When a new automotive parts plant opened in Suzhou last year, the management poached technical employees from a nearby competitor by doubling their salary. After discovering the employees' new positions, the competitor again doubled their salary if they would return.
This scenario repeats itself on a daily basis all over China. Finding skilled technical workers in China is not difficult, but keeping them can be challenging.
``If you have five to six years' experience in plastics or metalization, then you can find a job in 10 minutes,'' said Frank Mulligan, managing director of Recruit China, a Shanghai-based recruitment firm specializing in employees with technical and engineering skills.
Salaries continue to rise for employees with technical experience. Mulligan said an engineer with five years of experience in plastic injection molding, molds and new products can demand 15,000-25,000 yuan (around $1,900 to $3,100) per month as a basic salary.
New graduates make much less. Recent government statistics put the average income for students from professional training colleges at 1,333 yuan ($167) per month.
University graduates average salaries of 1,549 yuan ($196) per month, and higher-degree graduates can expect between 2,674-2917 yuan ($335-$365) per month as a start.
With one employment firm predicting a 22 percent rise in manufacturing jobs in China during the second half of 2006, staff retention worries among employers remain high.
Mulligan maintains that it is difficult for talented employees to refuse a good job offer, and headhunters in China have been known to approach targeted individuals with offers of doubling salaries if they accept a company's offer.
Salary increases are difficult to resist in any situation, but even more so in China, because this generation is the first with the freedom to choose where it works.
Workers also feel pressure to buy an apartment in order to get married, then buy a car and support parents who did not have the opportunity or education to earn as much as their children do.
``The economy is developing so fast, they're losing out if they don't move,'' Mulligan said.
``The pressure to change positions is around [employees] all the time. It's the first generation in China to have this situation. It's a problem of success rather than a problem of failure, so it's great for them.''
Packages pull staff
For multinationals, finding engineers in China presents few challenges.
``There is a fantastic supply of great people. So finding people is not a problem,'' said Marcus Sutch, Husky Injection Molding Systems Ltd.'s Asia-Pacific president.
Husky increased the employee head count in its Shanghai technical center from nine in January 2003 to 270 at the beginning of 2006.
Mulligan points out that large multinationals have the ability to pay for the talent they seek, and they can offer attractive packages, including training and benefits, that smaller enterprises may not be able to duplicate.
``We employ the same philosophy around the world, which is that people will work for Husky because of what Husky provides as a total package,'' Sutch said.
``It's a very unique package - not all salary, not all benefits, not all work space - but it's the same in Canada, Luxembourg and Shanghai,'' Sutch added.
Husky's approach marks a change in the way multinationals handle human resources policies in China. In previous years, companies would offer benefits commensurate with China's labor regulations. The practice caused feelings of discrimination and unfairness among local employees.
Now, in order to attract and retain talented personnel, multinationals commonly offer packages in line with U.S. or global employment standards. Their competitors are China's big state-owned enterprises that have started offering similar salary packages, often with more opportunities for moving into management positions or being assigned to an overseas office.
At the same time, Chinese white-collar and technical personnel appear to be changing their definition of professional fulfillment. Not everyone primarily considers salary when assessing an employment offer.
Dick Zhu, China general manager for specialty elastomer compounder RTP Co., said he has noticed an increase in the number of candidates looking for diversified opportunities during the past five years. Five to 10 years ago, most college graduates saw working in a well-known multinational as the ultimate job.
``During interviews, [candidates] comment that big multinationals are good to work for on most levels, but they can lack team spirit and employees lack a feeling of professional fulfillment,'' Zhu said.
RTP of Winona, Minn., opened a Suzhou manufacturing facility in December with 10 employees, and expects the head count to be about 50 by the end of 2006.
Zhu believes managers who have reached a certain level are looking to improve their skills through increased responsibility and a more team-oriented atmosphere.
``If an individual really has ability, then a small company can offer more opportunities. At a big company, it can be difficult to show the extent of your ability because everyone's roles are limited to a certain area,'' Zhu said.
Potential employees now see fledgling enterprises as an opportunity. Zhu said most of the people he hired during the past six months considered the possibility that as the company grows they will be first in line for promotions.
Titles play a big roll in Chinese business society, according to Recruit's Mulligan. But he said the emphasis on titles and salaries can cause management problems too.
``Some [prospects] come out with an engineering degree and an MBA, but they can't do anything,'' he said. These highly educated candidates still get jobs, though, because the generation before them lacks both education and management experience.
A recent study by consulting firm McKinsey & Co. estimates that 30 percent of graduates in China are unemployable because they do not have practical experience. Companies compensate for the shortcoming through training programs, taking the risk of training employees who may jump to competitors in a few years.
``Some companies don't want to invest in training because they don't want to become the training center for the industry,'' Mulligan said. ``But the most successful companies, the ones that are holding people, are holding them with training. They're rotating them, training them in new technologies and offering them a future.''
Training programs can provide a variety of incentives, with courses beginning in-house in China that hold the promise of going to regional headquarters in Hong Kong or Singapore, or corporate headquarters, depending on seniority and performance.
Entrepreneurship brings another complication to the retention issue.
``An awful lot of people in China actually have the goal to set up their own business. The cultural goal in China is to become `the boss,' '' Mulligan said.
Zhou Zhanbin, Ningbo-based Sanpo Polymer Co. Ltd.'s chief technical officer, said that in the past six years, seven employees have left to start their own companies. Of those, four planned to compete with Sanpo.
Zhou reasoned that if sales and marketing employees left to start their own businesses, the threat was less than if engineers left because of the potential intellectual property issues. So he devised methods to keep the engineers satisfied, like training opportunities and options programs.
Meanwhile, Zhou encourages sales and marketing employees who yearn to be the boss to start spinoffs beneficial to Sanpo's development, rather than to its competitors.
As China's employees become more discerning, both multinational and domestic employers are offering increasingly attractive employment packages to keep talent on board. The challenge for employers will be keeping up with the changing market.
Consultants like Mulligan of Recruit Talent and McKinsey predict that the skills shortage in China is likely to increase in the near term.
With more competition, skilled workers have growing negotiating power, while new graduates will continue to build the skills they need on the job.