While China may have been known for its manufacturing and raw materials industries for decades, the contemporary reputation of China is one of expansive and diverse entrepreneurial opportunities. Both startup businesses and long-established ones are finding that China presents to them exciting potential in a number of high growth industries, including: education, pharmaceuticals, automotive, construction (including ecological construction), solar technology, beauty products, legal and financial services, and B2B. With around 1.4 billion people, China has markets for the very large and the very small of business niches. Hiring the right people to execute your vision in China, then, is important now more than ever before.
What are the options for hiring in China?
Most businesses looking to expand into China appreciate that hiring from the local workforce is their best option. Not only does hiring locally help to avoid the costly and time-consuming administrative hassles of hiring foreign individuals to work in China, but local employees are also more knowledgeable about Chinese markets and opportunities, familiar with local customs and business culture (which may help you to avoid common mistakes or social faux pas), and of course the local workforce will be fluent in China’s main language, Mandarin.
While there are a number of complex arrangements that can be made to hire in China, the two main options are:
- Establishing a legal entity in China: As it is illegal for a foreign company to hire directly local Chinese employees without a legal entity in China, one option is for that foreign company to set up a new business entity in China. This process is long and expensive, however, and certain companies may be prohibited from establishing an entity in China because of the Negative List (industries where foreign investment is barred).
- Partnering with a recruitment agency in China: By far the easiest method of hiring employees in China is partnering with an experienced and reputable recruitment agency. Whether a company is looking for executive talent or professional managers, a recruitment agency is able to conduct extensive searches and use sophisticated assessment techniques to find the right candidate the first time.
For the vast percentage of businesses looking to establish or expand their presence in China, hiring a recruitment agency is going to be the best option, not only in terms of reducing the administrative headache but also in freeing up company resources to focus on high value activities that directly contribute to the business’s goals and objectives in China.
What to look for in a China recruitment agency?
- Look for an experienced agency: With the increase of new opportunities in China has come new foreign investment, and with that new foreign investment has come new agencies to assist in hiring talent in China. Unfortunately, many of these new recruitment agencies are in a race to the bottom in terms of price, and that means they use poorly qualified and inexperienced consultants. It is imperative, therefore, to find a company that has a number of years of experience and demonstrated results with top international companies.
- Work with a company that offers a guarantee: No matter how extensive the search and assessment process, sometimes a candidate does not work out, and that means companies usually have to assume the high costs of finding a replacement. The best companies offer a guarantee of at least a few months, with some exceptional companies offering a guarantee of six months on placements.
- Partner with agencies who conduct deep searches: Filling positions is not just about matching profiles with job descriptions. Hiring is a complex process and the industry has come up with advanced tools to meet this challenge. Some of these innovative techniques include: personality tests, behavioral interviews, business simulations, and psychometric assessments.
- Find a recruitment agency that offers PEO services: PEOs are your on-the-ground administrative and human resources team, able to handle a wide variety of complex tasks from negotiating salary and drafting contracts to professional assessment and contract renewal/termination. The core benefit of using a PEO is achieving rapid market entry and a significantly reduced administrative and legal burden. The best recruitment agencies tend also to have a PEO branch, which enables a smooth process from hiring to employment.
Hiring in China can be time-consuming and costly, but partnering with a professional recruitment agency can make all the difference. Bear in mind, however, that not all recruitment agencies are created equally, and those that have the best results have the most professional offerings, which may even extend after the hire is made.