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Chinese Management Shortage Limits U.S. Multinationals

Talent management strategies are key to success for U.S.-based companies operating in China, says white paper.

Source: Manpower Inc.
Source: Manpower Inc.

Despite China’s population of 1.3 billion, a critical talent shortage has multinational corporations struggling to retain their management and employees, according to a recent white paper from Manpower Inc., a Milwaukee-based employment services provider.

“The United States is the biggest investor country in China, yet many of its companies are struggling to generate the growth they want because of people issues,” says Jonas Prising, president of Manpower North America. “Recruiting the right people, retaining the best staff and developing leaders of the future are difficult tasks in any market. For foreign companies operating in China, there is the added difficulty of understanding how to adapt talent management strategies to the country’s unique business culture and values.”

Management shortage

The white paper, titled “The China Talent Paradox,” reports that rapid economic and social change has spurred a skills shortage that is expected to escalate in the next few years. The labor shortage in China is even more problematic than in other nations because it is most severe among managers, Manpower says. Two in every five companies find it difficult to fill senior management positions. Mid-level managers are also in short supply, particularly those who are Chinese nationals and can interact with local people.

Competition is stiff for this elite group of employees, and high turnover compounds the issue. Management-level attrition rates in China are more than 25 percent greater than the global average, and replacing a high-performing manager can cost 300 percent to 2,000 percent of that individual’s salary.

The white paper details Manpower’s proprietary Workforce Optimization Model, which offers practical strategies for multinational corporations to improve employee attraction, engagement and retention in China. The Model provides five practical steps for employee attraction and retention: 

  • Create a learning organization
  • Appoint competent leaders
  • Establish an appropriate organization and culture for China
  • Provide competitive compensation and benefits packages
  • Select the right people.

These talent management strategies rely heavily on understanding Chinese cultural nuances and leveraging that knowledge, and must be viewed as a holistic, integrated solution. Neglecting even one of the areas will weaken the solution considerably, says the white paper, which discusses each area in more detail.

Hands-on leadership

“To fuel the current level of growth that multinationals are experiencing in China, they need to attract and develop competent leaders that can work effectively in the Chinese workplace,” says Lucille Wu, managing director of Manpower China. “Chinese employees respond best to hands-on leadership and having a role model to demonstrate what is expected of them so that they may replicate their actions. They are also unlikely to tell a manager when they do not understand how to complete their work. This requires a different leadership approach than most Western multinationals expect when they come to China.”

There is good news for U.S. multinationals operating in China if they are successful in developing an employment strategy that fits the culture and values. Although employee retention is an issue, these businesses have a distinct advantage in competing for talent in China. Nearly 75 percent of Chinese employees would prefer to work for wholly-owned foreign companies rather than joint venture companies and wholly-owned Chinese companies, according to Manpower research.

The white paper, “The China Talent Paradox,” is available at the Research Center on Manpower’s web site at

Manpower Inc.

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