Headhunting agencies have seen a lacklustre year despite high hopes that China's World Trade Organisation entry in December 2001 would breathe new life into the executive-search market. The global economic slowdown, continued slump in the information technology sector and sabre-rattling over Iraq all conspired to cast a pall on the market, which is unlikely to rebound until the second half of 2003, according to industry sources. 'The headhunting market has become extremely competitive,' said Jenny Lee, vice-president of the Cornerstone Group's China Team International. Layoffs and hiring freezes at the headquarters of multinationals also affected overseas staff. But many laid-off executives have opted to stay in China, competing for a diminishing number of jobs. In this sombre environment, headhunters have turned their attention to domestic enterprises, many of which are seeking high-calibre but affordable senior staff. Heidrick & Struggles International Consulting, which set up a joint venture on the mainland last month, estimates that six million companies in China spend around US$3.6 billion (HK$28 billion) a year on staff recruitment. Korn/Ferry International, another American giant, has also received permission to set up a search business in China. These big players' foray into the mainland is a sign that Chinese companies have become sophisticated and rich enough to require global headhunting services. So far, only 2 per cent of mainland companies use recruiters. 'Many private enterprises have developed to a level that rivals international companies in the same industry, but their human resources management still lags behind. It is not a matter of economic reasons, but a matter of the system and mentality,' Ms Lee said. However, observers say Chinese enterprises' experience in hiring executives through headhunters has so far been mixed. Employers have been criticised for holding unrealistically high expectations, while the executives - finding adaptation and communication difficult - often quit after three to six months. Qu Chao, deputy general manager of Shanghai Realise Consulting, which monitors compensation of top executives in Chinese enterprises, said the mobility of executives on the mainland was still low compared to developed countries. Top executives of state-owned enterprises were mostly appointed by administrative order, and few of them moved to privately owned enterprises, he said. The market is also characterised by a disparity in pay between industries and locations. For 2002, executives in manufacturing and IT received the highest average pay, while those working in Guangdong, Zhejiang and Liaoning topped the salary charts. Headhunters concede that China will remain a difficult market. A Heidrick & Struggles executive said the firm would be happy to see US$2 million to US$4 million in revenue in its first year of operation - a mere drop compared to its 2001 billings of US$455 million.