Developing a Skilled Workforce in China

Adrienne Fox | September 2007

China is one of the worlds fastest-growing global economies, and one reason
many multinational companies located in China was because of a large,
cheap workforce. When U.S. companies began operating in China they only
needed workers with basic skills for straightforward parts manufacturing
processes. However, in the past decade (since China joined the World Trade
Organization in 2001), the economy has shifted from basic manufacturing to
higher end and high-tech manufacturing, research and development, product
innovation, and services. In addition the number of Western-style
multinational companies operating in China has exploded. This rapid
economic evolution has resulted in a severe shortage of experienced and
skilled employees in China. Despite a workforce of 800 million only a small
percentage are skilled enough with the necessary experience to work in
global multinational companies. Out of 4.9 million college graduates in 2006
only about 10% had the necessary skills in such things as language
proficiency, basic education, business and interpersonal skills, and positive
attitudes toward teamwork and flexible working hours, to work in
multinational companies.
For example, when Tyson Foods began operating in Shanghai in 2001 it
needed employees with basic technical skills, however now its greatest need
is for employees with management skills. This has created a very
competitive labor market among multinational firms which has fuelled an
annual wage growth rate of almost 14%. However, multinational firms have
learned that importing skilled workers is not looked upon favorably in China;
the Chinese expect companies to invest in developing a skilled workforce
within China. This has led many U.S. and other multinational firms to invest
heavily in training and development programs, and this, combined with rapid
advancement initiatives within companies, helps attract and retain Chinese
workers. For example, Cisco Systems, which employs over 1,000 employees
in nine Chinese cities, operates 220 Cisco Network Academies in all
Chinese provinces, with more than 22,000 students. This not only creates a
source of skilled labor for Cisco, but it also elevates the Cisco brand name
with the Chinese government and workforce.

Source: Fox, A. (2007). China: Land of Opportunity and Challenge. HR

Magazine. pp. 38-44