Strategies for WFOEs to Retain Valuable Chinese Talent 7/12/2016

In the past three decades, China has achieved unprecedented economic growth.  Foreign companies, known in China as Wholly Foreign Owned Enterprises (WFOEs), have entered the country to capitalize on the economic growth opportunities. Many times however, foreign companies arrive in China only to struggle to retain its top China talent. They quickly realize that they cannot apply their Western retention programs in China, because the business environment in China is very unique. On the other hand, many state-owned enterprises (SOEs), which are private companies funded by the Chinese government, have been successful in attracting and retaining highly qualified Chinese workers by offering unique benefits tailored for the local market

TriVista’s team conducted an in-depth study, encompassing primary and secondary research, to shed light on what Chinese national employees value when looking for long-term employment.

Discuss Different Career Development Opportunities

The concept of having a structured career trajectory plan might seem second nature to a Western firm, however Chinese businesses tend to be much more closed off when discussing career development opportunities. Keeping an employee’s future path a secret, could be hurting your retention rates. In a recent poll by ChinaHR, 36% of Chinese college graduates “hoped to work for SOEs more than any other type of employer—such as private or multinational enterprises and the government—because they were thought to be more stable and offer a clear career path.”

Much like their Western counterparts, white collar Chinese employees prefer to know when their managers believe there is a future for them within the company. Knowing that their foreseeable future is bright, makes employees feel more stable in their current role and are more likely to stay. Companies should create an open environment that enables their employees to learn and grow, allowing them to make strides towards advancing in the company. Offering a stipend for continuing education classes in their field, discussing their future goals and asking for input on career progression will show employees that you are invested in them as a valuable member of the team.

Educational Opportunities

WFOEs should remain focused on providing intellectually stimulating work for their employees. While people who work in government jobs may be perceived to enjoy straightforward and unchallenging jobs, WFOE employees tend to desire a more intellectually challenging environment. Chinese workers seeking employment at a foreign-owned company have come to expect a challenging environment that allows them to use their problem solving and critical thinking skills.

    1. English as a Second Language

Our study found that Chinese workers often come to WFOEs for the added benefit of improving their English. English has become the business language of the world, and according to the English Fluency Index, between 250 and 350 million Chinese citizens are actively learning English. Although there is a high number of Chinese employees attempting to learn the language, a report published by the Economist magazine, suggests that English classes in China are based on rote memorization, which does not aid in achieving true proficiency and fluency. Consider having fluent English speakers work with their Chinese counterparts to enhance the English learning process.

    2. Training & Development

Although it may seem like a basic training concept in the Western world, our research has also found that many Chinese companies neglect to offer their employees basic training opportunities. Many companies fail to teach employees the greater picture of the company’s inner workings, outside of their direct department.

For example, a person in a marketing role at a computer company, should have a basic understanding of how a computer is made, how it works, and who the end-user is. This critical insight will allow him or her to not only work more effectively on their marketing tasks, but will enhance their own acumen, allowing them to better contribute to the business as a whole. Cross-training employees can help empower your team to make better decisions, boost morale and improve overall competency.

Relationships in the Workplace Matter

It is generally understood, that in the American culture, an employee’s work life and home life are maintained relatively separately. However, in China, employees tend to have much closer bonds between each other and their superiors. WFOEs should take this concept into consideration and promote a positive company culture through team building activities. For example, holding a badminton or tennis competition or hosting a company dinner with drinks afterwards, may help to facilitate a feeling of closeness, strengthening your team’s bond and encouraging the team mentality.

Many Western companies operating in China have heard of the concept of guanxi, which when roughly translated means relationship. Guanxi is used to describe the personal connections built amongst colleagues and business contacts through spending time outside of the office. For example, in China it is not uncommon for a boss to ask questions about an employee’s personal life. However, having guanxi in your workplace does not mean you need to completely change your management style to fit with the Chinese culture as some might claim. Primary research showed that Chinese employees who work at WFOEs understand that Western businesses tend to have more of a separation of “church and state” and have come to expect that type of work environment. Developing a delicate balance between guanxi and the Western work environment is key for keeping in line with employee expectations.

Salaries Need to Be Comparable to State-Owned Enterprises (SOEs)

Prior to the Global Financial Crisis in the late 2000s, Western companies operating in China were known for offering high salaries and coveted positions in comparison to state-owned companies. Recently, China’s rapidly expanding economy has given many Chinese businesses, including SOEs, the capital required to become more competitive with their Western counterparts.

However, Zhao Zifeng, Director of ChinaHR’s Research Institute, believes the perception among employees will begin to change as they make their way through their careers. Zifeng notes that recent college graduates’ initial tendency is to work for an SOE, since it is a stable job and offers a clear career path, but has concluded that once graduates have been working for three to five years, their preference will shift towards WFOE jobs. This is because he believes that WFOEs are more likely to pay employees based on merit. Performance-based pay demonstrates to employees that you value them as individuals and care about their performance on the job. By offering bonuses based on performance metrics and goals achieved, you are providing motivation and incentives, while instilling pride in your employees’ workmanship.

Benefits Should Reflect the Culture’s Values

    1. Incorporating Traditions and Gifts into Holiday & Festivals

Holidays and festivals are an extremely important part of the Chinese culture. As such, it has become a commonplace for SOEs and government employers to give their employees gifts and bonuses in addition to their allotted time off. They may offer their employees a couple days off for a particular festival or holiday and an additional gift of 400-1,000 RMB depending on the significance of that event. Based on an internal study, government and SOEs employees receive nearly double to triple the amount for holidays compared to WFOE employees. SOEs even offer anywhere from fifteen to twenty vacation days per year, while WFOEs typically offer ten to thirteen days.

Each festival in China is uniquely different and deeply rooted in tradition.  You should be tailoring your benefits for each holiday, offering thoughtful and culturally appropriate gifts. Consider incorporating some of the following ideas into your company’s benefits package:

  • Women’s Day: Allow female employees to leave early and offer them traditional gifts, such as tea and makeup bags.
  • Children’s Day: Allow parents to take the day off and offer gifts such as bonus pay, mooncakes and cooking oil.
  • Chinese New Year: Offer a minimum of three vacation days in addition to the customary monetary gifts often distributed in red envelopes, known as Hongbao. Hongbao is a way of sending your workers good wishes and blessings.

    2. Flexible Working Arrangements Are an Important HR Strategy

It has become common knowledge that Western workers value a flexible working environment that allows them to make their own schedules and “telecommute” or work from home. Now China is considering going this route. According to a study published by the U.S.-China Business Council, for the first time ever, Chinese employees are beginning to place work-life balance and improved benefits as key factors when determining where to work.

Factors such as air pollution, traffic congestion and late night conference calls with international clients have made telecommuting and flexible hours something Chinese employees have come to value and look for in an employer. Incorporating these types of flexible work arrangements into your company’s benefits package can help reduce employee turnover and improve company morale.

Final Thoughts

Foreign-owned companies in China have been facing increased competition from their domestic counterparts. By following these strategies WFOEs cannot only stay competitive with domestic companies but can also promote their strengths, attract top talent, and improve retention.