Foreign Firms Lose Luster for Chinese Executives

Executive Options: Executives are finding that China's state-owned firms now offer advantages over foreign employers.

The tide has turned in the tug-of-war between foreign and state-owned firms to attract executive talent in China, according to a report by executive search firm Korn/Ferry.

“Chinese firms are luring talented managers and executives away from multinational corporations by offering generous compensation, more decision-making power and a faster career track,” said the report published in June.

One reason for the turnaround is that as Chinese firms thrive overseas and at home they can offer salaries, benefits and opportunities comparable to those offered by multinationals. The Korn/Ferry report cites a global food and beverage company that lost a key executive to a Chinese firm offering four times the salary.

Another big inducement is the prospect of working for a Chinese company preparing to go public. A Korn/Ferry survey of 43 senior executives and managers working in China found that 45 percent would consider joining a pre-IPO Chinese company.

Many multinationals have been forced to retrench due to the global recession, forcing them to lower salaries and bonuses, or even lay off staffers. China’s mostly state-owned corporations, on the other hand, are able to raise compensation due to continued growth at home and abroad. The better job security is one reason cited by executives who switch to Chinese state-owned firms. Other factors include shorter hours, less office politics and not having to face barriers to being fully accepted as equals in foreign firms.

As a result the 2010 list by online recruiter ChinaHR.com of the 50 best employers in China included only 10 foreign firms. In 2003 the list contained 34 foreign firms.