in China still face critical staff shortages, particularly in terms of sales professionals, engineers, and people with international management experience,” said Guo Xin, Mercer’s managing director of greater China, in a news release.

Lack of internal mobility is a major issue for multinationals in China. Moving people from city to city is complicated because, for example, Social Security and pension payments made in one city cannot be transferred to another.

However, the pension system is evolving, notes Ames Gross, president/owner of Pacific Bridge, a company that focuses on recruiting issues across Asia.

“In certain companies, some pension and Social Security benefits can’t be transferred and in some companies it can, though that is changing,” says Gross.

Social and cultural factors can also limit mobility and the wealth of jobs available in coastal cities means there is little incentive for workers to move. For example, it’s difficult to convince people from Shanghai to move out to the countryside.

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East Meets West

How do companies get more creative in attracting and retaining workers in these new locations? It goes beyond typical incentives such as higher pay, promotion, and more responsibility.

Gross contends that workers in the countryside may not be familiar with Western practices. In the interior cities, “there are more state-owned enterprises, so one of the biggest challenges is finding labor that can work in the Western sense,” he says.

“The workers in the countryside need more Western training. Companies could give more training, ranging from how to show up at work on time, to an employee evaluation, to Western accounting. The key is when they train locally, they also have to work on retention through housing allowances, compensation, and benefits,” adds Gross.

How HR executives can address internal factors to maximize attraction and retention of employees will be the subject of a workshop at the Mercer Global HR Conference in December.

Pacific Bridge is also offering a Webcast in February, focusing specifically on China recruiting and retention, ranging from ways to source candidates to understanding the “traditional” Chinese method.

Elaine Rigoli has nearly 15 years of experience managing content and community for various B2B and consumer websites. Elaine has written thousands of business and technology articles and has been quoted in The Wall Street Journal and eWeek, among other publications.

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