Recruitment in China Chinese Shanghai head hunter headhunter executive search recruiter in china manufacturing start-up in china china talent leadership recruitment automotive industry recruitment recruiter

1. Presented By: Chris Baillargeon
Tier One Executive Search

2.  Senior Consultant at Tier One Executive
Search
 Specialize in placing manufacturing
professionals in APAC (80% China)
 Mid Management to C-Level
 Sales, Finance, Engineering, Operations, Quali
ty, Purchasing

3.  Due to their competitive nature, young talent in
China are more open to career opportunities that
will put them in a visible position.
 They are often very receptive to recruiters, and
will not hesitate to leave their employers for a
better opportunity.
 This makes finding the “right candidate” with a
balance between strong experience and potential
growth with your company, even more of a
necessity.

4.  Identifying Candidates
 Attracting Candidates
 Contract Negotiation/Structure
 Legal Issues
 Retaining Talent
 Expatriates

6. Sourcing
 Use established network of contacts to identify talent.
 On campus recruitment for entry level positions.
 Avoid using job boards or advertising, as this produces “bottom
level” talent.
 Source candidates who are passively looking opposed to those
who are actively looking for new employment.
 Consider outsourcing recruitment function if you do not have
the resources or experience to smoothly manage the process.
 Make sure HR and the hiring authority are coordinated.

7. Resume Scanning
 Candidate resumes are often not professionally formatted.
 Language barrier causes frequent spelling mistakes.
 Work experience may be listed in reverse chronological order.
 Focus more on the content of the resume rather than the
aesthetic.
 Line items commonly found on Chinese resumes:
• Picture
• Age
• Marital Status
• Salary (Sometimes)

8. Frequency of Career Change
 High growth in China has led to more need for senior level
talent, with global experience.
 Candidates are aware that the China job market is still a
candidate driven market.
 Often will be interviewing for multiple positions at one
time, even if they have just accepted an offer.
 Employees are less loyal to their employers and are more willing
to make a change for a higher salary or better title.
 Identify why it is that a candidate is considering a career change.

9. Qualify for Cultural Fit
 Does the candidate have experience working in a MNC?
 Has the candidate had previous experience reporting to an
international?
 Face to face meetings give more accurate impressions of
candidates, especially if they have poor English skills.
 If required, make sure English skills are properly evaluated by
conducting some of the interviews in English.
 Who does the position report to? What is their; age? sex?
nationality?

11. Location
 Cities in China are classified by tiers.
 Cities are evaluated on average income, education, population,
sophistication, etc.
 Candidates will often not relocate from a higher tier to a lower
tier city.
 Employers in lower tier cities often have longer search
processes, and a smaller candidate pool.
 Some employers in less attractive locations will pay for
employees living quarters and frequent trips home.

12. What is your Legal Entity?
 Are you a Wholly Owned Foreign Entity? Joint Venture?
 Do you have a majority share in the JV?
 Candidates like to work for the decision maker in the
partnership.
 If candidates are employed by a minority shareholder they
become frustrated that they are not being heard.
 If there is candidate resistance reporting exclusively to the JV,
matrix reporting structures can be beneficial.

13. Understanding Candidate Needs
 It is rare that a candidate will make a lateral move, unless there
are other variables involved, i.e. job security, family issues, etc.
 Job seekers will often look for a functional increase in
responsibility to expand their skill sets.
 Highlight the companies’ growth potential, and the candidates
role in that.
 Be flexible with titles of positions. Candidates in China place a
higher value on title than in North America.

14. Conducting the Interview Process
 Be mindful of time zone differences when scheduling interviews.
 Timing is crucial. If the process takes too long candidates may
become “turned off” the position, or accept another offer.
 On first contact, focus on attracting the candidate to your
company.
 Make sure the candidate is aware of the reporting structure, and
that they have built a rapport with upper management.
 Manage expectations throughout the recruitment process, and
make sure the candidate understands what their duties will be
from day one.

16. Things to Consider…
 Fluctuating exchange rates will change the real cost of employee
salaries, budget accordingly.
 Four Mandatory Benefits in China:
• Pension
• Unemployment Insurance
• Medical Insurance
• Occupational Injury Insurance
 Candidate salary expectations are typically 20-30% increase
when changing positions.
 Contracts are structured differently.

17. How will the Contract Look Different?
 Due to high tax rates, contracts in China are often broken into
multiple line items:
• Base Salary
• Bonus
• Car/Driver
• Home Allowance
• Other
 Salaries are calculated on a monthly basis, with 13 months
salary being mandatory.
 Bonus can be calculated on a percentage of salary, but is often
calculated by month (ex. Variable Bonus: 0-3 months’ salary)

18. DESCRIPTION REMARKS
Annual income Package
(Before Tax)
Basic Salary: RMB 70,000 /
month.
Bonus Based on the individual
performance and determined by
Employer MBO system
3-Year Special Bonus
(Before Tax)
Base on the achievement to the
3-year Business goals and
objectives which will be
confirmed between employee and
Supervisor
Yearly Home Leave 15 Days/Year
Commuting Car: Provide commuting car
Home allowance TBD
Insurance National Regulation
Phone / Travel expenses Normal and reasonable expenses
will be reimbursed by company
Probationary Period 6 Months

19. Negotiation
 Candidates will not always be honest about salary expectations
to potential employers.
 They are afraid they will appear selfish to their colleagues and
carry a negative reputation.
 To counteract this, it is often beneficial to have a third party
assist with contract negotiations.
 Be flexible with job titles, as candidates will base a large portion
of their decision on how prestigious they feel the position is.
 Standard resignation notice period is one month (often longer),
schedule start date’s accordingly.

21. Representative Office (RO)
 Often, companies looking to invest in China will set up a RO to
evaluate market conditions.
 Not an independent legal entity.
 RO’s cannot generate business, sign contracts, invoice, etc.
 Companies with just an RO cannot hire employees in China.
 It is illegal for a Chinese national to work as a consultant for a
foreign entity.
 How can RO’s staff employees?

22. Foreign Enterprise Service Corporation (FESCO)
 Created for hiring Chinese employees on behalf of foreign
companies.
 The employee is employed by FESCO.
 Foreign entity carries all liability on the employment contract.
 Minimum 2 year contract to qualify.
 A “premium” is added to candidate salaries for services rendered
by FESCO. (Usually RMB 250-350/staff/month)

23. Wholly Owned Foreign Entity (WOFE)
 Independent legal entity.
 Can manufacture, consult, trade, invoice, etc.
 Can hire employees directly without having to use an
employment agency, ie FESCO.
 Set up period, normally 3-5 months.
 Minimum investment requirement for WOFE.

24. Things to Consider…
 In order to travel outside of China, citizens must obtain a visa
every time they wish to do so.
 Consider hiring someone who is based in a neighbouring
country if the position requires a lot of travel outside China.
 Be aware that bribery for new business, and other corruption is
not at all uncommon.
 Discrimination based on age, gender, or race is very
present, and can even be found on job postings.

26. Why is Turnover so High in China?
 Candidate driven marketplace.
 GDP has averaged 9% growth over the last 20 years.
 In the mid 2000’s it was not uncommon for a candidate to
change employers and double their salaries.
 Employees are loyal to their team members, not their employers,
and this often causes turnover to be compounded within teams.
 Changing of leadership causes anxiety.

27. Proactively Manage Expectations
 During the interview process make sure the candidates
expectation is aligned with the duties of the position.
 If there are any ownership/leadership changes happening
shortly after the candidate is expected to start, make sure the
candidate is aware of and understands this.
 Consult with employees before making major decisions, at the
very least you will have a clearer idea of the employees
intentions.
 Make sure senior management understands that they have to
keep employees engaged and involved.

28. Incentives
 How is the employee going to grow?
• Function
• Scope
 Is there an opportunity for international experience?
 How visible are they in the company?
 Make sure the employee understands the organization chart,
his/her role and opportunity to gain a more prestigious title.
 Salary incentives:
• Annual wage increases
• Stock options
• Advanced schooling subsidies

30. Common Traits
 Expatriates are compensated at a premium, compared to their
western counterparts.
 Often expatriates are on temporary contracts (3-5 years) , and
may not even sell their homes.
 Usually they are in the latter half of their career, taking on senior
leadership roles or start-ups.
 Children are usually out of the house, and do not relocate with
their parents.
 Expatriating someone is distinctly more expensive than hiring a
local.

31. Why Expatriate?
 There may be a lack of talent in the host country.
 New or “Green Field” operations often require someone from the
parent company to oversee the start up process.
 Western presence to communicate back to parent organization.
 Internal promotion, help employees gain a global perspective.
 Combat corruption, maintain company reputation.

32. Preparation
 Culture shock and language barriers can be difficult to
overcome.
 Employers should consider having the employee visit the country
for a period of time before a decision to move is made.
 Language and culture training should be provided to all
employees before their contract begins.
 Women should be aware that they may be treated differently
depending on the culture.
 It is important to prepare the entire family, not just the
employee, for the transition.

33. Differences in Compensation
 Relocation Costs: The company will pay for the employees
housing, and movement/storage of goods.
 Housing: Many companies assist the employee in selling their
home. This is often backed by a Guaranteed Purchase Option.
 Vacation/Flights: Family members may be given free flights, in
addition to the employee receiving a set number of trips home.
 English School: Employees that do wish to relocate their children
will likely require that schooling is paid for. (USD $20,000/year)
 Tax Equalization: U.S. citizens are required to pay income tax in
host country and in home country.

34.  The China job market is very competitive, which
causes high employee turnover.
 Identifying the right candidate becomes even
more important; someone you can build business
around.
 Attracting the right candidate requires HR and
hiring authorities to operate together.
 Transparency is important for both recruiting and
retention purposes.

35.  Be aware that employment contracts in China
may be structured differently than in western
countries.
 Can I hire employees directly?
 Keep employees interested with incentives and
growth opportunities.
 When is it a good idea to use an expatriate?
 It is difficult to capitalize on a growing market if
you cannot retain talent.

36. Chris Baillargeon: 1-519-258-1844 ext. 101