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Mainland boost for headhunters

THE Chinese executive search industry has over the last year become one of the most important growth areas for international headhunting firms.

For years regarded as an underperformer in the revenues of the major search firms, China is now starting to bring home the bacon, according to the head of one of the world's largest headhunting firms, Egon Zehnder.

Daniel Meiland, the firm's international chief executive, says the firm's Chinese operations are now the fastest-growing single area of its international practice. Revenues have grown by 100 per cent over the last year for the group's Greater China practice, Mr Meiland said.

Egon Zehnder does not have a billing practice in China. It simply operates a representative office out of Shanghai which is used predominantly for marketing purposes.

The firm has a main base in Hong Kong and a smaller one in Singapore from which virtually all revenues for mainland searches are derived.

Based on the policy of virtually all of the major international executive search firms - with the exception of Amrop International - not to operate joint ventures on the mainland, it appears the Chinese operations of most practices will continue to bill largely out of Hong Kong.

Mr Meiland does not see this as an obstacle to the continued success of Egon Zehnder's operations in the territory.

Nor is he concerned that virtually none of this 100 per cent growth rate is being driven by mainland companies themselves.

It is the foreign multinationals who are looking for new executives to drive their Chinese growth.

According to Mr Meiland, multinationals will continue to be able to drive impressive growth rates in the revenues of executive search firms on the mainland for the next five or so years.

Mainland companies at this stage appear to be unwilling to pay external firms to look for their senior staff. Mr Meiland believes this will change.

'Mainland companies will see in the long run that it is inevitable they will have to employ search firms if they want to develop a sustainable professional advantage,' he said.

It is a realisation which has already come in India among businesses there, where the firm has been surprised by its level of growth in recent months.

A major part of the revenue growth in India has been due to the strong growth driven by native Indian businesses.

Egon Zehnder's growth rates on the sub-continent have far exceeded expectations, and the firm has stolen a march on its rivals there, Mr Meiland said.

Mr Meiland is hoping that out of Hong Kong, the push for better corporate governance will drive a significant growth in Egon Zehnder's practice.

The firm has built up a specialisation in recruiting non-executive directors for company boards, and Mr Meiland is hoping the growing worldwide push by shareholders for more independent board members will ultimately rub off on Hong Kong.

He is, however, disappointed with the current level of enthusiasm of senior Asian businessmen to join the boards of multinational companies - often interest was only registered when there was something in it for the business figures involved.

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