China\'s Growing Talent Shortage

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Are we closing the factory of the world?

Transcript of China\'s Growing Talent Shortage

  • 1. Chinas Growing Talent Shortage: Problems & SolutionsPresented on May 12th, 2011 by Marijn Booman Thomas CantorDario BerrebiDebbie YongBased onMcKinsey & Co. (2003) Chinas Looming Talent ShortageMcKinsey & Co. (2008) How to Address Chinas Growing Talent Shortage

2. Closing the factory of the world? From manufacturing to services & IT Millions of university graduatesThere arent enough people in China Number of quality graduates: Shortage of homegrown talent Domestic economy vs MNCs (including Chinese) Excessive competition in China: a diversity of opportunities Among the millions young professional graduates, few are fit for services sector Willingness to work long hours important in manufacturing, but not in services sector Transition impossible right now 3. The Supply Paradox< 10% suitable for work in foreign company poor English (professional proficiency) engineering graduates with only theoretical experience (absence of teamwork & projects) communication styles & cultural fitDispersion, mobility and accessibility Only lives near big city with international airport (requirement for MNCs) Only 1/3 is willing to relocate (one child policy) Result : Less than half of the total pool of graduates is accessibleWar for talent Fierce competition for Chinas best graduates (large MNCs: 60%) Short supply of suitable managers (5,000 in 2005 75,000 in 2015) 4. Chinas economy currently dependson manufacturing but will eventuallyneed to develop its services sector. China could follow developmentalmodels of countries such as the USand Italy, where manufacturing wasmoved to regions with lower labourcosts, while keeping high skilled jobsdomestically. Challenge: employing 150 millionsurplus unskilled workers. Potential for R&D intensive industriessuch as pharma and software andbusiness process offshoring servicingChinese speaking markets. 5. McKinseys Recommendations 1. Restructure financing of universities 2. Improve English language instruction 3. Invest in the training and development oftalent 4. Align university curriculums with industryneeds 5. Encourage expats to return to China 6. How to address Chinasgrowing talent ShortageThe balance between business opportunities inChina and qaulified executives to manage them willget worse (Kevin Lane and Florian Pollner) Demographic trends(Ageing population) Mismatch in educationand demand of the market Rapid pace of change inboth the corporate andsocial domains 7. Demographic trends Decline in the working-agepopulation signifies adecrease in the labor force The rise in the dependencyratio is highly likely to lead toa fall in savings rates leadingto less investment and adecrease in GDP growth 5000 international mangers2010 total number needed by2015 is estimated to be 75000 8. Education Poor English skills Dubious educational qualifications Cultural issuessuch as a lack of experience on teams Reluctance to take initiative or assume leadership roles 9. Rapid pace of change in both the corporate andsocial domains Global competition for experiencedmanagers set to increase. 30% of companies who have theirheadqaurters stationed in Beijing saythat they have no senior managersabroad. 27% have only a small foreigncomponent (43% have stated that theywant to attract global managersmeaning that competition will increaseeven further). 44% say lack of managment is a barrierto doing business outside of China.(While lack of capital was only statedby 25%). 10. McKinseys Recommendations1. Segment executives into salary bands Review targets regularly2. Identify leadership with China-specific qualities Business builders vs. Execution drivers China-specific qualities3. Make talent a priority rather than a soft issue Tighten data-gathering process and feedback loop 11. 4. Sharpen external recruiting schemes Focus on university recruiment Look into other sectors5. Develop talent development and training programme that favours the proactive Apprenticeships and mentoring programmes