Tips for Hiring in a Hyper- Competitive Tech Market: Chinese Technology Case Study

Written by Aquis Search

Kensy Sy, Aquis Search Director, China, recently published this article in the SCMP - 

Hiring in China’s fast growing technology sector is made more competitive by a shortage of advanced skills and a concentration of demand from the Beijing area. To cope with competition, hiring managers need to consider prioritising the advertising of their culture, training and broader benefits and focus efforts on candidate profiling.

As China’s technology industry continues to boom, the demand for skilled staff stretches far beyond the existing talent pool. Chinese technology companies are being forced to sharpen their recruiting efforts and refine their internal strategy to build the workforce needed to successfully operate in such a quickly evolving and competitive landscape.

China’s technology industry is not the largest employer market, but the hyper-competitive environment offers lessons for its hiring managers and HR directors.

Rising competition

The technology industry in China is rapidly developing, so the recruiting environment’s growth prospects are promising. More and more university students are choosing a computer science-related major in order to find and secure lucrative jobs after graduation, and more good overseas technical candidates are returning to China due to the buoyant technology scene. 

Over the past few years, the multinational technology companies have not performed so well in China. Most of the headcount growth and hiring needs have come from local or regional SMEs. Multinationals have been less willing to invest in product development roles and are now reallocating the new headcount from technical roles to sales. Recently, B2B solution providers have outperformed their B2C peers, so they are investing resources in new hiring.

In the past, the majority of hires have been junior to middle-level coding developers. Now the market wants technical candidates with specific skill sets, such as data scientists and AI engineers. Universities in China teach the fundamentals of coding and programming, but additional technical knowledge usually comes through on-the-job training. Hiring firms need to offer a clear training plan to assure candidates that they will benefit from this continual knowledge acquisition.

Beijing remains the hub for China’s technology industry. It has proximity to government policy makers and the presence of top universities, which means a steady supply of talent. It is also where most of the hiring activity occurs. However, local government support means that Shenzhen (home to Tencent) and Hangzhou (home to Alibaba) are also rapidly developing markets.

Talent mobility

There is a huge talent gap in this booming sector. Local universities have not yielded enough talented and skilled graduates to meet demand. Meanwhile, graduates with the right qualifications usually have multiple offers, and with that comes high salary and title expectations. 

Much of the time, hiring managers look to overseas talent pools to ensure they can supply companies with the best match in terms of skills and qualifications. The biggest challenge in encouraging overseas candidates to relocate and work in the region is the air quality, and many are not willing to relocate themselves and their families.

For hiring managers, after a new hire receives one or two years of experience they begin to receive multiple unsolicited offers of a 30% to 40% salary increase. Employers of fresh graduates are often viewed as little more than a training ground. 

Some Chinese technology companies are trying to mitigate the high turnover of tech staff by speeding up the hiring process. For example, instead of asking candidates to come in for different rounds of interviews on different days, HR lines up all the interviews on the same day, thus freeing candidates at the end of it. Offers are then often made within the next 48 hours.

Headcount vs culture 

There are also many technology companies who try to hire quickly to beat their competitors and rapidly scale their business, but there are common pitfalls that should be avoided.

The first problem is when technology companies grow headcount quickly, funding can quickly run out. The initial euphoria of a cash injection into a firm means many technology companies neglect to formulate a proper strategy for their company structure. Staffing is relatively cheaper in China when compared with the US or even Hong Kong, with fresh tech graduate salaries starting at around 5000 yuan per month, which means that many companies hire too quickly. Average individual productivity is lower than in Singapore and Hong Kong, so Chinese hiring managers are more used to massive manpower strategies with lower productivity.

In a bid to attract top talent away from competitors, technology companies are willing to pay higher salaries. Too often, however, they do not consider whether the candidate fits the company culture or has a defined place within its structure. Candidates who believe in the company’s strategy and fit easily into its culture are more likely to stay longer. When hiring managers attract candidates based on salary and financial benefits alone, staff retention becomes harder as their employees will easily leave when offered more money by the competition.

In order to attract talent, hiring managers also have a tendency to promise candidates an overly rosy future and create an unrealistic picture of the role and opportunities. If an employer cannot deliver what the candidate wants in a role, the employer may be tempted to offer stock options and promise an IPO. If such promises are not fulfilled, the candidate will lose confidence in the firm.

There do, however, exist ways of offsetting the loss of staff, such as maintaining contact with those that have departed. Some Chinese companies have set up alumni clubs for those employees who have left on good terms. Such clubs have regular meetings to catch up, where the former staff get the chance to meet their old colleagues and get an idea of what changes their previous employer has undergone or implemented. This may eventually lead to some of the former employees rejoining and will, at the very least, ensure positive wordof-mouth that can help itself in the hiring process. HR’s role in running an alumni programme varies depending on the size of the initiative, but should generally include introducing outgoing staff to the programme during the exit process; leading programme design and meeting schedules; and maintaining and updating contact details of alumni. 

Finally, some hiring managers in the technology sector believe that if they hire top talent it will automatically equate to success, but they do not know how to bring these individuals together. Team dynamics, adequate support structures and resources are also needed in addition to skills. 

Best recruitment and retention practices 

There are clear strategies that yield results, both in terms of recruitment and retention, for hiring managers at Chinese technology firms to note.

1.  Strategy first - Hiring managers need to coordinate with a clear business strategy, come up with the company or team structure, and finally the hiring timeline. When Chinese technology companies invest heavily in expensive talent, they often overlook the timing of the hire. Furthermore, hiring an entire team at once rather than staggering the hires often results in hiring at a premium, which will quickly affect a technology company’s cash flow.

2.  Candidate profiling - Hiring managers should discuss with line managers what sort of profiles are bestsuited and will be successful in the company instead of simply listing and focusing on the desired skill sets. Companies should study their own employees and label the characteristics of their top talent to form the basis of an evaluation matrix for new hire screening. These characteristics will vary based on the nature of their business, such that in a research team, teamwork will be more important than a competitive nature. Hiring managers must also be careful not to focus only on what a candidate has achieved before, as prior success may have been a result of their team performance rather than individual ability. Hiring managers should be clear on exactly what part of a candidate’s technical expertise is most important to the role.

3.  Tailored training - Many line managers in Chinese technology firms believe that core coding skills are not difficult to pick up, but that personality is much harder to change. Therefore, if the hiring manager can find a motivated, bright candidate, they can pick up hard skills in a reasonable amount of time. When there is a talent shortage, as is the case in China’s technology industry, the perfect candidate may be too expensive, but hiring managers can find a candidate who is willing to learn and within six months they can be up to speed.

4.  Broad benefits - Chinese technology companies should compile an overall benefits package that practically supports and adds value to candidates including programmes such as working from home, flexible working hours for mothers, paternity leave, thereby shifting the rewards conversation away from just money. In China’s competitive technology industry, money is less effective in retention and recruitment, so many candidates will look at the overall fringe benefits and work-life balance that is on offer. These benefits show the employer cares for the employees, which adds another layer of essential attraction besides culture and money.

5.  Career plan - Working with line managers and training managers, hiring managers should articulate a clear career development plan and career path to candidates. For example, some of the large US technology firms in China send their local staff to attend the Consumer Electronics Show in Las Vegas, while others allow staff to work overseas for a period of time. 

While these challenges and solutions are drawn from the Chinese technology industry, they can also serve as a basis for hiring in other rapidly growing, highly competitive industries in China where retention and talent shortages are of chief concern.

For more details please contact:
Kensy Sy
Managing Director
Financial Services
Shanghai, North Asia
+86 212605 2153