IF RESEARCH FROM AUSTRALIAN UNIVERSITIES, Monash and Melbourne, are to be believed, single children, born in China around 1975 are “significantly less trusting, less trustworthy, more risk-averse, less competitive, more pessimistic and less conscientious” than their peers with siblings. The research was conducted on 400 Beijingers who were born just before and immediately after the implementation of the one-child policy. These children are China’s middle managers today. But what of the Chinese employees of the future? To predict the future, we must look to the past.
[quote style=”boxed” float=”right”]Metaphorically, China is an aircraft carrier that has the unique ability to be able to turn like a tugboat.[/quote]Metaphorically, China is an aircraft carrier that has the unique ability to be able to turn like a tugboat. This is evident by China’s sudden growth, which some argue is contributed to Deng Xiaoping’s ‘Southern Tour’ where his perceived catchphrase “to get rich is glorious” (致富光荣) was forever embedded in the mind of the people. Almost immediately the huge ‘ship’ changed direction, as a wave of personal entrepreneurship was unleashed. This continues to drive China’s economy today. This economic renaissance was a result of a huge cognitive shift, brought on by policy change and the innate Chinese character of hard work.
1. Open and loud
But since that time, the shift has been a more cautious, organic growth. While seeking to become a world superpower, economically, militarily and technologically, knowledge has been firewalled from the Chinese employee hindering their connectivity to the West. Ironically, it is China’s place in the global supply chain, and this connection to foreign markets and thought, that has been propelling the GDP. Thankfully, these hurdles have only slowed, not stopped the evolution of the Chinese employee, evident by the rapid localisation of multinational firms, helped largely by the growth of the training and development (T&D) industry. While ten years ago, English language training dominated T&D budgets, today it is leadership.
So how will the Chinese workplace look in the next 10 years? Here’s my prediction:
Last year Chinese electronics and white goods mega-company, Haier, bought 90% of New Zealand based Fisher & Paykel. The company has also bought Japanese Sanyo, and launched a European brand, Casarte. And Haier is not alone. ZTE, Huawei, Changhong, TCL and Hisense, have all rolled out their own foreign market strategies. What’s important to realise that it is Chinese employees that are driving these decisions. They are more open, and willing to learn from others. Just go to the Lenovo offices in Haidian, Beijing, and you’ll see their staff canteen full of expatriates.
But that also means that Chinese employees will demand to be heard more, particularly within global companies. China is no longer just the manufacturing hub of the world; it’s also the world’s largest consumer market. Who understands the Chinese consumer the best? Obviously the Chinese themselves, and consequently, the Chinese employee within foreign multinational firms will be demanding to be heard, even as high up as the board room table.
2. Loyal and demanding
A February 2012 Roland Berger report highlighted that “employees in China switch jobs easily, causing loss of know-how and reduced productivity at the companies they leave.” [quote style=”boxed” float=”left”]“employees in China switch jobs easily, causing loss of know-how and reduced productivity at the companies they leave.”[/quote]The report goes on to say that comparatively, the employee turnover rate per annum in China is 19%, whereas in ‘Western Countries’ it is 5%, but improved HR practices can help make them stay. Roland Berger’s ‘Eight Elements of an HR Strategy’ reads like the contents page of a NetworkHR issue: HR planning, Recruiting, Staffing, Performance Management, Development, Compensation, Leadership and Exit Management. Follow these eight steps, and better engagement, and therefore higher loyalty will result.
But with that loyalty will come more demands. Performance management and compensation and benefits will become more significant in China. Performance management is the basis for evaluating employee potential and for developing local top management executives. Chinese staff will demand a clear career path, if they are going be more loyal. They will also demand rewards. If a company is to avoid a wage war, they will have to offer comprehensive employment packages and integrate status symbols into work life, such as iPhones, Blackberries, laptops and transportation benefits.
3. Efficient or unemployed
Last year in July, Adidas closed its last factory in China, moving to new kid on the block, Myanmar (Burma). Vietnam and the Philippines are also offering cheaper alternatives than China for manufacturing, due to lower blue collar workers. However, these countries are also stealing a sizeable chunk of the white-collar shared services business, which often includes finance, administration and HR. Henkel, for example, has hundreds of white collar workers, both local and expatriate, based in Manila, supporting Henkel’s operations across China and the rest of Asia. [quote style=”boxed” float=”right”]a US company with offices in Los Angeles and New York, last year relocated their Shanghai office to St. Louis, Missouri. [/quote]It’s not hard to see the writing on the wall for inefficient businesses in China. Red8 Interactive, a US company with offices in Los Angeles and New York, last year relocated their Shanghai office to St. Louis, Missouri. Time zone and language barriers, combined with increased employee benefits, contributed to a lower efficiency than when compared with the American teams. Of course, this ‘insourcing’ was helped much by the global financial crisis.
Therefore, the Chinese employees of the future will, by default, be doing the work of two or more in the future. They must, in order to stay competitive, or lose their job to cheaper countries or regions. Technology and increased training will be critical for this transition.
Dr William Thomas, of the Corporate Executive Board (CEB) believes China’s aging population will mean that there will be more opportunities for younger workers in the next decade, but because of a high level of youth unemployment in China today, those staff who are currently under-employed will likely have lost many of their skills gained from university. Investment in training will therefore be a must.
5. More Collaborative
The CEB’s research has also found that only about a third of employees across Asia feel their companies provide tools and a culture that support effective collaboration and innovation, suggesting a huge potential for improving work if firms embrace greater internet use, and the government allows greater internet openness. Since increased efficiency will be critical to job security for Chinese employees, collaboration will become the new norm – hard to believe in today’s ‘dog-eat-dog’ world that is Shanghai and Beijing, for example.
6. More Service Focused
For the wealthier coastal cities of Beijing, Tianjing, Shanghai and Guangzhou, the shift of manufacturing firms inland will push up the percentage of Chinese employees working in the service industry. Wage increases will also drive this shift from manufacturing to service focus. Evidence of this trend is the recent 20% rise in minimum wage across 13 of China’s 22 provinces. Regional players, Singapore and Hong Kong, will be directly affected by this shift towards services.
7. Risk takers
Darwin’s fifth law of evolution is that of natural selection. He borrowed Mr. Herbert Spencer’s definition of the ‘survival of the fittest’, which became attributed to himself. The term, whoever who coined it, applies also to the social evolution. Even 30 years ago in China it was dangerous to stick ones neck out. Today, Li Kai Fu, Ma Yun, and Li Ning are entrepreneurial legends, and eagerly mirrored. Still today, Chinese en mass are cautious, but this will change within the decade. You have been warned.
In 2001, American Gordon G Chang published ‘The Coming Collapse of China’, blaming China’s poor management of risk, money and corruption for its forthcoming demise. How shocked he must have been to see China only grow stronger as his own country fell to these same three threats. My point? Chang got it wrong because he underestimated the Chinese people’s ability to radically shift their thinking and take action. Understand this, and you’ll be better prepared to either manage, or be managed by, the Chinese employees of the future.