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Executive Pay in China More Globally Competitive

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In a recent BlueSteps study of over 100 senior executives working in China, seventy percent stated that executive pay had become more competitive over the last 5 years, and 89% indicated their intent to stay in China for over 3 years. The majority of respondents were expats working in China (77%), in general management roles including CEO/COO (63.4%), earning over USD $150k (74%).

In a comparison of six nations, senior executives ranked China as the fourth highest paying country, ahead of other emerging markets, Brazil (5th) and India (6th), yet behind developed nations Germany (3rd), UK (2nd) and USA (1st).  70 percent of respondents indicated that compensation in China has moderately or significantly increased in competiveness in the last 5 years.

Peter Felix, President of the AESC commented:  “Our survey provides useful insight into the reality of senior executive opportunity in China for expatriates and helps us to understand better the dynamics of the Chinese market. What is significant is that executives perceive China as a positive environment in terms of compensation and longer term career potential”

A majority of respondents (53%) have found it difficult to gain access to executive positions in China. The most inhibiting factors are the difficulty of building a strong network (38.7%), the language barrier (32%), and employers favoring local talent (29.3%). Visa difficulties were not seen as a top obstacle by any of the respondents (0%).

While maintaining a strong network in China is difficult for expats, it is also the most common way executives found their current position. They were either contacted by an executive search consultant (35.5%), received an internal transfer (31.6%), or relied on a personal referral or contact (27.6%).  Only 5% found their position through a job posting or an online network.

Despite any difficulty to obtain positions, 57% intend to stay for 5 or more years, with another 32% intending to stay 3-5 years.

According to the executives surveyed, Wholly Foreign Owned Enterprises (WFOEs) are the most attractive organization to work for in China (83.2%) over Joint Foreign-Domestic Ventures (11.6%), Domestic Private Enterprises (4.2%) or State-owned Enterprises (1%),.

The top reasons given were that foreign-owned Multinational Corporations (MNCs) offer the highest pay, the management style and corporate culture is closer to international standards and practices, and that MNCs offer greater global opportunities and scale.

When asked what is the most attractive aspect of working in China, the majority of respondents praised china for its “dynamic” high growth economy driven by a positive outlook, great purchasing power and a fast-paced decision making / deal closing culture. Executives also appreciate the greater managerial freedom to enact real change, with one executive commenting, ‘What happens in one year here, takes at least 7 years in developed markets like the U.S. and Europe’.

On the other hand, respondents complained of a lack of transparency in business regulation and ruling, corruption, ambiguity in a constantly changing environment, and a strong shortage of domestic talent.

A full copy of the 2011 Executive Compensation in China report is available to AESC/ BlueSteps members at this link. A copy of the report is available to the press by emailing Joe Chappell at jchappell@aesc.org.

BlueSteps is the exclusive service of the AESC that puts senior executives on the radar screen of over 8,000 executive search professionals in over 74 countries. Be visible, and be considered for up to 75,000 opportunities handled by AESC search firms every year. Find out more at www.BlueSteps.com

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About the author

This article was written by Joe Chappell, Managing Director, Global Marketing at the Association of Executive Search Consultants (AESC).
 

About the Association of Executive Search and Leadership Consultants

Since 1959, the AESC has set the standard for quality and ethics in executive search and leadership consulting worldwide. Because AESC members must commit and adhere to the AESC's industry and government recognized Code of Ethics and Professional Practice Guidelines, clients can be assured that AESC members are able to serve as trusted advisors for their most important engagements. As the voice for executive search and leadership consulting worldwide, today the AESC is comprised of more than 350 member firms, representing 8,000 executive search professionals in 75 countries. To learn more about the AESC and its membership, visit www.aesc.org.

 

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