From what we’ve seen in the first two months of this year, the job market situation in China is so far, so good. At least, based on the volume of search cases that we’re working on currently, our company is still seeing the carry-over from 2007 of aggressive hiring attitudes and strong hiring activity from clients.
It’s hard to escape the news though. Every day, there are headlines about the sub-prime crisis in the United States and the likelihood of a U.S. recession. In addition, there is also the continued weakening of the U.S. dollar, which has the overall effect of making products from China more costly for U.S. buyers who make up the mainland’s top export market. Domestically, the especially harsh weather this winter is creating inflation pressures that were already a concern for the Central Government, even before the snowstorms struck. This combination of events is resulting in a GDP growth forecast for China of around 10% for 2008, a lower growth rate than has been seen in the past few years. Given all these macroeconomic factors, what will be the effect on China’s job market and hiring outlook for this year?
For those of us who have been working in China for the past 7-8 years, we all remember the very tough time created for both businesses and individuals from the bursting of the Internet bubble, crash of international stock markets, and resulting worldwide, economic downturn in late 2000/early 2001. What followed then was a prolonged, difficult period for many companies trying to respond to an economic scenario and environment that they had never experienced before, where both the speed and distance that many markets, industries, and businesses fell was stunning, and where the severe impact on companies took most by surprise.
The effect on the job market and hiring picture in China was felt immediately as we entered a period of headcount and budget freezes that lasted for nearly three years, until late 2003. For anyone looking for new opportunities in the mainland then, it was a relatively tough time. Actually, China’s economy continued to show strong growth, as did the business potential and opportunities for companies operating here. However, multinational subsidiaries operating here were required by headquarters to re-budget and re-plan just like every other international operation was asked to do.
Because so many companies were going through a “right-sizing” of operations in other markets, and because of the related sensitivity to adding new staff, most multinational operations in China had to hold their headcount as well. Effectively, they were asked to continue to grow their business in this market with the same resources. The few hiring opportunities we saw at the time were either for replacement situations or for “amazing” candidates that we could introduce that a company might consider.
As a result, as in the rest of the world, the hiring scenario in China for that period was highly conservative and deliberate. In times of uncertainty, businesses typically take a more conservative approach to their expansion and growth plans. In addition, many spending decisions are delayed or held until a clearer sense of a situation or outcome is known. During the worldwide, economic downturn of a few years ago, most people and companies simply could not tell how far things were going to fall or how long they would last.
Today’s situation, however, is much different from the last time, for many reasons. First, the likelihood of a coming recession in the U.S. is being seen much more clearly in advance, where businesses are much better prepared for its impact. Back when the Internet bubble burst, few companies were prepared for it, or its fall-out. In contrast, company’s right now have time to plan for contingencies that will allow them to respond to and absorb much better a worldwide, economic downturn scenario.
In addition, two key factors are working in favor of China’s job and hiring market. As companies face tougher times in markets like the U.S. where the economy is slowing considerably, the growth prospects for businesses in China continue to stand out. Many expect this to draw greater attention and urgency for companies to implement their expansion plans in the mainland, and even accelerate them.
There is also the long-awaited arrival of the 2008 Olympic Games in Beijing. With the world watching, many businesses will be extremely active and spending big to capture the spotlight and take advantage of all the attention that will be focused on this event, both leading up to and during the Games. This very significant event for China is one that many believe will overwhelm, at least in the short-term, the impact of negative events or economic news from abroad.
From our perspective, given that 85% of our clients are international companies with overseas home offices, a U.S. recession will again result in a period where many companies will re-forecast their budget and growth plans in China for the year. Even if it is a relatively “mild” one, the overall spending and decision-making of companies will occur more slowly and deliberately for the short-term . So although companies will remain committed to their plans for China, candidates can expect interview processes and hiring decisions that will take longer to happen than what has been the norm in this market recently.
We believe that at some point this year, there will be a brief slowdown in hiring activity here, as recession news from abroad becomes more real and as multinationals adjust and respond to that reality. Given the solid business prospects of this market and our confidence in the government’s ability to manage the general economic situation here though, we do believe that the job and hiring market for 2008 will continue to be good in the mainland. Although it many not be as great as it’s been these past three years, relative to other markets around the world, we should be able to look forward to it being good from both a job market and job-seeking perspective.
For instance, similar to the types of positions we worked on throughout 2007, we are currently involved in many searches for candidates with strong business and IT consulting, BD and sales management, finance management and investment, IT and engineering management, global sourcing and supply chain, and human resources and organization development backgrounds. For anyone with solid experience in these areas, in particular, the job market prospects for you in the mainland should continue to be quite solid. Although there are few things that can claim and stand up to being “recession proof,” these essential job functions and hiring areas for China and for many companies operating in China come pretty close.
