HERE IS A giant paradox: China has a population of 1.3 billion but faces a critical labour shortage.
More specifically, what the country lacks is people with the skills needed by fast-expanding companies in today's knowledge economy, and this is creating a previously unseen set of market forces. The demand for experienced managers is outstripping supply, wage bills are rising and businesses are being forced to rethink their hiring and retention policies.
All these factors are linked directly to China's breathtaking economic performance. Just consider that, in 2004, the mainland accounted for around one third of total global expansion, and that GDP is expected to grow by 9.4 per cent this year and by 9.5 per cent in 2007. Much of this growth has been fuelled by foreign direct investment, with 90 per cent of the world's top 500 multinationals investing in China.
In a recent report, employment services industry leader Manpower Inc noted labour shortages across the board in the mainland, but most notably for positions as production operators, sales representatives, technicians and managers.
'The talent shortage at middle and senior manager level is proving a major problem for domestic and foreign-investment companies in China and is hindering them from growing their business,' said David Arkless, senior vice-president of corporate affairs at Manpower.
The actual cost of replacing a staff member could amount to about 90 per cent of that person's annual salary, taking into account compensation, advertising for a new recruit and time spent on interviews, induction and training.
'There are also issues concerning rebuilding relationships within the organisation and the effects that personnel changes have on customer knowledge,' Mr Arkless said.