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BUSINESS & TECH

Doing Business in China: Local Tech Giants Join Multinationals at Head of the Class

By Doug Young

Universities across China are casting thousands of students to the corporate wind in graduation ceremonies nationwide during these last two weeks of June. As someone who once stood in the thick of the maelstrom during my days as a university professor, one of my strongest memories was the overpowering angst that gripped the student community as everyone raced to nail down their perfect job before the big date.

That seasonal factor seems like a good opening for this week’s column, which focuses on how China’s job landscape has changed these last few years and where foreign firms fit in. All of this, of course, is seen from the eyes of these wide-eyed students as they get set to make their working-world debut.

When I first arrived here 30 years ago, Chinese students getting ready to graduate were confronted with a very stark reality. The vast majority were sent to big state-owned work units, often in their hometowns, where they had little hope of serious career advancement. A tiny group managed to land jobs in foreign companies or joint ventures, which were seen as the gold standard back then.

Through the 1990s and into the first decade of the 21st century, big multinationals became far more prevalent in China, and the nation also eliminated the system that assigned fresh graduates to state-run companies. That left most people to fend for themselves, with a still largely two-pronged choice of big multinationals and large state-run enterprises. The pendulum tended to swing back and forth, favoring more dynamic multinationals during boom times and more stable state-owned companies during times of greater uncertainty.

Then something groundbreaking happened in the last few years, as a new generation of homegrown private companies began to emerge with the scale, resources and dynamic work environments that had previously been the exclusive domain of the big multinationals. I first became aware of this sea change around five years ago, when names like smartphone maker Xiaomi, search giant Baidu and telecom heavyweight Huawei began attracting not only top-ranking Chinese, but also foreigners to their ranks.

That reality was on prominent display in a newly published ranking of the top employer preferences among college students, whose favorites included Baidu, Alibaba and Tencent, sometimes known collectively as BAT, along with Huawei. Not only was this “BATH” of companies in the top 10 for all their relevant categories in the survey, but they also topped their lists in most cases.

A typical example was the engineering category, where BATH took the top four spots, according to the survey of nearly 80,000 students and 100 universities by employer branding specialist Universum. The best the foreigners could come up with was Microsoft at No. 5, along with Google, Apple and Siemens, which also made the top 10. It’s worth noting that BATH were really the only Chinese companies at the top of their class in any categories, and that foreigners still reigned supreme in certain areas like pharmaceuticals.

Not surprisingly, not very many state-owned enterprises made the grade. The few that did were mostly well-known sector leaders like Bank of China, Industrial and Commercial Bank of China (ICBC) and oil major Sinopec.

Still attractive

All that said, let’s delve down a bit and briefly explore what the students are looking for these days, and how that meshes with what the multinationals and a newer generation of foreign and domestic startups have to offer. To get the story, I talked to Universum’s main China rep and three of my students, and found a surprising uniformity in their answers.

The general consensus was that multinationals are still attractive, but by no means the only top choice out there. Such companies still enjoy a reputation for attractive work environments, most notably for their organization as well as advancement and training opportunities.

One of my students pointed out that managers in Chinese companies often feel they can make requests of any employees beneath them, even when they are separated by many layers of management. The result is that individual workers can sometimes get caught juggling many requests from different people. By comparison, he noted, Western companies tend to have tighter structures that keep workers reporting to a single direct manager, providing better insurance that they won’t get overloaded. The other two students also mentioned similar preference for the simpler structure at many foreign firms.

I was slightly surprised at a repeated refrain that job satisfaction is increasingly one of the most important factors. Salary and broader prestige, which had reigned supreme, are becoming more secondary. That makes the young Chinese of today look increasingly like their millennial counterparts around the world, reflecting just how quickly living standards here have risen to the point where money is no longer the primary consideration.

One student pointed out that despite the managerial and advancement advantages offered by foreign companies, one of their biggest drawbacks was limitations due to China’s common status as a satellite operation. That treatment is one you see throughout the world, limiting the potential for advancement unless someone is willing to relocate to larger offices or even the company’s headquarters.

One of my students nicely summarized the situation by saying the distinction between foreign and Chinese companies is becoming increasingly blurred in the eyes of graduating students. That owes in no small part to the rise of BATH-like corporate giants, as well as a growing field of entrepreneurial startups that are just as likely these days to be led by foreigners as local Chinese.

Doug Young has lived in Greater China for two decades, including a 10-year stint at Reuters, where he led China corporate news coverage. Send your questions or comments to DougYoung@caixin.com.

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