Advanced Techies

Difficulties when Doing Business in a foreign market.

Fulfilling the demand for technological “hot skills”

At WAGAS, we provide financial and technical solutions on entering a foreign market.

Difficulties doing business in China

In 2018, the technology industry in China took significant leaps. MarketWatch named 11 U.S. companies in its list of Top 20 biggest tech companies—including Apple, Google, and Facebook. However, the remaining nine are all Chinese companies—including tech giants Tencent, Baidu, and Alibaba.

With nine of the world’s top twenty technology companies originating from China, and the World Economic Forum having launched a Beijing hub for government officials, businesses, and academics to develop suggestions for future tech policies, it all seems that hiring talent in China is no longer an issue.

However, skills that are greatly in-demand, or ‘hot skills,’ vary between regions & cities. A hot skill is one that is scarcely available for at least one of four reasons:

The technology is so new that very few people have experience using it (novel scarcity);

Very few people have experience with the technology within a given geography (regional scarcity);

Very few people with experience are using the technology in a given industry (slow adaptation)

Demand is largely due to outside pressures such as a regulatory change, so the demand for talent with the skill(s) outstrips supply

Radford, a part of Aon, conducts regular surveys of technology companies in China to assess the hot skills companies are most interested in acquiring and the impact this has on the talent crunch. The Radford Global Technology Survey provides human resources and compensation professionals with access to rewards insights covering more companies, incumbents and countries on a single survey platform than any other data provider. The survey spans 7.7 million responses from 2,272 organisations across 3000+ jobs in 86 countries. A recent edition of this survey showed that the Top 3 hot skills in China, are Data Science, Artificial Intelligence, and Data Visualisation.

The Radford study found an overlap for “Data Science/Big Data” and “Cloud Engineering,” which appeared in the Top 10 hot skills list for China and abroad. And while “Data Visualisation” and “Auto Pilot” did not make the Top 10 when it came to the hot skills, they were in the list of Top 5 Skills that received significant pay premiums both in the E.U./U.S. and in China. – In fact, China offers a 28.5 percent pay premium for skills in Auto-Piloting and a 28 percent pay premium for skills in Data Visualisation. On the other hand, the corresponding pay premium in the U.S. for these same skills are a mere 14 percent and 14.9 percent respectively.

What’s more, China’s cash-focused compensation strategy is a highly attractive one—in addition to pay premiums, technology industry employees can look forward to generous project and retention bonuses, and also benefit from profit distribution or excess profit sharing. In this regard, E.U./U.S.’s choice to focus on equity premium could fall short of a key factor in attracting and retaining top talent in a hotly contested market like China.

Even though tech companies are in search of technical skills, companies also look for behavioural traits. Problem-solving capability is in high demand, both in China and E.U./U.S. —as well as other qualities such as leadership capabilities, high emotional intelligence, good written communication skills, strong negotiation skills, and the ability to work well in teams. Although it’s not realistic to attach pay premiums to each of these skills, candidates and employees who demonstrate them are more likely to be rewarded—and in China, this means higher cash.

We are now about three years into Chinese Premier Li Keqiang’s ‘Made in China 2025’ programme, an initiative designed to reduce China’s dependency on imported technology by closing the skills—and therefore, talent—gap between China and the E.U./U.S. All 10 prioritised industries in this initiative, from robotics to biopharma and energy-saving vehicles, demand that the tech workforce in China have the skills to compete with those in E.U./U.S. —and during this time, China has made significant strides.

All thing being equal, foreign companies wanting to establish operations in China will find it difficult to hire “hotly skilled” tech experts as the indigenous companies are already saturating demand with high premiums payslips.