No matter which MNC office you visit in China, most likely you will notice a common phenomenon: local employees are much younger than their counterpart at headquarters. Most local hires are in their 20's, some 30's, and very few over 40's. Very unlikely you will see anybody over 50 except janitors and cleaners. There are multiple reasons.
The Missing Generation
This relates to the Cultural Revolution (1966 - 1976). In those 10 years, universities and colleges were shut down, and students sent to villages or factories for "re-education." That's Chairman Mao's most controversial idea and probably the most dumb one in the whole human history. That generation is now in their 50's and virtually non exsting. Occasionally you will see entrepreneurs out of them, but you won't see many professionals at all, especially professionals who can speak English. Few of them are assuming senior executive positions. Instead, these senior executive positions are pushed down to younger generations who are now in their 40's or late 30's.
This applies to both MNCs and local companies. Recently we visited Haier, a $19B home appliance leader and the General Electric of China. Haier clearly illustrates how a generation was missing. Their chairman and president are well over 60, and their No. 3 person is below 50. Their CIO, CPO, heads for the two biggest business units, and multiple VPs/Managing Directors are all in their 40's. At the director level, you won't see many people in their 50's either. As a result, the whole management team looks 10 years younger than what you would see at a multi billion U.S. company.
The Language Barrier
Before 1976, English teaching or learning virtually didn't exist in China. After China decided to reopen to the world at the beginning of 1980s, schools started to teach English nationwide as a foreign language. It took about 10 years to see the effect. When the English speaking college students graduated in volume, it was already around 1989, the year of Tiananmen Incident. That generation is now in their earlier 40's, which is the upper limit of English speaking work force in China.
Unfortunately, Tiananmen Incident impacted the relationships between China and Western countries. Foreign Direct Investment (FDI) decreased significantly for a few years, which led to fewer job opportunities from MNCs. Most of those college graduates didn't get exposed to English speaking work environment, and gradually lost their English skills. When more opportunities eventually came as FDI increased, MNCs had to hire more people right out of school, not from the existing workforce. This further pushes the upper age limit down to late 30's.
Looking 20 years back into MNCs' hiring practices in China, you can see a clear pattern. In the early years, MNCs primarily hired English majors simply because they could communicate in English. Gradually, as engineering majors caught up on their English skills, MNCs shifted focus to Engineering disciplines. Now days, English skill remains a very important factor for MNCs to make a hiring decision in China, which virtually excludes the whole generation in their 50's or late 40's from the candidate pool. The local hires will remain looking young. Time would be the only factor that can change it as the MNC eligible workforce ages.
The Abundant Opportunities
The bilingual professionals have been a rare commodity. The trilinguals who can speak Chinese, English and the language of a profession are even rarer. While the candidate pool has grown significantly, supply still can't meet demand. On one hand, this is driven by the MNCs' business growth in China; on the other hand, it is also due to local Chinese companies expanding globally.
Nowdays, for the limited talent pool, MNCs not only have to compete with each other but also premiere Chinese companies like Haier, Lenovo and Huawei. The competition is even more fierce at the middle management level. Local companies systematically hire trilingual managers and directors away from MNCs -- these managers can bring in Western management approaches to help build better systems and processes at local companies which is greatly needed for them to become significant global players.
Middle level executives, mostly in their middle 30's to early 40's, also consider local companies for better career growth. This is because creer opportunities at MNCs are mostly execution related as the majority of decisions are typically made at headquarters. At the beginning of their career, bilingual professionals are willing to stay at a MNC for better training and exposure to Western management approaches. As many don't see a clear career path at a specific company or industry, they make frequent career changes, not only driven by financial rewards but also better career development opportunities. It is not surprising to see a person change jobs two or three times in a year or two. This will remain a challenge for MNCs until the economy growth slows down in China.
About the Author
Bob Liu, C.P.M., CPIM, is Managing Director of CSCS International. He is stationed in Silicon Valley and travels frequently to Greater China to help clients build their local supply chain organizations. Bob got his MBA in supply chain management, and has been managing global supply chains for over 10 years in the U.S. and China. He can be reached at bob.liu#ChinaSCservices.com (substitute # with @).
