shanghai hr conference - mercer … · shanghai hr conference c h i n a a n d g b a ta l e n t t r...

© 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


© 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%


© 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.


© 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 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 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

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