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© MERCER 2019 1
Shanghai HR
Conference C H I N A A N D G B A TA L E N T
T R E N D S
M E R C E R G L O B A L H R C O N F E R E N C E S
1 8 S E P T E M B E R
Elley Cao, Senior Principal, China Career Product Leader,
Mercer
Jackson Kam, Senior Principal, Talent Strategy Practice
Leader, AMEA, Mercer
© MERCER 2019 2
China Overview
© MERCER 2019 3
C H I N A O V E R V I E W
G D P G R O W T H 2 0 1 6 – 2 0 2 0 ( I M F )
6.7
6.8
6.6 6.3 6.1
2016 2017 2018 2019 2020
G R E AT E R B AY A R E A
( G B A )
T H E U S – C H I N A
T R A D E W A R
7.6 6.8 8.8 10.7
per-capita disposable income per-capita spending
Urban Rural
G R O W T H O F R E S I D E N T I A L I N C O M E
A N D S P E N D I N G 2 0 1 8 ( y . o . y . % )
CHINA
© MERCER 2019 4
G D P F O R E C A S T B Y 2 0 3 0
6.9
7.2
7.9
8.2
9.1
10.1
31.0
46.3
64.2
0 10 20 30 40 50 60 70
Germany
Japan
Russia
Egypt
Turkey
Indonesia
USA
India
China
Top 10 Countries by Nominal GDP Using PPP Exchange Rates by the Year 2030
Source: Standard Chartered, Jan 2019
Note: Estimates are in trillions of international dollars, using purchasing power parity measures
© MERCER 2019 5
T H E B I G P I C T U R E : C H I N A F O R E C A S T G D P
A N D I N F L AT I O N
10.6
7.9
12.3
8.6
9.8
11.3
7.9
6.4
5.1
0
2
4
6
8
10
12
14
0
2
4
6
8
10
12
14
1980-85 1985-90 1990-95 1995-00 2000-05 2005-10 2010-15 2015-20 2020-25
GDP & Inflation Trends, %
Real growth Inflation (CPI)
% growth % inflation
Source: IMA Asia, China Forecast Update, Q2 2019
© MERCER 2019 6
T H E B I G P I C T U R E : C H I N A F O R E C A S T
P O P U L AT I O N
0
0.5
1
1.5
2
2.5
0
5
10
15
20
25
1980-85 1985-90 1990-95 1995-00 2000-05 2005-10 2010-15 2015-20 2020-25
China: Population Trends
Increase persons Population growth rate
mn persons pa % growth pa
Source: IMA Asia, China Forecast Update, Q2 2019
© MERCER 2019 7
C H I N A H A S B E E N R E D U C I N G I T S R E L A T I V E
E X P O S U R E T O T H E W O R L D W H I L E T H E W O R L D
H A S B E E N I N C R E A S I N G I T S E X P O S U R E T O
C H I N A
0.4
0.7
1.1
1.2
0.8
0.9
0.7
0.6
2000 2007 2012 2017
China-World Exposure Index (trade, technology, and capital)
World exposure to China China exposure to the world
Weighted average
exposure of 7 large
economies1 = 1.0
1 China, France, Germany, India, Japan,
United Kingdom, and United States
Source: China and the World, McKinsey Global Institute, Jul 2019
© MERCER 2019 8
The US – China Trade War
© MERCER 2019 9
U S – C H I N A T R A D E WA R
Copyright © 2019 Mercer
Escalations Tariff pre-Sept 1 Tariff after Dec 15
1st - $34bn 25% 30% (Oct 15)
2nd - $16bn 25% 30% (Oct 15)
3rd - $200bn 25% 30% (Oct 15)
4th - $300bn 0% 15%
Source: IMA Asia, China Forecast Update, Q3 2019
© MERCER 2019 10
U S D T O C N Y
• USD/CNY breaks
7 on Aug 5, 2019
• UBS forecast the
US-yuan to move
to 7.2 at end
2019 and 7.3 in
2020 in the case
of trade war
escalation
© MERCER 2019 11
C H I N A ’ S P R O M I N E N C E I N O V E R A L L
C O M PA N Y S T R AT E G Y
16% 17% 14%
19% 14%
78%
67% 74% 71%
68%
6%
12% 10%
9%
13%
4% 2% 1% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2016 2017 2018 2019
China’s Prominence in Overall Company Strategy
Not a priority
One of many non-key priorities
Among top 5 priorities
Top priority
Member Survey, US-China Business Council, August 2019
© MERCER 2019 12
H A S Y O U R C O M PA N Y M O V E D O R D O E S I T
P L A N T O M O V E A N Y O P E R AT I O N S O U T O F
C H I N A ?
5% 2% 4% 4% 3%
7% 6% 4% 6% 10%
88% 92% 92% 90% 87%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2016 2017 2018 2019
Has your company moved or does it plan to move any operations out of China?
No
Yes, to another location
Yes, to the United States
Member Survey, US-China Business Council, August 2019
© MERCER 2019 13
G L O B A L L O G I S T I C S R A N K I N G
Source: The World Bank (2018)
3.29
3.75
3.54
3.59
3.65
3.84
3.14 3.14
3.46
3.41
3.47
3.81
2.95
3.01
3.16
3.4
3.45
3.67
2.8
3.3
3.8
Customs Infrastructure International shipments Quality and competence Tracking and tracing Timeliness
Global logistics ranking for China, Thailand and Vietnam
China Thailand Vietnam
© MERCER 2019 14
W H AT D I D G M G E T W R O N G ?
“General Motors, which was once the Giant of Detroit, is now one of the smallest auto
manufacturers there. They moved major plants to China, BEFORE I CAME INTO OFFICE.
This was done despite the saving help given them by the USA. Now they should start
moving back to America again.”
Trump tweet, 30 Aug 2019
Just the facts…
• GM is shutting 4 plants, leaving 29 in the US. It has 27 in China.
• GM China serves only China (apart from 30,000 Buick Envisions sent to the US).
• GM China has produced $16bn in profits for GM since 2010.
• GM never “moved” US production in China. It has downsized in North America due to
automation and lost market share.
Source: IMA Asia, China Forecast Update, Q3 2019
© MERCER 2019 15
Guangdong-Hong Kong-Macao
Greater Bay Area (GBA) and
Shenzhen
© MERCER 2019 16
B A S I C I N F O R M AT I O N A B O U T G B A Cities and General Information
Source: Xinhua, People Daily
Greater Bay Area
GUANGZHOU HUIZHOU
DONGGUAN
SHENZHEN
ZHAOQING
FOSHAN
JIANGMEN ZHUHAI
ZHONGSHAN
MACAO HONG KONG
• GBA outline development
plan was issued on February
18 2019
• 9+2 Cities: HK + Macao,
plus 9 cities in
Guangdong province
• GDP: 1.64 trillion USD
• Area: 56,000km2
• Population: 71.12 millions
• Shenzhen: to build a
Demonstration Pilot Zone for
Socialism with Chinese
Characteristics (guideline
issued on August 18, 2019)
© MERCER 2019 17
B A S I C I N F O R M AT I O N A B O U T G B A
81,720.8
86,720.7
93,526.1
101,843.0
109,070.3
2014 2015 2016 2017 2018
2014 – 2018 GDP (GBA)
GDP Growth and Population
Billion
RMB
1,490
1,077
834
766 748
476 456 412
326
177
65
835
926
654
439 379
286 244 220 213
110
39
Population in each city in GBA
2018 Resident population (10k)
2016 Employed population (10k)
Economy Growth Labor Force
© MERCER 2019 18
O V E R A L L G O A L A N D T I M E L I N E
• Building a dynamic world- class city group
• Becoming a global international technology and
innovation hub
• Providing support for the implementation of the
“Belt and Road” initiative
• Deepening cooperation between mainland China
and Hong Kong and Macao in the Qianhai,
Nansha and Hengqin development zones
• Building a quality living environment that is
suitable for residents as well as business and
tourism.
GBA
Five Strategic Orientations
• Better develop the GBA and enrich the practice
of the "one country, two systems" principle
• By 2025, become one of the leading cities in the
world in terms of economic strength and quality
of development
• By 2035, become a national model of high-
quality development, as well as a hub of
innovation, entrepreneurship and creativity with
international influence.
• By mid-21st century, become one of the top
cosmopolis in the world and a global pacesetter
with outstanding competitiveness, innovative
capacity and influence
Goal of
Shenzhen Pilot Zone
© MERCER 2019 19
W O R L D W I D E B AY A R E A S General Comparison
Bay Area Area
(10 thousand km²) Resident
population (10k) GDP
(Trillion USD) Per capita GDP (Trillion USD)
Container Throughput
(10k Container)
Airport Passenger Throughput
(Billion)
GBA 5.60 7,112 1.64 2.33 6,648 2.17
Tokyo Bay 1.35 4,383 1.77 4.24 776 1.23
New York Bay 2.15 2,370 1.72 8.21 625 1.32
SF Bay 1.80 770 0.88 10.53 242 0.81
18,000 21,500
56,000
36,800
7.7 23.7 71.0 43.8
8,800
17,200 16,400 17,700
SF Bay NY Bay GBA Tokyo Bay
Area (km2)
Population (Million)
GDP (Billion USD)
© MERCER 2019 20
G B A A D VA N TA G E S GDP Growth and Population
• 3+2 Economic circles and areas
• Close to the world top shipping
lane
• The intersection of Silk Road Belt
and Maritime Silk Road
• 2017 GBA appeared in the
government working report
• 2018 GBA construction leading
group hold the 1st time conference
• 2019 the GBA development
planning outline was published
• Guangzhou-Shenzhen-Hong Kong
high speed railway
• Hong Kong-Zhuhai-Macao Bridge
• Guangzhou-Zhuhai-Macao high
speed railway
Geographic Policy Transportation
© MERCER 2019 21
B U S I N E S S O P P O R T U N I T I E S A R I S I N G F R O M
T H E D E V E L O P M E N T O F G B A
A SINGLE BIGGER MARKET
• More cost-effective to target GBA as a single market
instead of individual cities
• E.g. set up insurance customer service center to serve
GBA clients in premium payment, etc.
COST OPTIMIZATION POTENTIAL
• Enhanced transportation network makes relocating to
cities with lower cost of business viable
• E.g. move logistics delivery hub from HK to western
cities where rent is significantly lower
ACCESS TO SPECIALISED TALENT POOL
• Enhanced transportation network and lowered criteria
for GD/HK/MC residents to work within GBA allows for
free flow of talent
• E.g. FS (from HK), Tech (from Shenzhen)
CROSS-BORDER COLLABORATION
• Clear market positioning for each city in GBA
encourages collaboration rather than competition
• E.g. launch liner routes that passes through ports
within GBA, hence boosting the cruise economy
GATEWAY TO THE WORLD
• Leverage HK/MC and their global trade ties for China
to open up its economy and go international
• E.g. leverage MC’s ties to develop FS platform for
China and Portuguese-speaking countries
NEW PLATFORMS FOR COOPERATION
• 3 pilot districts within GBA will be developed as
demonstrative zone for cooperation
• E.g. Qianhai (modern service industry), Nansha
(innovation & FS) and Hengqin (tourism)
© MERCER 2019 22
Talent Trends in Greater Bay
Area (GBA)
© MERCER 2019 23
A G R O W I N G TA L E N T P O O L
Rank City 2018 Population
(million)
2017 Population
(million) Increase (‘000) Growth Rate
1 Shenzhen 13.025 12.528 496.7 3.96%
2 Guangzhou 14.9044 14.498 406 2.8%
3 Xi’an 10.004 9.6167 387 4.02%
4 Hangzhou 9.806 9.468 338 3.57%
5 Chengdu 16.33 16.045 285.3 1.78%
6 Chongqing 31.0179 30.752 266.3 0.87%
7 Zhengzhou 10.136 9.881 255 2.58%
8 Foshan 7.9057 7.6567 249 3.25%
9 Changsha 8.1547 7.9181 236.6 2.99%
10 Ningbo 8.202 8.005 197 2.46%
Cities in Guangdong Province had the largest population growth during the past year.
© MERCER 2019 24
M E G AT R E N D S T H AT M A K E A R E A L
D I F F E R E N C E I N G B A
N E W P O L I C I E S
E N C O U R A G E T H E F L O W O F
E V E RY T H I N G ( E S P E C I AL LY
TAL E N T )
T E C H G I AN T S &
I N N O VAT I O N P U S H
AC C E L E R AT E J O B S
T R AN S F O R M AT I O N
N E W C I T Y P O S I T I O N I N G
D I S R U P T S T H E VAL U E
C H AI N AN D TAL E N T
D I S T R I B U T I O N
© MERCER 2019 25
GUANGZHOU HUIZHOU
DONGGUAN
SHENZHEN
ZHAOQING
FOSHAN
JIANGMEN ZHUHAI
ZHONGSHAN
MACAO HONG KONG
T H E D I V I S I O N O F L A B O R W I T H I N G B A H A S
I M P L I C AT I O N S O N TA L E N T C O N F I G U R AT I O N
Hong Kong: World’s
financial, shipping and
trade hub
Macau: World’s travel
and recreation center
Zhuhai: New engine
of GBA economy
Jiangmen: GBA cross-industry
cooperation platform
Zhaoqing: Door to
South-West of China
Zhongshan: West-GBA
tech innovation center
Dongguan: World’s advanced
manufacturing center
Shenzhen: World’s
tech and industry
innovation hub
Huizhou: Modern ecological city Guangzhou: GBA multi-
functional center
Foshan: National manufacturing
innovation hub
© MERCER 2019 26
… A N D T H E C I T I E S ’ F U T U R E P O S I T I O N I N G
A L O N G T H E VA L U E C H A I N M AT T E R S
Basic R&D Application
R&D
Engineering Procurement
& Logistics
Production Assembling Marketing Sales Delivery After
Service
Manufacturing industry value
chain example
Shenzhen: electronic
information,
biomedicine, new
energy, new materials
Huizhou: digital,
petrochemical, clothing,
shoes,
Cement, automotive
and parts
Guangzhou:
Automotive,
petrochemical,
electronics, electrical
machinery and
equipment
manufacturing,
transportation
Foshan: furniture, home
appliances, lighting,
ceramics, machinery and
equipment
Zhaoqing: auto parts,
electronic information,
agricultural products,
metal processing, food
and beverage, chemical
industry
Jiangmen: cars,
motorcycles, ships,
microphones, hardware
and bathroom, textiles,
electronic information,
petrochemicals, printing,
new materials, shoes
Zhongshan: medicine,
electronics, electrical
appliances, chemicals,
hardware, lighting,
clothing, furniture
Zhuhai: electronic
information, home
appliances, biomedicine,
petrochemical,
machinery
manufacturing, power
energy
Dongguan: electronic
information, electrical
machinery, furniture,
textiles, paper, toys,
chemicals, food and
beverage
Hong Kong and
Macau: sales and
marketing, customer
service
Primary
Positioning
H O W W I L L I N D U S T R Y AD V AN T A G E
AN D V AL U E C H AI N P O S I T I O N I N G
O F E AC H C I T Y E V O L V E I N T H E
F U T U R E ?
© MERCER 2019 27
P O L I C I E S T O E N C O U R A G E TA L E N T F L O W
Individual Income Tax (IIT) policy in GBA
High-level and urgently-needed talent working in the GBA
is eligible to apply for fiscal subsidies if their IIT rate is
higher than 15%
The application for subsidy is on an annual basis
It will be granted by municipal governments of nine GBA
cities in the mainland and those subsidies are exempted
from IIT
The fiscal subsidies will cover incomes as salaries,
remuneration for personal services, royalties, business
income, as well as allowances for honorary talent
programs
• Guangzhou, Jiangmen and Zhongshan
has announced detail for IIT policy
• Talent definition (Basic Requirement)
• HK/Macao PR
• Hong Kong residents who are part
of the Hong Kong Admission
Schemes for talents, professionals
and entrepreneurs;
• Residents of Taiwan region
• Foreigners
• Returnees with overseas education
background and obtained foreign
permanent residence status, and
overseas Chinese;
© MERCER 2019 28
P O L I C I E S T O E N C O U R A G E TA L E N T F L O W
( C O N T ’ D ) Shenzhen and other GBA cities’ attraction policy
Shenzhen
• Support Shenzhen in
implementing a more open
and convenient system for
the introduction of foreign
talent and allow
international contributors
with permanent residence
to set up scientific and
technological enterprises
and serve as legal
representatives
Hengqin – Zhuhai
• Talents outside Zhuhai and graduated from top ranking
universities within 5 years (former 985 & 211) or top
500 universities in the world can apply to move to
Hengqin New District
• Enjoy living and renting allowance
• Special talent reward
• Supporting fund for high-level talents who start up new
companies in Hengqin
• Reward to the winning team in innovation competition
© MERCER 2019 29
T H E S E R E S U LT I N A C O M P L E X W E B O F
TA L E N T F L O W S I N T H E E C O S Y S T E M
• Inflow from other parts of China and overseas (GBA as a talent
magnet)
• Convergence of “industry talent” towards expertise centers with
distinct city positioning
• Competition (back-and-forth flow) of “industry talent” among
cities with similar or overlapping positioning (particularly in
financial services and technology/innovation)
• Dispersion and continuous flow of “functional talent” (e.g.
digital marketing) within GBA
• Relocation of lower-value jobs to lower-cost areas
• Integration of South East Asia and overseas talent supply
chain along One Belt One Road
© MERCER 2019 30
C O N S I D E R AT I O N S T O TA K E B E S T
A D VA N TA G E O F T H E M E G AT R E N D S
VALUE POSITIONING, CRITICAL TALENT AND THE
PRICE TAG
TALENT DEPLOYMENT INTER- AND INTRA-REGION
1 2
3 4
INTERNAL TALENT
PARTNER-
SHIP TALENT
FREELANCE
TALENT
CO-OPETITION
TALENT
CROWD-SOURCE
TALENT
DIVERSE CHANNELS TO SOURCE TALENT
WAYS OF WORKING
Time
Place
Job
Contents
Delivery
Method
Skills
© MERCER 2019 31
GBA Compensation and
Benefits Trends
© MERCER 2019 32
T I E R 2 C I T I E S H AV E T H E H I G H E S T C A G R O N
M I N I M U M W A G E S , W H I L E S H E N Z H E N R A N K S
T H E H I G H E S T
1,000
2,200
2014 2015 2016 2017 2018
The minimum wage level of 2014-2018 in Guangdong Province
Shenzhen Guangzhou Zhuhai Foshan, Dongguan, Zhongshan Huizhou, Jiangmen, Zhaoqing
• The minimum wage
in Hong Kong is
over 5 times more
than that of
Shenzhen
• The minimum wage
in Macao is over 2
times than that of
Shenzhen
Source: Labor Department, The Government of the Hong Kong Special Administrative Region; The Social Security Fund of the Government of the Macao SAR
In RMB
5.0%
7.9%
5.7% 7.0%
3.5%
8.2%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Shenzhen Guangzhou Zhuhai Foshan,Dongguan, Zhongshan
Hong Kong Huizhou, JiangmenZhaoqing
CAGR of minimum wage (2014-2018)
© MERCER 2019 33
T H E O V E R A L L S A L A R Y G R O W T H R AT E O F
G B A R E M A I N E D S TA B L E , W I T H T H E H I G H E S T
S A L A R Y I N C R E A S E R AT E I N G U A N G D O N G
2015 2016 2017 2018 Planned 2019 Estimated
Guangdong 6.7% 5.7% 5.9% 5.9% 5.9%
Hong Kong 4.1% 4.0% 3.7% 3.8% 3.9%
Macao 4.3% 3.6% 3.3% 4.1%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Salary Increase Rate in GBA, 2015 – 2019
Source: Mercer TRS Survey and Mercer Asia Pulse Survey
© MERCER 2019 34
T H E O V E R A L L S A L A R Y L E V E L O F G U A N G D O N G I S
I N C R E A S I N G E V E R Y Y E A R , W H I L E T H E S A L A R Y
C O M P E T I T I V E N E S S O F T I E R 2 C I T I E S G R A D U A L L Y
A P P R O A C H G U A N G Z H O U / S H E N Z H E N
Source: Mercer TRS Survey
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
40 45 50 55 60 65
Salary Level in GBA (in RMB)
Hong Kong Guangzhou/Shenzhen Tier 2 cities in Guangdong
177%
136%
82%
38%
-14.3% -15.5% -14.0% -7.0%
-50%
0%
50%
100%
150%
200%
Para-Prof. Prof. Mgmt Top Mgmt
Average pay gap
Hong Kong Tier 2 cities in Guangdong
Guangzhou
/Shenzhen
© MERCER 2019 35
T H E A N N U A L T O TA L C A S H O F E M P L O Y E E S I N
G B A ( G U A N G D O N G ) I S M U C H L O W E R T H A N
O T H E R 3 W O R L D - C L A S S B AY A R E A
Source: Mercer TRS Survey
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
Operator-entry
Operator-experienced
Operator-senior
Professional Management Top Management
4 Bay Areas – Annual Total Cash
GBA Tokyo Bay Area New York Bay Area San Francisco Bay Area
0
100,000
200,000
300,000
Operator-entry
Operator-experienced
Operator-senior
Professional Management Top Executive
Difference on Annual total cash by category
Max-Min
The low labor cost in GBA means there is still
much room for development in the
transformation and upgrading of industrial
structure as well as attraction and retention of
outstanding talents.
USD
© MERCER 2019 36
Wrap Up
© MERCER 2019 37
I M P L I C AT I O N S T O H R
• Ensure foundational
architecture is in
place
B E I N N O VAT I V E
A N D A G I L E
G I V E N E W L I F E
T O Y O U R E V P
B U I L D F O R
T H E F U T U R E
• Create agility in HR
systems
• Meet employees
where they are
• Transform the HR
journey to deliver
better experiences
• Create more flexible
& personalized
reward solutions
• Redefine the HR
function to align with
business changes
• Craft a future-
focused
people strategy
F O C U S O N T H E
F O U N D AT I O N
© MERCER 2019 38