BIZCHINA / Top Biz News
US companies facing skills shortage
By Yin Ping (China Daily)
Updated: 2006-11-02 05:49
SHANGHAI: A skills shortage has emerged as the top challenge for US
companies operating in China, according to a report from the American
Chamber of Commerce in Shanghai.
The "2006 China Business Report" was released yesterday after the
organization polled 274 member companies throughout China.
Charles Mo, who heads human resources at the chamber of commerce, said
the skills shortage had, for the first time in five years, overtaken
bureaucracy as the No 1 headache for US companies in China.
"The vast majority of US companies said their China operations were
suffering from challenges in recruiting capable Chinese managers and
retaining them," Mo said at the press conference in Shanghai yesterday.
They account for around 80 per cent of those companies polled.
And the scarcity of entry-level and clerical staff has also had a
negative impact on US companies.
"Controlling salary increases was also a problem for 82 per cent of the
companies," Mo said.
Mo said the growth in operations in China had outpaced the supply of
desirable staff.
"US companies have to fight for talent against international and domestic
competitors," Mo said.
Bureaucracy, lack of transparency and inconsistent regulatory
interpretation were the second biggest challenge facing US companies, the
report showed.These challenges, along with other factors, are squeezing
the profit margins of US companies in China, according to the report.
More than half of those firms polled said their China margins were
threatened by price pressure from domestic competitors, price pressure
from major customers, or changes in salary and wages in China.These
factors have affected the bottom line of many US companies.
While half of those polled saw improved profitability in 2005 over 2004,
most saw profit margins increase by less than 10 per cent and only a
quarter reported higher margins for China than for their worldwide
operations.
Nevertheless, US companies are clearly bullish about China and the
country is a priority for many. When describing their five-year business
outlook in China, 94 per cent of those polled were either "slightly
optimistic" or "optimistic." And 79 per cent were more optimistic about
their business outlook in 2006 than a year before.
(For more biz stories, please visit Industry Updates)
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