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China's Fickle Talent Pool - WSJ.com

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BUSINESS

Updated March 15, 2012, 8:07 p.m. ET

China's Fickle Talent Pool

Se ice Job Go Begging a Re aile , Ho elie Vie fo Wo ke Wi h he Righ Skill
B L AU R IE BU R KITT

BEIJING At Italian fashion house Versace SpA's local headquarters here, human-resources director Su Meizhen has noticed a trend among applicants for sales positions: anywhere from 15% to 30% of them don't show up for their interview. That isn't something that happens much outside China but, in the world's No. 2 economy, job openings often outnumber job hunters, Ms. Su says. While many people struggle just to land interviews in Europe and the U.S., where high employment persists, the Chinese assume there will be more jobs tomorrow. "Motivation is a problem," she says. Service industries the world over complain about the difficulty of finding good help. But business managers and analysts say China poses a special challenges for global companies seeking to establish a long-term footprint. The number of job vacancies in its service sector has surged in the past decade and is larger than in any other segment of the fast-growing Chinese economy. In 2011, there were roughly 1.4 million more job openings than applicants, up from one million a year earlier, according to data from China's Ministry of Human

Xinhua/Zuma Press

Would-be flight attendants prepare for interview s at Hainan Airlines. Hotels and retailers are seeking a similar t pe of w orker.

Resources and Social Security. The problem stretches beyond services and into the broader economy. China has a vast population that is urbanizing and looking for jobs but often lacks the mix of skills that businesses need. Chinese Premier Wen Jiabao addressed the issue last week in his annual speech to the country's legislature, saying China is dedicated to training "talented young people and personnel who are urgently needed and in short supply." For now, however, service companies, which require workers with a certain level of education and social skills, are at a particular disadvantage. With luxury retailers and hotels expanding rapidly here to meet a growing appetite for handbags and travel, demand has far outpaced the supply of qualified applicants, says Christoph Nettesheim, managing director of Boston Consulting Group Greater China. The finance and healthservices industries are caught in a similar bind. Pay is also an issue. Many global companies say their Chinese workers are motivated more directly by money than their Western counterparts, who also work for promotions and to further long-term career goals. With pay on a long-term growth streak in China yearly salaries for city dwellers rose to about $5,500 in 2010, up 13% from a year earlier and 77% from five years earlier employers here face a lot of pay-related turnover. Versace's Ms. Su says its also relatively easy for many of China's youngest workers to walk away from a job, because many are only children who are supported financially by their parents and two sets of grandparents, giving them an extra cushion. Starwood Hotels & Resorts Worldwide Inc., HOT -0.07 % whose hotel brands include Westin and Sheraton, needs to find 30,000 new employees in three years to staff about 100 new hotels, and will be scouting Chinese universities for recent and soon-to-be graduates. But younger workers are less committed and more demanding than the previous generation, which tended to stay with the company for around a decade, says
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China's Fickle Talent Pool - WSJ.com

Qian Jin, a Starwood senior vice president in China. Chinese workers in their 20s often expect quick promotions or raises and leave after one or two years, he says. U.S.-based Starwood recently created a mentoring program for its Chinese workers, matching its newest employees with managers who have been around for years. In addition to providing training, the program will build personal relationships, helping it retain staff, says Mr. Qian. Versace is taking a similar tack. This spring it plans to start language training to help its Chinese workers improve their English so they can better communicate with upper management and one day become managers themselves. "We look to promote from within," Ms. Su says. "That's one way to find talent and keep it." Companies expanding in China often poach employees from other businesses, which has been a problem for closely held Ermenegildo Zegna Holditalia SpA. The Italian fashion label was one of the first luxury companies to set up shop in China, in 1991. Rivals will offer to triple the salaries of its sales staff or managers, says Gildo Zegna, the company's chief executive and grandson of its founder. Mr. Zegna says he won't engage in a bidding war. Instead he offers employees the chance to work in his stores overseas. Some companies are making up for a lack of talent by nurturing it themselves. To staff its hotels in Beijing, Swire Properties Ltd., 001 9 .HK + 0.1 7 % the real-estate arm of Hong Kong conglomerate Swire Pacific Ltd., 001 9 .HK + 0.1 7 % recruits recent graduates with hotel and hospitality degrees but no service experience from China's smaller cities.

Laurie Burkitt/The Wall Street Journal

Sw ire Properties teaches its new est hotel staff w a s to look more professional.

The company uses role-playing exercises to train the new workers, asking them to pretend to be guests and requiring them to reserve limousines to the airport. The idea is to make them able to better understand and anticipate a guest's requests and to respond to them more confidently. Swire also hosts beauty classes, helping new female workers like 22-year-old Wan Xu, who recently graduated from hospitality school in China's central Hubei province, learn how to use make up and fix their hair. "Workers with little to no experience are overlooked in China, but we find they're like sponges, absorbing quickly and willingly," says Anthony Ross, general manager of The Opposite House, Swire's boutique hotel in Beijing. Italian lingerie company La Perla gives its workers tips on how to manage the big egos that sometimes accompany its clientele's fat checkbooks. The rise of China's nouveau riche has created an economic chasm between luxury-store sales clerks and customers, which can lead to awkward situations, says Andrea Bonardi, La Perla's managing director for emerging markets. Chi Wei, a 30-year-old saleswoman at a La Perla store in Beijing's central shopping district, Wangfujing, says some customers feel insulted when she tells them about the brand. "Many of them act as though they should be telling me [about it]," says Ms. Chi, who doesn't make enough to afford La Perla bras, which can cost between 2,000 and 3,000 yuan, or roughly $310 and $470. Ms. Chi says she has been trained to calm herself by breathing and to remember that most of her customers will leave the shop within a half-hour. "I can put up with anything for a short time," she says. She adds that haughty clients usually ease up when they realize that La Perla's lingerie is made for the Italian body, and that they need help with fitting. Shanghai-based training service JETT trains employees of retailers such as Versace and handbag maker Coach Inc. COH -0.4 5% in how to deal with customers who insist on smoking in stores, says Ed Dean, JETT's founder. (Explain that the store wants to provide customers with the highest-quality products, and that smoke can tend to tarnish them.) "Problems emerge in China that multinational businesses don't always foresee when they look for employees," Mr. Dean says. Wri e o Laurie Burkitt at laurie.burkitt@wsj.com A e ion of hi a icle appea ed Ma . 15, 2012, on page B1 in ome U.S. edi ion of The Wall S ee Jo China' Fickle Talen Pool. nal, i h he headline:

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