China's Fickle Talent Pool - WSJ

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    BUSINESS Updated March 15, 2012, 8:07 p.m. ET

    Xinhua /Zuma Press

    Would-be flight attendants prepare for interview s at

    Hainan Airlines. Hotels and retailers are seeking a

    similar tpe of w orker.


    BEIJINGAt Italian fashion house Versace SpA's local headquarters here, human-resources director Su Meizhen has noticed a

    trend among applicants for sales positions: anywhere from 1 5% to 30% of them don't show up for their interview.

    That isn't something that happens much outside China but, in the world's No. 2

    economy, job openings often outnumber job hunters, Ms. Su says.

    While many people struggle just to land interviews in Europe and the U.S., where

    high employment persists, the Chinese assume there will be more jobs tomorrow.

    "Motivation is a problem," she says.

    Service industries the world over complain about the difficulty of finding good

    help. But business managers and analysts say China poses a special challenges for

    global companies seeking to establish a long-term footprint. The number of job

    vacancies in its service sector has surged in the past decade and is larger than in

    any other segment of the fast-growing Chinese economy.

    In 2011, there were roughly 1 .4 million more job openings than applicants, up

    from one million a year earlier, according to data from China's Ministry of Human

    Resources and Social Security.

    The problem stretches bey ond services and into the broader economy. China has a vastpopulation that is urbanizing and looking for jobs but often lacks the mix of skills that

    businesses need. Chinese Premier Wen Jiabao addressed the issue last week in his annual

    speech to the country's legislature, saying China is dedicated to training "talented young

    people and personnel who are urgently needed and in short supply."

    For now, however, serv ice companies, which require workers with a certain level of

    education and social skills, are at a particular disadvantage. With luxury retailers and

    hotels expanding rapidly here to meet a growing appetite for handbags and travel,

    demand has far outpaced the supply of qualified applicants, says Christoph Nettesheim,

    managing director of Boston Consulting Group Greater China. The finance and health-

    services industries are caught in a similar bind.

    Pay is also an issue. Many global companies say their Chinese workers are motivated

    more directly by money than their Western counterparts, who also work for promotions

    and to further long-term career goals. With pay on a long-term growth streak in China

    yearly salaries for city dwellers rose to about $5,500 in 2010, up 13% from a year earlier

    and 77% from five years earlieremployers here face a lot of pay-related turnover.

    Versace's Ms. Su says its also relatively easy for many of China's youngest workers to

    walk away from a job, because many are only children who are supported financially by

    their parents and two sets of grandparents, giving them an extra cushion.

    Starwood Hotels & Resorts Worldwide Inc., HOT -0.07 % whose hotel brands include

    Westin and Sheraton, needs to find 30,000 new employees in three years to staff about

    100 new hotels, and will be scouting Chinese universities for recent and soon-to-be graduates. But younger workers are less

    committed and more demanding than the previous generation, which tended to stay with the company for around a decade, says

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    Laurie Burkitt/The Wall Street Journal

    Swire Properties teaches its new est hotel staff w as

    to look more prof essional.

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    Qian Jin, a Starwood senior vice president in China.

    Chinese workers in their 20s often expect quick promotions or raises and leave after one or two years, he says.

    U.S.-based Starwood recently created a mentoring program for its Chinese workers, matching its newest employees with managers

    who have been around for years. In addition to providing training, the program will build personal relationships, helping it retain

    staff, says Mr. Qian.

    Versace is taking a similar tack. This spring it plans to start language training to help its Chinese workers improve their English so

    they can better communicate with upper management and one day become managers themselves. "We look to promote from

    within," Ms. Su says. "That's one way to find talent and keep it."

    Companies expanding in China often poach employees from other businesses,

    which has been a problem for closely held Ermenegildo Zegna Holditalia SpA. The

    Italian fashion label was one of the first luxury companies to set up shop in China,

    in 1991. Rivals will offer to triple the salaries of its sales staff or managers, says

    Gildo Zegna, the company's chief executive and grandson of its founder.

    Mr. Zegna says he won't engage in a bidding war. Instead he offers employees the

    chance to work in his stores overseas.

    Some companies are making up for a lack of talent by nurturing it themselves. T o

    staff its hotels in Beijing, Swire Properties Ltd., 0019.HK +0.17% the real-estate

    arm of Hong Kong conglomerate Swire Pacific Ltd., 0019.HK +0.17% recruits

    recent graduates with hotel and hospitality degrees but no service experience from

    China's smaller cities.

    The company uses role-playing exercises to train the new workers, asking them to pretend to be guests and requiring them to

    reserve limousines to the airport. The idea is to make them able to better understand and anticipate a guest's requests and to

    respond to them more confidently.

    Swire also hosts beauty classes, helping new female workers like 22-year-old Wan Xu, who recently graduated from hospitality

    school in China's central Hubei province, learn how to use make up and fix their hair.

    "Workers with little to no experience are overlooked in China, but we f ind they're like sponges, absorbing quickly and willingly,"

    says Anthony Ross, general manager of The Opposite House, Swire's boutique hotel in Beijing.

    Italian lingerie company La Perla gives its workers tips on how to manage the big egos that sometimes accompany its clientele's fat

    checkbooks. T he rise of China's nouveau riche has created an economic chasm between luxury-store sales clerks and customers,which can lead to awkward situations, says Andrea Bonardi, La Perla's managing director for emerging markets.

    Chi Wei, a 30-year-old saleswoman at a La Perla store in Beijing's central shopping district, Wangfujing, says some customers feel

    insulted when she tells them about the brand. "Many of them act as though they should be telling me [about it]," says Ms. Chi, who

    doesn't make enough to afford La Perla bras, which can cost between 2,000 and 3,000 yuan, or roughly $310 and $47 0.

    Ms. Chi says she has been trained to calm herself by breathing and to remember that most of her customers will leave the shop

    within a half-hour. "I can put up with anything for a short time," she says. She adds that haughty clients usually ease up when they

    realize that La Perla's lingerie is made for the Italian body, and that they need help with fitting.

    Shanghai-based training service JETT trains employees of retailers such as Versace and handbag maker Coach Inc. COH -0.4 5% in

    how to deal with customers who insist on smoking in stores, says Ed Dean, JETT's founder. (Explain that the store wants to provide

    customers with the highest-quality products, and that smoke can tend to tarnish them.) "Problems emerge in China that

    multinational businesses don't always foresee when they look for employees," Mr. Dean says.

    Wrie o Laurie Burkitt at

    A eion of hi aicle appeaed Ma. 15, 201 2, on page B1 in ome U.S. ediion of The Wall See Jonal, ih he headline:

    China' Fickle Talen Pool.

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