Julian Buckeridge, Managing Partner, Shanghai, China

May 2022

Instrumental Components Currently Affecting China’s Talent Market

From China’s current geo-political maneuvering to its persistence in a COVID-zero strategy, we examine the fundamental elements that are of most relevance to MNCs operating in the country right now, and how these are affecting critical human capital issues such as benefits, compensation and workforce availability.

For multi-national corporations (MNCs) who have a presence in China, there are currently a number of instrumental economic, government and technology elements at play which are having large-scale impacts across almost every facet of their businesses.

Zero COVID Strategy

As the vast majority of the developed world bounces out of the pandemic, China is persisting with a zero COVID strategy, with mass-testing of whole-city populations, stringent lockdowns, and those who are infected being sent to government-run COVID centers. 

This is having a marked impact on the workforce dynamic, and has resulted in a significant delinking of China’s ability to meet the human capital needs of many companies, particularly MNCs. There has been an expatriate exodus, with some estimates suggesting as many as one in four have already left the country over the last two years. Few executives want an overseas posting now, and even less if any, want to go to China today.   

On the flip-side, there is a perception amongst Chinese nationals that China provides stability and safety compared to the ‘uncertain’ West. A higher percentage of students are returning to the country than ever before, usually soon after they have completed their studies. They value predictability over opportunity in the current climate. 

Geo-Political Tensions and Maneuvering

China’s somewhat muted response to the Ukraine-Russia conflict aside, there are a number of other geo-political developments which are of particular concern and interest to MNCs. China’s expansion in the South China Sea, it’s increasing control of Hong Kong, and a recent security pact with the Pacific Island nation state of the Solomon Islands have come amidst a backdrop of ongoing trade wars and tariffs with the US and Australia.  

All of this has increased political and operational pressures on the supply chain in China, especially in sectors such as technology (especially microchips) and health (especially vaccines and PPE). 

Considerable uncertainty persists: a stock crash for Chinese technology companies has taken place in recent months, especially stocks that are US listed but also Hong Listed. Beijing is cracking down on Chinese companies that are listed on US exchanges, threatening a $2 trillion market. 

On the flipside, the continuing emergence of the Chinese middle class has meant many high-end multinational consumer brands have established domestic manufacturing bases in the country. As an example, Diageo and Pernod Ricard have recently opened whisky distilleries in China and luxury houses are buying and developing Chinese brands.  The Chinese call this the dual economy strategy.  

Governmental Policies

The Chinese Communist Party (CCP) recently announced in their annual Government Work Report (GWR) that they will continue to support and promote MNC investment in high-end manufacturing. Tax rebates and favorable financing conditions were mentioned in the report, as part of a broader initiative to cultivate an increase in foreign direct investment capex growth. 

Overall, the GWR also emphasized a governmental focus on stability and predictability. Beijing’s view is that housing is not for speculation but for living in, income growth should grow no more than economic growth, and there should be a focus on reducing wage inequality. 

Perhaps most importantly for MNCs, the CCPs ‘stability’ theme also extended to the country’s labor market targets. In urban areas, they are aiming for the creation of 11 million new jobs this year, whilst keeping the unemployment rate to less than 5.5%. These are well within the benchmarks of what was achieved in 2021. However, the current lockdowns now make this target unlikely to be achieved. 

Digital Climate

The online landscape in China is dictated by the government’s firewall policy, which also allows the platforms preferred by the CCP to flourish. This sometimes presents considerable operational and branding problems for some MNCs: for example, H&M were pulled from the Chinese internet and removed from major e-commerce and service apps for comments relating to Uyghur Muslims in Xinjiang province. 

That aside, the digital landscape in China has immense scale and power. The main players include Alibaba, Tencent, Meituan, Baidu, Didi, Douyin, TikTok, and Little Red Book. Human capital talent across the country is being drawn to these established companies, as well as to newer tech companies, particularly those with technology experience. This is a major workforce challenge for traditional companies, since all organizations need digital expertise, and the shortage is particularly noticeable in China.

Also of note is the fact that many China traditional senior executives struggle to give direction on digital strategy, and find it challenging to connect with younger generations (so often the main demographic user base for technology companies). 

Compensation and Benefits Strategies

Traditionally, the strategies that companies in China employ around compensation and benefits to retain or attract executive talent has not been as creative or multi-faceted as outside China. However, this is changing as we have moved into a candidate-centric employment market. 

At the executive level, salaries have increased considerably in China. 75% of MNCs report that their China leadership is paid the same or more than their global HQ executives. Chinese companies now compete directly with foreign companies on compensation, and have the added advantage of being able to offer equity upside.  

MNCs that have ring-fenced their China businesses into separate business units, like YUM Brands China, IMAX China, and Budweiser Brewing Company APAC Ltd, which are all listed separately, can now build LTIP packages that incentivize the best talent in the market to join them. 

Talent Acquisition

In the current climate, mobility of talent in China has lessened, particularly at the executive level. Potential candidates are highly receptive and open to a conversation as most are in lockdown, but also increasingly risk averse when it comes to pulling the trigger in more uncertain ventures. As a consequence, it’s harder to convince executives to consider moving from their incumbent firms, and it’s more challenging to build an emotional connection with a prospective firm with no face-to-face meetings.  

Chinese candidates are very used to being approached by recruiters, so company advocacy and credibility are key metrics in any pitch. Firms looking to hire executives in China are prioritizing emotional investment and an ability to be physically present in the office. The CCP are not keen on remote work modalities, and this is reflected in business culture throughout China.


Arguably, 2022 will be the toughest year for businesses in China since the start of the COVID pandemic, and particularly so for MNCs operating in the country. COVID-related interruptions and bureaucracy is ongoing. As a result, a considerable amount of foreign executive talent has left China, and supply chain/trade war operational challenges have not gone away, and in some cases are intensifying. Additionally, after the summer of 2022 many of the international schools will struggle to fill empty teaching posts with international talent, further eroding the family infrastructure support for global talent in China. 

One way for MNCs to overcome these challenges is to bring the China leadership team into the global leadership team, but allow them to geographically operate from within China as global leaders. Alternatively, for businesses at scale to ring-fence China by listing it separately and building its own listed company leadership team. 

Due to the current circumstances in China, the traditional Western expat model popular with MNCs (whereby leaders come for two-to-three-year postings in the country with frequent home leave) is no longer a solution. Companies will have to have very long-term plans for developing Chinese solutions for the China market.

Julian Buckeridge and NGS Global’s team in China, with offices in Beijing, Shanghai and Hong Kong, can assist your organization with executive search, talent mapping and executive leadership consulting. 

Julian Buckeridge
Shanghai, China

Contact Julian

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