Time for a raise

By Chen Ximeng Source:Global Times Published: 2017/12/28 18:23:39

Foreign workers in China see a steady increase in pay, but not in all sectors

Reports show that companies are expected to provide staff with an average salary increase of 6 percent in the Chinese mainland in 2018. Photo: VCG

Michael (pseudonym), an American who has been working in Beijing for almost four years, is satisfied with his current job as the chief marketing officer at an e-commerce platform.

Over the past two years, Michael has worked for three different companies doing marketing for the internet industry.

"I changed companies for career advancement opportunities and pay increases. Since arriving in China in early 2014, my salary has doubled. I started as a digital operations manager, and I am now a chief marketing officer. So, my salary increases correspond with my increased job responsibilities," said Michael.

Despite the slower economic growth, China is still ranked top in salary increases in the world, according to London-based global consulting firm ECA International.

The firm's salary trends survey in November shows that companies are expected to provide staff with an average salary increase of 6 percent in the Chinese mainland next year.

"A forecast average rate of increase in the Chinese mainland of 6 percent is higher than the 5.5 percent awarded on average in 2017," Lee Quane, regional director of Asia at ECA International, said in a news release. "This points to improved business sentiment in China, which perhaps shows that employers are more positive for the prospects of both the domestic and global economy in 2018."

Metropolitan spoke with several foreign workers and HR professionals to find out about the salary trends in 2017 and salary prospects for 2018.

Increased salary in key areas

For Michael, his current salary is 55,000 yuan ($8,406) per month with benefits and vested equity in the internet company.

He thinks that wages in China match or surpass second-tier cities in the US. "The only way for China's companies to acquire world-class talent is to pay similar wages," he said. 

According to the December survey data by Hays, a British recruitment firm, the share of candidates experiencing a 10 to 30 percent increase in salary at the end of 2017 compared to the beginning of 2017 is particularly evident in hot sectors such as real estate, education, manufacturing and IT.

"We certainly expect a dynamic mix of government, academic and private sector activity to drive increased hiring over 2018, but also salary growth in a number of industries," Simon Lance, managing director for Hays China, told Metropolitan.

"Talents with skills across a wide range of areas, from artificial intelligence (AI) and cyber security to many areas of business, will see employers not only competing even more fiercely for talents, but also striving to develop the most effective retention strategies," said Lance, adding that these talents are well positioned to command the most attractive remuneration packages in the coming months.

Nicolas Fusier, operation director of Dragonfly Group, an HR consulting firm in China, told Metropolitan that salaries have increased in 2017 but mostly in hot sectors.

"Foreign employees working in specific IT areas like AI and virtual reality (VR) or in a digital sector, who have both traditional industry and digital experience, have seen a salary increase. Finance is still a safe bet," said Fusier.

There seems to be an increasing number of foreigners working in China, especially in Chinese companies in the Internet of Things (IoT) business segment as these talents are still rare and command high salaries, added Eric Tarchoune, founder and managing director of the Dragonfly Group.

HR experts suggest that in order to increase pay, foreign workers should have better personal performance and a clear vision for their industry by joining a booming industry and a company able to adapt quickly to the market. Photo: VCG

Smaller pay gap

Another salary trend in recent years is that there might be a smaller gap between foreign workers and Chinese workers at the same level.

"More and more Chinese returnees can replace foreign workers because they have strong knowledge and working experience. They can easily interact in China and abroad. Besides, the gap has to be justified. It's really not a question of nationality," said Fusier.

Fusier found that the gap between foreign workers and Chinese workers is smaller than ever. Michael has also seen the salary gap close dramatically since first arriving.

"There is little to no salary gap at this time for foreigners and Chinese with comparable language, technical and soft skills," he said. "It's not only foreigners; Chinese IT, marketing and design talents are all reaching globally competitive wage levels."

Percy Gilbert, a British designer who has been working in China for over four years, has 14 years of work experience back in the UK. According to him, fashion designers earn between 400,000 to 1 million yuan per year. There is a smaller pay gap now, and some Chinese designers will even earn more than their foreign counterparts in future, Gilbert added.

As the honorary dean of Ying Sheng Fashion Institute and by helping train Chinese fashion students, Gilbert found that there are many talented new young Chinese designers. He also works with a mostly Chinese team and does not see himself as better than his colleagues.

"Being respectful of the place one has chosen to live and work goes a very long way. Just like a good football team, we complement each other," said Gilbert.

Costly expats

Alok Joshi, an HR and marketing professional with over 20 years of experience in different countries including about 10 years in China, found that State-owned Chinese companies are less interested in hiring foreigners in China.

He worked for four State-owned companies in China and after he left, they did not hire any other foreigners. In two of these companies, he was the first and last foreigner they hired, he recalled.

"If required, they prefer to hire foreigners in their overseas branches than in China because of expensive expat packages and language and cultural barriers," said Joshi.

Joshi had hired seven foreigners for one of the State-owned companies in project management and the company gave them very high salaries for their expertise and experience, but six of them left within a year. The foreign workers told him that they found it difficult to adapt to the Chinese work culture.

He also said that international companies operating in China, particularly in the automobile sector, are reducing expat presence because of cost considerations. They want to reduce their overheads and strive for more localization.

Besides less demand for foreign workers in some companies, high living costs also pose a big challenge.

Joshi said a lot of the foreigners wanting to come to China are at lower levels in their careers and want to relocate to improve their career prospects and gain experience in a fast-growing country.

"Rental properties in big cities like Beijing have skyrocketed and are becoming impossible even for foreigners to manage unless their companies pay their rent," said Joshi. "However, foreign experts are still sought in IT and internet companies."

What to do

HR professionals and employees suggested being flexible and taking a long-term look on pay raises. As for companies trying to retain staff, there are many ways to do so.

Joshi said that foreigners should not expect their pay packages to increase much in 2018.

Although Michael receives one to two solid job offers a month, he does not plan to change jobs next year. However, if he did, he would target a 15 percent to 25 percent pay increase.

"I expect a 5 percent to 10 percent pay raise in 2018 at my current company. However, at this time, I'm not looking for increased pay or career development. I look for larger marketing budgets and freedom to do what I believe is right for the organization I work with," he said.

"My goal from day one in China was to find a career niche where I could be a big fish in a small pond. That meant becoming hyper-specialized in the skills and knowledge I acquired and mastering management skills." 

He added that the tactic is simple. Become one of the very few people that can do what you know how to do, then create your own publicity via social media content publishing and public speaking.

Fusier predicted that people working in IT, digital sales and finance will probably see a salary increase in 2018.

He noted that foreign professionals and jobseekers need to have a long-term vision. Some candidates with more than 10 years of experience joined a new company without hoping for a raise. They joined a new company or sector with a bright future.

"To increase their salary, foreign job seekers and employees should have better personal performance and a clear vision for their industry. They can join a booming industry and a company able to adapt quickly to the market," he said.

Gilbert is optimistic about the future.

"There is so much excitement about what is happening in China within the arts, fashion and creative industries. As we see a rapid transformation from 'made in China' to 'created in China,' the job prospects for home-grown talent and also for skilled foreigners within the arts and fashion industry look really great," he said. "There are plenty of opportunities not just for jobs but also for being inspired."

He thinks that increasing pay is an easy way of attracting foreign talent, but for him, there has to be more than that.

"For companies, offering lifestyle benefits for high-quality foreign talents is a good start. For example, offering them life, medical and dental coverage. Offer employees a way to move up. Talented people normally want to know that there are opportunities for advancement," he said.

"A lot of companies develop coaching and training programs to keep their staff. Fewer executives will have to move to a new company to get a better salary. Team longevity is a key to retaining staff for all successful companies," Fusier added.  


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