How Are Local Companies Overpowering MNCs in China?

The Made in China 2025 programme has spurred the semiconductor industry to expand aggressively in the market—with local companies luring top talent away from MNCs. How are they doing this?

How Are Local Companies Overpowering MNCs in China?

28 Sep 2018 by  Judy Zhang

Launched by China Premier Li Keqiang in 2015, the Made in China 2025 programme is an industrial upgrading strategy that aims to shift China’s economy into higher value-added manufacturing sectors, such as robotics, aerospace, and energy-saving vehicles. This involves government subsidies, heavy investments in research and innovation, and targets for local manufacturing content, and builds on earlier government policies encouraging or requiring foreign companies seeking to access the Chinese market to enter join ventures with, and transfer technology to, domestic firms*.

More recently, the Made in China 2025 programme has spurred the semiconductor industry to expand aggressively in the market. One of the reasons for this is that government policies have encouraged the establishment of more and more local companies, through both government subsidies and investments from private equity firms.

As a result, multi-national companies—which already hold mature talent pools, especially in R&D—have suffered in the war for talent in the semiconductor industry as attrition rates rise and top talent is lost to the more attractive pay, perks, and possibilities offered by local companies.

How are local companies attracting top talent?

They do this in 3 ways:

  1. Aggressive pay techniques: Local companies are offering an average of 40% more in cash pay compared to the industry average.

  2. Family matters: Many semiconductor companies are opening new plants in China’s east coast and central regions, which means candidates may need to relocate to take the job. To remove all obstacles, local companies take care of all relocation arrangements, not just for employees but for their families as well—including getting their children places in good schools.

  3. Career opportunities: Local companies deliver more promising career development paths. These companies also use equity to offer employees a sense of ownership for the success of the organisation.

As the world’s second-largest economy, China has the potential to be home to an unprecedented level of talent. The semiconductor industry is just one example of how local companies are using creative and innovative ways to build their talent pools, and it is a valuable lesson for local tech companies in other industries that are striving to benefit from the Made in China 2025 programme as well.

Source:
* https://www.washingtonpost.com/news/monkey-cage/wp/2018/05/03/what-is-made-in-china-2025-and-why-is-it-a-threat-to-trumps-trade-goals/?noredirect=on&utm_term=.9e892157f8b0 , 3 May 2018

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Radford, part of Aon plc

Radford partners with technology and life sciences companies to reimagine their approach to rewards, empowering them to achieve superior levels of people and business performance. Radford is part of Aon plc (NYSE: AON).

Judy Zhang

Judy (Leilei) Zhang has been with Aon for more than 7 years, with diversified working experiences including compensation and benefits diagnoses, engagement study, job evaluation, salary structure design, short-term incentive plan design (including sales incentives), HR strategy, project management, and leadership assessment and development. Her clients include private companies, state-owned enterprises, as well as foreign enterprises—such as McDonald’s, Fiat Chrysler, Mercedes Benz, China Resources, Merck, Medtronic, Karl Storz, Sanofi, OCBC Bank, Poly Property, CIFI, Yango, Hong Kong Land, and Shanghai Jiahua.

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Judy Zhang
Judy Zhang
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