China offers investors certainty, resilience
China offers investors certainty, resilience
Growing demand from middle-income buyers is creating business opportunities for domestic firms, foreign entities.
The Chinese government has adopted a series of measures to boost economic growth, including stimulating consumption, further opening up to foreign investment, supporting private enterprises and encouraging technology innovation. China Daily interviewed Simon Lance, Managing Director of Hays in Greater China, to share his views on the country's economic development and their companies business strategies in China.
China has rolled out a series of measures to stimulate consumer spending and boost economic growth. What opportunities are there for your business?
The Chinese economy is undergoing a transformation - the rise of consumer spending is one driver. The Chinese economy is shifting from its reliance on traditional heavy industries and exports. Today, one of the fastest growing sectors is the professional services industry. This is leading to a scarcity of talent.
In our 2019 Salary Guide, Hays reported that 47 percent of companies polled were not confident they will find talent with the necessary skills in the year ahead. The demand for skilled workers is also acute in healthcare and tourism, as well as financial services and insurance.
To make matters more challenging, the skills gap has widened in the past year, up from 36 percent in 2018. This means most enterprises will struggle to find the people they need in the year ahead, which could put a curb on growth plans.
This is opening more advanced career options for many, from professionals transferring into new industries or overseas returnees. We are recruiting experts in specialized sectors to get the right job for the right person; and work alongside our clients to spot, secure and nurture the best talents.
Overall Chinese economic growth has slowed, but the top-line numbers remain relatively robust. In what areas do you plan to increase investment or employment?
Hays mirrors the markets and invests in the growth areas of the economy. We find we're an "early indicator" of where the economy is headed, as we are called on just as companies start to invest in new businesses and the human capital around it. Our recruitment consultants help build the teams for our clients in China's fastest-growing industries.
As an example, we have observed continued demand for high-quality candidates in logistics, supply chain, and procurement. These are the specialists that are pushing some cities to transition from traditional industrial centers to commercial hubs. This trend is being further fueled by the country's fast-growing free trade zones.
In August, the Chinese government doubled the size of the Shanghai FTZ and announced new tax incentives and import duty exemptions for companies working in the area. In the same month, China announced it would establish new pilot FTZs in six regions, including Jiangsu.
The Shanghai and Jiangsu FTZs are positioned next to each other on China's eastern coast. The pair is set to become the country's hub for logistics, supply chain and procurement. The demand for skilled workers in these zones is particularly acute.
What business opportunities do you see as China continues to pursue higher-quality growth, which is increasingly driven by services and consumption?
The rise of the middle-income group in China is one of the largest economic transformation stories in history. There are more than 400 million middle-income people in China. That's greater than the entire population of the United States.
Satisfying the diverse needs of middle-income buyers is creating retail business opportunities not just for domestic companies, but also for foreign entities. China has taken steps to encourage more foreign direct investment.
In March, China released a revised Foreign Investment Law. The law improves the transparency of foreign investment policies and ensures that foreign-invested enterprises compete on an equal footing. This will improve global trade flow particularly for markets in the UK and Australia.
As an example, China's e-commerce giant Alibaba has been facilitating trade between mid-tier buyers in Australia and China since it opened its regional headquarters in Melbourne in 2017.
With our global reach and our experience in China, Hays is ideally positioned to source talent for the cross-border e-commerce boom.
What do you see as the most resilient part of the Chinese economy and how do you plan to align your business with it?
China has world-class operations in a number of industries. We see great resilience in the technology industry. China is leading the world in research and development, which is critical to drive real innovation. It is home to millions of engineers and scientists, and its companies lead the world in R&D investment.
Since the 13th Five-Year Plan (2016-20), China has called for innovation to enhance the competitiveness of various industries. This will help private enterprises move toward higher value-added businesses amid intensified global competition. The country has made the investments necessary to transition to an innovation-oriented economy.
Hays saw the demand well before China climbed the ranks as a technology innovator. There was strong demand for highly skilled and experienced technology professionals. That led Hays to open the Shenzhen office at the prestigious China Resources Headquarters in 2017, on track to become the industry leading recruitment firm in the city.
The other resilient industry we focus on is in logistics and supply chain.
China has developed a mature supply chain recruitment team as well as highly efficient logistics and supporting services. This ecosystem supports longtime industries, and gives increased impetus to companies returning manufacturing to China after forays in Southeast Asia.
Finally, China has an aging population placing increasing demands on healthcare and pharmaceutical industries. The area is seeing marked growth.
How has your company adjusted to the uncertainties brought by trade frictions between China and the United States?
It is true that there is now far less certainty in many locations around the world. China, despite some of the recent challenges, remains a highly attractive investment location for Hays.
At Hays we believe that China, the world's second-largest economy, will continue to make significant long-term contributions to our global business. Therefore, we will continue to prioritize China.
Overall, our response is to increase our investment here, rather than decrease. As one example, we will be increasing investment in property, personnel, tech, branding and marketing.
China has adopted policies to further open the economy to foreign investment, to transform financial services and to promote private enterprises. How are you planning to take advantage of these policies?
China's policies are very appealing to foreign companies.
According to the Ministry of Commerce in the first half of this year, foreign direct investment reached $9.8 billion in the 12 established FTZs across China. This is 14 percent of the overall FDI in the country, and an increase of 20 percent from the same period last year. This is driving further demand for professionals across the many industries in the FTZs.
In addition, overseas investors will now have a much easier time participating in China's domestic financial markets. Last month the State Administration of Foreign Exchange announced it will abolish the investment quota restriction for qualified foreign institutional investors and renminbi qualified foreign institutional investors.
This is driving more business opportunities in the financial services industry. More foreign investment firms are setting up operations in China and are actively sourcing local talent.
This gives talent options. In this year's Hays Asia Overseas Returnees Report we found foreign-owned companies continue to be most attractive to mainland returnees (those who have studied and worked overseas). A full 61 percent of them worked for such companies immediately upon return to China.
How does your company plan to take advantage of the technology transformation opportunities in China over the next decade?
For our part, Hays is helping China's booming tech startups to meet the strong demand for the word's best talent. Hays helps our clients find skilled professionals across the technology industry. We see strong demand for data scientists, cloud architects, user interface designers, solution engineers and artificial intelligence professionals to name a few.
We believe talent is the key for China to build globally influential innovation and technology hubs. Our technology recruitment practice is based in the Greater Bay Area encompassing Shenzhen, Guangzhou and Hong Kong.