¥The Evolution of China’s Talent in the Technology Sector

Written by: Norman ChangConsultant PCI Executive Search ConsultantsBeijing

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An Opportunity for Exponential Growth

In the early 1980s, China was a huge unexplored market for investment. Many well-known multinational technology companies such as HP, IBM, and Motorola entered as pioneers into the Chinese market to reap the benefits of China’s exponential growth. At the time, these large multinational companies hired experienced leaders from the four “Asian Tigers” (Taiwan, Hong Kong, Singapore and South Korea).

Each of these countries had consecutive economic growth of approximately 10% each year from the 1970s to 1990s. Many of these expats were provided generous packages including a 30% to 50% salary increase, housing, education, family travel expenses and a company car. As a result, middle management and less senior executive positions were sourced with local talent. Many Chinese native technology graduates and managers had high motivations to work at large multinational companies because the salaries at these firms were roughly quadruple that of a domestic company.

As China’s economy grew stronger, more students traveled overseas for higher education. More Chinese names appeared on research papers and there was an influx in participation at global technology conferences. Many candidates and overseas graduates who gained international experience at large multinational companies began to return to China for career development, family or competitive compensation.

Native technology graduates and managers had high

motivations to work at large multinational companies

because salaries were roughly quadruple that of a

domestic company...

“

”

The Shift from Expat to Local Leadership

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Trends in market demands led companies to tailor their core products to meet consumer needs. Local firms were able to successfully adapt to this trend, while multinational firms were not as flexible and slow to fulfill consumer demands and comply with government regulations. As local and multinational companies competed for market share, a war for talent emerged.

In the last five years, leadership roles that were previously held by talent from the four “Asian Tigers” are now held by local talent. This is due to the Chinese market maturing and domestic candidates possessing more international experience and acumen. Paul Po-Ping Lien, Senior Partner at PCI Executive Search Consultants in Beijing has tracked this transition and explains the scarcity of talent that China faces. “We are seeing a complete shift in leadership in the technology sector. Local talent that historically aspired to work at large multinational companies are now gravitating to positions at leaner, local enterprises. These executives are at the forefront of an emerging industry experiencing exponential growth and a severe under-supply of talent. Local and global organisations must engage executive search firms to help fill strategic senior level positions and select the best talent available” Lien said.

Compensation for local talent in China is comparable to US compensation packages at the senior management level and above. For example, a Director position’s compensation package can range from ¥1 million to ¥3 million, which is the equivalent to $170,000 to $500,000 USD. At middle management levels, compensation for local talent in China is below the average compensation packages found in Silicon Valley.

But demand for executive leadership continues to exceed the supply of available talent, and technology companies in particular are facing significant difficulties in fulfilling their talent needs. This talent gap has proven beneficial to potential candidates in the negotiating process. Potential candidates can request a salary increase between 15% and 30%. Foreign multinational technology companies

¥1 million - ¥3 millionRange of compensation for Director position

15% to 30%

Range which potential candidates can request a salary increase

have a standard protocol when it comes to base salary, benefits and negotiation.

Even though local companies have very similar standards, they are more flexible in their incentive programs. For example, candidates can demand a higher base salary and less stock as long as the total package amount remains the same. The flexibility in compensation packages offered by local companies has presented a huge challenge to multinational technology companies in maintaining and attracting talent. This trend will intensify over time as China continues to grow.

Is China the Next Silicon Valley?

The accelerated speed and scale at which China’s technology industry is growing will yield an unpredictable market for talent demands in the future. This is partially due to the country’s constantly changing government regulations implemented to fit China’s economic needs.

Chinese Internet companies have moved to Silicon Valley to aggressively compete for elite talent from all over the world. For example, Andrew Ng, a former Assistant Professor at Stanford University, has joined Baidu’s research team to study artificial intelligence. Talent has begun to relocate to China for positions at emerging startups and local technology companies for career development and compensation incentives. This trend will only get stronger over the years as new developments are made and the Chinese technology market continues to expand. The question remains, will China be the next Silicon Valley, and emerge as the next great technology leader of the future? Only time will tell.

Founded in 1991, PCI Executive Search Consultants is a leading Asia-Pacific executive search firm with operations in Greater China. With experience across many major industries, PCI Executive Search Consultants specialises in the Technology, Industrial, Consumer & Retail and Financial Services sectors.

PCI Executive Search Consultants is a proud member of IIC Partners, a global top ten retained executive search organisation. IIC Partners has 41 independently owned and managed executive search firms representing 51 offices in 34 countries, each considered to be leaders in the geographic and industry markets they serve.

For more information on PCI Executive Search Consultants please visit: www.pcichina.com

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About PCI Executive Search Consultants

About Norman Chang

Norman Chang is a Consultant at PCI Executive Search Consultants in Beijing. Norman specialises in the Technology, IT and Telecom industries and holds a masters degree in electrical engineering from Cornell

University. With over six years of experience in Silicon Valley, Norman posseses an in-depth knowledge of the technology industry and has an extensive network of high-tech talent across China, Taiwan and North America. Norman joined PCI Executive Search Consultants in 2013.