April 07, 2010
Posted by:
Shana Marbury
Several weeks ago, I had the opportunity to travel to China to view how one of the world’s fastest-growing economies is addressing issues of regionalism and sustainable development. China has been an area of growth in an otherwise dismal world economy. Despite the worldwide economic downturn, China’s GDP grew approximately 8 percent in 2009. AmCham Shanghai, the chamber of commerce for American companies doing business in Shanghai, conducted a survey that found that 74 percent of American businesses surveyed considered China one of its top three global investment priorities. Of course, in some quarters, the size and growth of the Chinese economy causes much gnashing of teeth and feeds the fears that the Chinese economy will soon overtake the U.S. largely based on its “endless” supply of cheap labor. However, some believe the “end” has come—the end of cheap Chinese labor.
Based on data collected by Hewitt Associates, several contradictions are beginning to affect doing business in China. China does have the benefit of a large population and seemingly endless supply of workers, yet the talent pool is proving to be quite limited. The country is experiencing a potentially detrimental shortage of skilled labor in addition to white-collar management candidates. Talent gaps, particularly in candidates for leadership positions, have been documented in finance, marketing, HR, quality control and health and safety. This is turning a low-cost country—presumably, the initial attraction for most companies—into an expensive one.
This talent shortage is showing up particularly in white-collar positions. Candidates who do have the desired skills are in high demand and can demand top salaries. As a result, the foreign talent pool in China is growing, as there is a burgeoning demand for a limited supply of skilled talent. Another outcome is that companies are beginning to look toward the next “new frontier”—Vietnam and other Asian countries—to keep workforce costs down.
The talent issue will be an interesting—and potentially costly—challenge for China. In the city of Shanghai alone, new development is rising on almost every street corner. A large part of this development is supported by foreign investment. If skilled talent can only be had at a premium in China, will the pace of foreign investment slow down or even grind to a halt? Will China’s economic dominance only be a short-term aberration in the global economy? In any event, there are definitely some bumps in the road ahead.
Category:
Global Connections
Tags:
China,
labor,
regionalism,
sustainable development