Skilled Labor Force: Quantity & Quality Gaps

Last updated: Jul 2022
The HR Regulations Guide for Foreign Companies in China

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Skilled Labor Force: Quantity & Quality Gaps


China’s rapid economic growth and the increase in foreign investments in the Chinese market have greatly boosted the demand for educated, experienced and skilled local personnel. Ironically, despite China being the most populous country in the world, the supply of qualified workers is still lower than their demand, and foreign companies face some difficulties with finding and recruiting workers, especially for technological, marketing and human resources positions. A study by McKinsey revealed that only 10% of Chinese applicants for engineering and accounting positions were found to fit for work in a foreign company. The situation is even worse in second and third-tier cities.

Moreover, the practical experience of workers in China is also generally poorer than their counterparts in the West. The low supply of skilled workers is mainly due to outdated and inadequate university training. Let’s take the ad tech industry as a prime example: This is a relatively new “technical” field that requires previous experience but isn’t really taught in universities. Therefore, companies sometimes struggle to find suitable employees, and as a result, the cost of such an employee is very high.

Learn more about the cost of employing foreign employees in China

Lately, recruitment in China of blue-collar positions has also become more complex. This is mainly due to a new generation of young people, whose families can afford tertiary education. This new generation is more aware of their rights, strives to develop professionally and is not willing to become factory workers. In the past, one of the strategies to attract laborers to industrial enterprises has been to raise the minimum wage, but by doing so China is apparently giving up its advantage as a country with a cheap workforce.

Last updated: July 2022

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