Talent Development in China: Current Practices and Challenges Ahead

Abstract

The Problem

The continuing trend of globalization has made the need for talent a worldwide issue. China, as one of the fastest growing economies and population in the world, has made unprecedented growth during the past few decades. Nevertheless, with a rapidly aging population, migrant workers demanding better pay, rising numbers of college graduates entering the job market, and exacerbating shortage of technical managerial talents, China is facing serious new human resource challenges.

The Solution

In this article, we analyzed China’s talent needs and examined its current talent development practice. To gain deep insights, we classified Chinese human resources by industries (primary, secondary, and tertiary), geographical regions (Eastern, Central, and Western), and organizational ownership (private vs. state-owned). By taking this contingency-based approach, we hope to capture the uniqueness and complexity of the contextual variables that influence talent development in China. This research contributes to Chinese management literature and also expands global talent development knowledge base.

The Stakeholders

The findings and recommendations offered in this article will benefit multiple stakeholders, including national policy makers in China, domestic and multiple-national organizational leaders, human resource or talent development practitioners, and researchers.

Keywords

talent development talent management human resource development China

Introduction

As one of the emerging and fastest growing economic powers in the world, the People’s Republic of China (China) has continuously attracted global attention. With the biggest population and unprecedented economic growth, China has presented the world with abundant business opportunities as the largest consumer market (Cooke, Saini, & Wang, 2014; Hartmann, Feisel, & Schober, 2010; Lane & Pollner, 2008). With the launching of economic reforms and the open door and four modernization policies in 1978, China has enjoyed more than three decades of unprecedented growth and far-reaching transformations at all levels of the Chinese society (He, 2013; Shen, 2007). Most recently, the widely recognized importance of the intangible resources in the knowledge economy has fueled a strong interest in talent development (TD) in China.

Nevertheless, in light of the large-scale and multilevel changes that have occurred in recent years, China faces enormous human resource challenges (He, 2013; Nankervis, 2013; B. Yang, Zhang, & Zhang, 2014). First, China’s population is rapidly aging. The size of the workforce has plateaued, and the United Nation projected that the number of new entrants to the workforce would start decreasing from 2005; and by 2020, it is possible that China may be in shortage of 228 million workers (Silva, 2012). Second, the 22.5 million migrant workers who have been major contributors to Chinese’s economic growth are now demanding better pay for their work. Third, the number of university graduates entering the job market is on the rise, from 1.14 million in 2001 to 7.95 million in 2017 (Sina Education, 2017). Further complicating China’s situation are the exacerbating shortage of technical and managerial talents and demands for different skill sets in new growing service sectors such as sales, marketing, finance, insurance, real estate, retail, hospitality, and IT (Silva, 2012). It is not surprising that the increasing need for highly skilled talents and professional managers represents by far the biggest management challenge facing China (Silva, 2012). As a result, China is facing the daunting task of preparing new workforce that meets the new market needs (He, 2013; Nankervis, 2013; B. Yang et al., 2014). Like never before, TD is at the forefront of China’s growth agenda (Lane & Pollner, 2008; Wang-Cowham, 2011).

As a newly emerged management area, TD has become the latest trend within the field of people management in China. This has led to the steady increase in publications produced by management and human resource development (HRD) scholars (e.g., Ardichvili, 2012; Ke, Chermack, Lee, & Lin, 2006; Li, 2012; E. Liu, 2014; Wang-Cowham, 2011; B. Yang & Wang, 2009; B. Yang et al., 2014). Based on our review of existing literature, we noticed two patterns in research on TD in China. First, most of the current knowledge about China’s TD, commonly known to the West, is derived from publications available in the language of English. Second, most previous research on China TD takes a generic or piecemeal approach, overlooking micro-level contextual differences (e.g., industry, geography, and organization). This article attempts to address these two issues.

Purpose and Significance

The overarching goal of this article is to provide a holistic and updated understanding of TD in China. Specifically, we are interested in answering the two questions:

Research Question 1: What are TD needs in contemporary China?

Research Question 2: What actions has China taken to address its TD needs?

This research makes unique contributions in three ways. First, unlike many of previous research efforts relying heavily on literature published in English or retrieved through English databases, our review includes both English and Chinese publications. By including a significant body of Chinese literature that is not easily accessible to scholars located outside of China, we hope to provide some fresh or additional perspectives, which might have been missed in previous publications. Second, unlike researchers who took a broad or generic approach to describing TD issues in China, we differentiate China’s talent needs by adopting a contingency-based approach. That is, we classify Chinese human resources by industries (primary, secondary, and tertiary), geographical locations (Eastern, Middle, and Western), and organization ownership (private vs. state-owned). This approach enabled us to capture the complexity of the Chinese environment and context-specific talent needs. Finally, this research contributes to the much needed Chinese management literature and also expands global TD knowledge base.

Method

The primary method that guided this research is an integrative literature review. We followed the guidelines provided by Torraco (2005), and our goal was to build a holistic understanding of the topic under study. Our decision to include both English and Chinese literature was intentional and prompted by our observation that most of previous research on TD in China, which is published in English journals, include no or very few articles in the Chinese language. Therefore, it is our hope that by expanding the literature base, this article would reveal fresh or additional insights. This decision was also based on two facts. First, both authors are of Chinese origin, have extensive work experiences in the Western context, and are bilingual. Reading both English and Chinese literature was not an issue. Second, because both authors are professors (one working in a large U.S. university and the other in a top university in China), they had access to databases in both English and Chinese.

Literature Search

The search for both the English and Chinese literature was conducted simultaneously. The English literature search was conducted primarily by the first author through four English databases: ABI/INFO, PsychINFO, ERIC, and Academic Search Ultimate. The search for the Chinese literature was led by the second author via one Chinese database—CNKI, a key source of science citation index (SCI), engineering index (EI), and Chinese social sciences citation index (CSSCI) journals published in Chinese. Both searches were guided by the following keywords: “talent development” OR “human resource development” OR HRD AND China OR Chinese OR People’s Republic of China. The initial search via the English databases yielded a large volume of literature in English; and, the search via the Chinese database yielded 1,872 Chinese publications under the title of TD and 5,280 under the title of HRD.

Literature Screening

The next step was screening the literature using four pre-developed selection criteria: academic journals, timeline, context, and relevance. First, we included publications that appeared in the academic journals only. This excludes literature such as books, opinions, perspectives, and essays. Second, we included articles that were published since 2000 because our interest was to identify current issues and practices. Third, we included articles that focused on TD at the national level because this is the context under study. The last criterion is relevance. If TD or HRD was not specified in the article title/abstract, or was not presented as the main objective/goal/purpose, the publication was excluded. Applying these criteria, 179 articles in English were retrieved. After removing the duplicates, 88 English articles and 201 Chinese articles were left for review.

Literature Analysis

All the papers were classified in terms of industries (primary, secondary, and tertiary), geographical locations (Eastern, Middle, and Western), ownership (private vs. state-owned), and personal characteristics of talent (e.g., gender, age, education). To triangulate the analysis performed by the two authors, a team of seven Chinese students (three Chinese PhD students and four master’s students) majoring in business management independently and blindly completed the classifications using a coding scheme developed by the authors. Agreement of classifications is achieved through discussions among all the analysts. Frequency analysis and content analysis by key words were performed to elicit major themes across the publications.

The remainder of the article is structured into three parts. The first two parts report our analysis and findings in response to the two research questions. In the third part, we identify remaining issues and recommend an action plan in hopes of advancing China’s TD effort.

Talent Needs in China

To accurately identify talent needs in China, we took the classification approach to talent analysis. Our analytical results show that talent needs in China are situational and context-sensitive. In this section, we discuss different talent needs by industry, geographical location, and organization ownership (see Table 1 for the framework that guided our analysis).

Table 1.

Analytical Framework.

Dimension	Classification
Industry	Primary	Secondary	Tertiary
Geography	Eastern	Central	Western
Ownership	Private		State-owned

Talent Needs by Industry

China Industry Classification National Standard GB/T4754 named “Industrial Classification for National Economic Activities,” defines three groups of distinct industries based on their business activities—the Primary Industry, Secondary Industry, and Tertiary Industry. These three industry groupings are subsequently broken down into 20 industry groups and 95 industry categories. The Primary Industry includes farming, forestry, animal husbandry, and fishery. The Secondary Industry comprises mining and manufacturing, construction, and production and supply of electric power, gas, and water. The Tertiary Industry covers a wide range of service sectors, such as traffic, storage, and mail business, information transfer, computer service, and software industry, wholesale and retail trade, lodging and food industry, finance, realty business, scientific research, technical service, education, sanitation, social security and social welfare, entertainment, publication administration, and international organizations. As economies develop and industries evolve, the way industries are categorized is also changing. The China’s Standard was updated in both 2002 and 2011 to reflect such changes (Slater, 2017). Due to unique characteristics, different industries demand different talents. Below, we briefly discuss TD needs issues in each category.

Talent needs by the Primary Industry

Our literature analysis informed us of four critical issues at this level. First, there is a critical shortage of agricultural professionals and technicians (D. H. Wang & Zhang, 2009). Research shows that this group represents only 0.71% of the entire agricultural workforce, which is significantly lower than professional technicians in other industries (17.26%). Compared with developed countries, the shortage of agricultural talents in China is even more noticeable. In developed countries, the ratio between the technical personnel in agriculture and farmers is 1:100; whereas in China, the ratio is 1:1,200 (Geng, 2004).

Second, there is great difficulty in recruiting and retaining agricultural workforce. Both public media and academic studies show that rural population is declining, a phenomenon called “rural hollowing” (Y. Liu & Liu, 2010). This is because more and more young farmers leaving farming to seek employment in cities, to join the service, and to pursue education. According to a survey conducted by China’s NBS in 2011, among the young rural migrant workers from the ages of 16 to 29 years, only 8.8% expressed a willingness to go back to their homeland for farming. Furthermore, more than 40% of young rural migrant workers have no farming skills (Z. Yang, 2013). This will inevitably affect China’s agricultural development, food security, and even social and economic development in the long run. Meanwhile, the current workforce (born between the late 1940s and the early 1970s) in the farming sector is aging (Z. Yang, 2013). To make the matter worse, the central government adopts a strategy that leads to an imbalance in resource allocation. That is, the lower-level governments receive less financial support from the central government. As noted by the Ministry of Finance, the central government invests less than 10% of money in developing and promoting agricultural technology, which means that the local governments have to come up with the remaining 90% of the budget needed for agricultural development (Wu & Fan, 2006). In addition, even with the desire for farming, young people likely face land, capital, and technology challenges (Li, 2012). For example, according to Chinese regulations, young farmers cannot get a loan from banks where they do not have previous accounts (Z. Yang, 2013). There is also a noticeable disparity of incomes received by urban residents and rural residents (E. Liu, 2014). Recognizing the potential impact of steadily decreasing farming population, the Chinese government, in its First Policy Document of 2012 and 2013, called for developing a new type of professional farmers. The same proposition was also presented in the 18th Communist Party of China (CPC) National Congress Bulletin. “Who will be China’s farmers in the future?” will remain a critical concern.

The third issue lies in the inadequacy in agriculture education and training. Currently, China does not have an effective system in place to equip agricultural workforce with essential skills they need for modern farming (E. Liu, 2014). Compared with basic compulsory education, vocational and technical education and adult education in rural areas are far behind. Statistically speaking, a small number (20%) of Chinese farmers receive annual training (D. H. Wang & Zhang, 2009). Only 3.4% of farmers have received entry-level vocational and technical training or education, and even fewer numbers (0.13%) of farmers received mid-level technical education. Those who have not received any technical training account for 76.4% of the farming population. In addition, only 0.08% of farmers have obtained college associate degrees; compared with their urban counterparts, only 5% of young residents in rural areas manage to attend regular middle and high schools every year (Geng, 2004). These statistics are extremely alarming and indicates the ineffectiveness of China’s agriculture education and training systems.

Finally, there is no systematic developmental plan customized for agricultural workforce. So far, little effort has been made by the Chinese government to systematically and thoroughly analyze and identify specific needs by this population. As a result, the content of existing plans tend to be generic; and the approach to TD appears to be outdated and unpractical (Wu, 2006).

Talent needs by the Secondary Industry

Interestingly, advanced skillful workers are not considered as talent, which may help explain why we found very few publications on this industry in the Chinese TD or HRD literature. Based on our analysis, we identified three issues revealed by publications about manufacturing talent and skillful workers. The first issue is the co-existence of both structural surplus of lower skilled workers and a high demand for advanced skilled workers, especially in new materials on informational technology. The second issue is the disjuncture between the Chinese labor market and education as evidenced by a much smaller number of vocational and professional colleagues compared with comprehensive universities. The third issue is the lower social status of skillful workers, which has discouraged people from attending vocational colleges. For these reasons, there is a critical shortage of advanced skillful workers (technicians) in the Secondary Industry, which has been recognized as a key obstacle for China to become the manufacturing center of the world.

Talent needs by the Tertiary Industry

Among the articles that focused on the Tertiary Industry, most of the attention was given to the modern service industry (MSI; L. G. Yang, He, & Han, 2013). MSI is an information and knowledge intensive service industry, relying on information technology and modern management philosophy. Developed from traditional service industry (e.g., commerce, traffic, storage, and mail business, lodging and food industry), MSI expands service areas to include scientific research, technical service, finance, realty business, community service, and cultural service (Lu & Chen, 2012). Although the development of MSI is important for promoting national economy, accelerating social progress, and building an innovation-oriented society, China faces some serious TD challenges in MSI.

The first challenge is the shortage of the total talent supply. The imbalance between supply and demand is acute in China. The rapid development of MSI in China in recent years has prompted the demand for high-level professional talents in service industry. The critical shortage of high skilled professionals in tourism, logistics, and information service is particularly noticeable (Chen & Li, 2010; A. Liu & Wall, 2005; Silva, 2012; Z. Y. Wang, 2011). Using the Hainan Province as an example, the number of tourists in Hainan has increased by 10% annually in the past several years. This calls for additional 20,000 tourism professionals, more than what the local labor market can provide with only 5,000 tourist professionals available within the province (Zhong, 2010).

The second challenge facing the Tertiary Industry is the low quality of talents and shortage of middle to senior managers for key positions in particular. Using software industry in Shanghai as an example, the critical shortage of senior software developers and programmers has created a “bottle neck” effect in electronic information industry in the city (Zhu, 2005). Meanwhile, there is also demand for information technology talents who have not only technical skill sets but also managerial competency (Bai & Sun, 2011). Currently, many software companies in Shanghai are still at the initial developmental stage and the ratio between technical talent and managerial and sales talents is 1:1, lower than the 1:3 ratio in many mature software companies in developed countries (Zhu, 2005). Another example is the railway industry. Among the total number of railway skilled workers by the end of 2003, only 18.29% were senior workers with vocational qualification certificate; 0.91% were technicians with occupation qualification certificate; and only 0.07% were senior certified technicians (Wang, 2004).

The third challenge facing the Tertiary Industry is the high turnover rate. This is a common problem across all service sectors. In the hotel industry in Hainan, the turnover rate is around 30% (Zhong, 2010). In Henan Province, professionals in tourism change jobs once or twice per year and the turnover rate is above 20%, much higher than other industries (5%-10%) in the province (Z. Y. Wang, 2011). In addition, there is a tremendous turnover among logistics experts (Chen & Li, 2010) and senior investment professionals in the mutual fund industry (Appell, 2015). As a result, organizations are unwilling to invest much in developing their employees.

The fourth challenge is ineffectiveness and inefficiency of talent education in meeting market demands. In China, there is a misalignment between academic training offered by higher education and skill sets needed by business and industry (Y. Li, Sheldon, & Sun, 2011). In consequence, college graduates appear overconfident, lack practical skills, and often do not possess competences required by organizations (Z. Y. Wang, 2011). Furthermore, higher education institutions have not been able to meet the market demand for the number of talents needed. Ma (2002) noted that universities lag far behind in building the talent pipeline needed by the e-commerce industry each year.

Finally, there is no effective human resource management system for the service industry. At the organizational level, Zhu (2005) observed that most of the electronic information companies in Shanghai do not have a formalized performance evaluation system. Shen and Shi (2007) noted that in the transportation industry, there is no well-designed, long-term oriented incentive mechanism. At the macro-level, there are no supportive market conditions or policies and regulations to promote TD efforts. Z. Y. Wang (2011) examined the tourism industry and found that investments are made largely in building infrastructures, not developing talents. Ma (2008) described the exhibition industry as in a state of disorder, lacking systematic approaches to planning and managing human resources. Ma also noted that the practices in conference and exhibition services are not guided by theory or supported by a well-defined discipline.

In sum, the critical shortage of the talent supply prevails in all the three industries. There are huge demands for agricultural technical talent in the Primary Industry, professional and technical talent in the Secondary Industry, and senior professionals in the Tertiary Industry. It is projected that by the end of 2017, the talent gaps between demand and supply in China will be 2.18 million in the Primary Industry, 12.2 million in the Secondary Industry, and 3.25 million in the Tertiary Industry. In addition, there is insufficient training and education of talent needed for the Primary and Tertiary Industry. Resource obstacles exist in recruiting and retaining talent in the Primary and Secondary industry, such as lower level of compensation and benefit. Finally, there is a high turnover of talent and a gap between talent training and market demand in the Tertiary Industry.

Talent Needs by Geography

The unbalanced economic development of China can be observed across the geographical regions. As a result, each region faces different developmental issues and accordingly focuses on different TD needs. Following the commonly used classification system, the country can be divided into three regions—Eastern China, Central China, and Western China. Generally speaking, the East coast areas are more developed than the Western region. Although the Eastern region occupies only 11% of China’s land, it possesses 43% of the country’s professional talents. To the contrary, the Western region covers 69.14% of the land but has only 15.5% of nation’s talents (Xiao, 2008). Another reality is that most of college graduates in China want to work in big cities instead of second- or third-tier cities in China. Unfortunately, the so-called big cities are all located in the Eastern region such as Beijing, Shanghai, Guangzhou, and Shenzhen. A recent nation-wide survey (University Graduate Survey Report, 2017) shows that 15.12% of university graduates prefer working in Shanghai, 14.53% in Beijing, 10.23% in Shenzhen, 8.72% in Hangzhou, and 7.56% in Guangzhou; and, only less than 4% chose other cities. The fact that 56.16% of college graduates would migrate to only five big cities in Eastern China likely creates two problems simultaneously: surplus of talents in these five cities and inadequate talent supply to other regions of China.

Talent needs in the Eastern region

The publications we reviewed covered a number of provinces and cities in Eastern China, such as Beijing, Tianjin, Jiangsu, Zhejiang, Guangdong, Shanghai, Dalai, and Hebei. Three major issues were prominent.

First, governments and organizations in the Eastern region have a high awareness of but low efficiency in TD. Compared with West and Central China, many provinces in the Eastern region, especially in Beijing and Zhejiang Province, have been very inefficient in developing science and technology talents. This is mainly due to the large number of technical professionals available to coastal areas in this region. The high living costs, high labor costs, and the large supply of technical personnel are all factors influencing the efficiency of science and technology TD (Z. Liu & Sun, 2013).

Second, there is an acute need for innovative talents, as well as mid-level and senior managers. In Eastern China, the rapid growth of private enterprises has prompted the need for managerial resources. As these enterprises scale up, their current main supply of lower-level employees can no longer meet their growth requirements. Higher-level managers who demonstrate innovative thinking are in great demand (Li, 2012); however, the current human resource demographics and the government’s TD mechanism make it difficult for private enterprises to acquire innovative managers as they desired (Huang & Li, 2008).

Finally, there is an unbalanced and inadequate effort in training and development across areas within the Eastern region for several reasons. First, in many Eastern provinces, the TD goals are not aligned with the actual needs or capacity of the local market. Second, when it comes to the development of skilled or technical talents, the primary focus has been placed on those at the senior level rather than the entry- and mid-levels. Third, there is no overarching plan for regional TD; as a result, local governments and enterprises invest imbalanced amounts of resources and provide training that is often one-dimensional. In addition, there is a lack of supportive environments and effective incentives (Chen, 2007).

Talent needs in the Central region

There are three challenges facing TD in this region. The first challenge is lack of appreciation for TD, proper policies, and implementation strategies. The economic development in Central China occurs later than the Eastern region. Therefore, TD in the Central region is still at the infancy stage. Compared with many other parts of China, the Central region has a much smaller pool of highly skilled talents (Zhao, 2012).

The second challenge facing the Central region is the shortage of human resources in science and technology. Compared with other regions of the country, Central China has lower numbers of professional skill workers and R&D scientists and engineers. In addition, most technical talents choose to work in higher education and research institutions, with fewer choosing mainstream business sectors, and even fewer in private enterprises. Furthermore, within the current human resource landscape, those in basic and applied research represent a very small percentage (Zhao, 2012).

Third, there is an imbalance in talent structure and talent allocation. Use the ChangZhuTan Urban Agglomeration for illustration. The talents in one city (Changsha) account for 58.1% of the total talent supply in three cities combined (Luo & Song, 2011). The high-level talents in Changsha accounts for more than 90% of talents in the three cities combined. In addition, most of the talents work for the government agencies and educational institutions; and there is a shortage of talents for small-medium enterprises, private enterprises, and township enterprises. Furthermore, professional skill workers tend to concentrate in education and health care. There is also a critical need for talents in sectors such as electronic information, biology, medicine, new materials, and logistics, as well as professional and technical talents at the senior level (Luo & Song, 2011). To promote TD in Central China, the current talent structure must be optimized.

Fourth, there is as lack of adequate incentives and training. A recent survey with 119 enterprises in Hunan Province shows that 73 (61%) participating companies do not have formalized TD systems in place, or a designated training base and professional trainers (L. G. Yang et al., 2013). In addition, 4 of the 119 companies surveyed do not even have the human resource training function (L. G. Yang et al., 2013).

Talent needs in the Western region

We identified three TD issues for the Western region. The first is the overall low quality of talents, particularly among rural residents and employees working for township enterprises (Xiao, 2008). Despite the rapid population growth, Western China is challenged by the shortage of professional technical talents. As Xiao (2008) noted, in most western provinces, only 0.2% to 0.4% of technicians have obtained postgraduate degrees, significantly lower than the national average (0.98%). In addition, due to the inadequate investment in rural education in the Western region (MaimaitiYaer & Aili, 2009), vocational and technical skill training is not widely provided (Wu, 2006). For example, in Sichuan Province, a majority of farmers have never received systematic and comprehensive training (Li, Qui & Jiang, 2015).

The second issue relates to the unbalanced distribution of talents. As MaimaitiYaer and Aili (2009) noted, though the Western region has 69% of the land in China, it comprises of only 15% of the nation’s talents. Among agricultural workforce, technical talents significantly outnumber managerial talents, and those with entrepreneurial spirits are in even smaller numbers. Furthermore, those with one skill set are far more in number than those with multiple skills needed. In addition, the number of people directly involved in agricultural production is much larger than those in sales and services. The inappropriate distribution of talents is also reflected by the redundancy of talents in traditional industries (Xiao, 2008). For example, university students majoring in agriculture encounter difficulty in seeking employment upon graduation. Many practitioners in rural areas do not have platforms to utilize their talent, resulting in a serious waste of human resources (Dai, 2006).

Finally, there is a lack of effective strategies for talent acquisition, training, and retention. This issue has created the phenomenon of “brain drain.” Western China faces the serious challenge of losing its technical talents due to ineffective TD practices (Li, Qiu, & Jiang, 2015). During the past 20 years, Xinjiang Province has lost accumulatively nearly 240,000 professional skill workers, equivalent to 13,000 professionals per year (Z. Li et al., 2015). Another manifestation of the “brain drain” in the Western region is the migration of college graduates to Eastern China (Z. Li et al., 2015). Since China resumed the college entrance exam system in 1977, a large number of high school graduates in the Western region have chosen to attend college in other parts of China, or sought job or advanced education opportunities in the Eastern region (Maimaiti Yaer & Aili, 2009).

Talent Needs by Organizational Ownership

From the review of the literature, we found that organizational ownership also affects talent needs. Our discussion in this section focuses on two types of ownership—private and state-owned.

Talent needs by private enterprises

Private enterprises in China face issues such as the critical shortage of innovative talents, brain drain, misfit between individual competency and the job position, and inadequate compensation (Wang, 2004). Tang (2014) noted that the number one factor inhibiting private enterprises’ transformation and progression is lacking innovative technical talents and managerial talents. The next restraining factor is the uneven distribution of existing talents within private enterprises at the entry, middle, and senior levels. The third issue is retention. Tang’s (2014) survey in the city of Ningbo showed that the highest turnover rate is in sales force (38.8%), followed by technical experts (21.4%), frontline workers (18.4%), managers (15%), and researchers (6%). In addition, in terms of the job-skill fit, the survey revealed that 48% of the participating enterprises reported the degree of job-skill fit in their company as 50% to 80%, followed by 30% to 50% of the match reported by additional 18.4% of the companies. The final issue is lack of competitive compensation. According to Sun’s (2013) survey, 75% of respondents believed the turnover in their companies was high; 63.3% of them attributed the high turnover rate to low compensation. More than 52% of the survey participants confirmed that they had no plan to stay in their company for the long term, and 40% were willing to work in tier-two or three cities if the pay was attractive.

Talent needs by state-owned enterprises (SOEs)

A number of scholars identified challenges faced by SOEs in China. For example, Gu (2004) outlined the following: lack of sufficient human capital investment, brain drain, and imbalance of talent allocation. Similarly, Yin (2011) noted that the functions of human resource departments in SOEs are not well defined; and, their approach to human resource management is not systematic or scientific. In addition, human resource professionals lack competencies and qualifications. Training and development has received inadequate attention. And finally, human resource strategies are not effectively executed. After examining the HRD status in the coal industry, Lian (2010) identified a few problems including difficulty in acquiring and retaining talents, slow growth of talent, and lack of talent mobility.

TD: Current Practice

In the section above, we identified China’s talent needs in different contexts. However, very few articles we reviewed have differentiated these needs. As a result, we found China’s current approaches to TD as documented in the literature are not context specific; thus, our discussion will focus on TD at two levels—macro (national) and micro (provincial, municipal, and organizational).

At the Macro-Level

In China, TD emerged as both a research discipline and management practice field as early as late 1970s when China launched the open door policy. Since then, consistent effort has been made by the central government to support TD activities. These national-level efforts are manifested in various formats, such as national policies, newly established government agencies, workforce education programs, and talent incentive programs. Below, we highlight a few key initiatives.

National policies

TD has become a national policy in China in recent years. For the first time in history, developing human resources was proposed as a special chapter in the “Tenth Five-Year Plan” (2001-2005; Xie & Wu, 2001). In the “Eleventh Five-Year Plan Guideline” (2006-2010), human capital development was, again, emphasized (B. Yang & Wang, 2009). The 2002-2005 National Talent Development Outline jointly released by the Chinese Central Party Committee and State Council, in May 2002, proposed the strategy of reinvigorating China through TD. The Outline also identified five categories of talent and specified the regulation criteria for each category. The five categories are as follows: Party and government talent, professional/technological talent, business management talent, high technical skill talent, and practical agricultural talent. In 2010, the Central Committee of the Chinese Communist Party (CCP) and the State Council jointly launched a new national TD plan, National Medium- and Long-term TD Plan (2010-2020). This plan has created a blueprint for developing a highly skilled national workforce within the next 10 years. This is also the first national comprehensive plan about TD in China and is of vital importance to China’s future development.

In addition to national policies aiming to develop the overall workforce in China, the central government has also developed policies that address industry-specific TD needs. For example, in 2016, China released a Guideline for Manufacturing TD based on the Report of Made in China 2025 (Ministry of Education, 2017). Under this guideline, China will launch a series of initiatives to meet the high demand for skilled manufacturing workforce, for example, making a strategic manufacturing TD plan and executing it with a customized approach, building engineering and innovation centers in universities to prepare advanced manufacturing engineers, establishing manufacturing personnel service institutions, promoting education that combines production and research through engineering doctorates and professional degrees, transforming traditional undergraduate universities to applied technological universities to provide better quality vocational education and skill training, and setting up training bases for modern apprenticeship and pilot demonstrations.

Government entities

In addition to formulating policies, the government has also designated some agencies to carry out human resource functions. B. Yang et al. (2014) outlined three government agencies: (a) the Organization Department that exists at all levels of the CPC; (b) the Ministry of Personnel in the central government and the Bureau of Personnel at the provincial, municipal, and lower levels; and (c) the Ministry of Human Resource and Social Security in the central government, and at the provincial, municipal, and lower levels.

In addition to these traditional government agencies, there are also a few newly established entities focusing specifically on TD, an emerging trend in China. For example, in 1981, Talent Research Association was established. In 2013, China Global Talents Society (CGTS) was established as a national research organization dedicated to the study of international talent. CGTS operates under guidance from both the Ministry of Human Resources and Social Security of China and China Talent Research Society. Serving the national strategy of “reinvigorating China with talent,” CGTS sets itself the following objectives: promoting the development of international talent for China, providing consultation for the government on the cultivation of international talent, introducing high-level international talents to China, and fostering communication between Chinese talents and foreign talents on the international level. To achieve these goals, CGTS engages China’s international talent experts as well as practitioners in the study of hot talent issues such as cultivation of international talent, TD, talent utilization, and talent movement and competition, thereby boosting communication and interaction among global talents at home and abroad.

Initiatives and programs

On December 19, 2003, the First National Talent Conference (Congress) was held in Beijing (capital of China), symbolizing the official recognition of the importance of talent management and study in the development of economy as well as the entire Chinese society. To this end, the central government initiated the “Recruitment Program of Global Experts,” known as the “Thousand Talents Plan,” at the end of 2008. The goal of this program is to attract more than 1,000 top talents in different fields from all over the world over the next 5 to 10 years. Relying on National Key Innovation Projects, National Key Disciplines, central SOEs and state-owned commercial and financial institutions, and various industrial parks (mainly the high-tech development zones), this plan called for strategic scientists or top talents who can make breakthroughs in key technologies or can enhance China’s high-tech industries and emerging disciplines (People’s Daily, 2010). The overseas talents recruited through this program enjoy preferential policies in visa applications, residence permits, settling in China as well as exit/entry convenience. In 2014, the Ministry of Education accredited talent studies (ren cai xue) as a university program and listed it in the Classification and Code of National Standard (840.72). By 2016, five Chinese universities have offered a master’s degree in talent studies.

At the Micro-Level

At the provincial and municipal levels, policies and practices were adopted to promote TD. One example is the unification of three cities—Beijing, Tianjin, and Hebei in 2015, making this geographical region the center of headquarter of multinational corporations, R&D, and international organizations. Currently, Beijing is also discussing attracting and developing talent for 2022 Winter Olympic Game. Northeast provinces will focus on business management talent, particularly for SOEs. A special administrative zone for talent had been established in many cities and regions.

At the organizational level, TD has been promoted through various channels, such as the corporate university and learning academy. For example, a large state-owned company with more than 400,000 employees across business industries, China Resources, established, in 2012, China Resources University to support the company’s fast development and need for unified TD. The university has eight schools to support different business units and assume more responsibilities than traditional training centers (W. Wang, 2015).

In addition to the traditional corporate university, virtual corporate universities have also been set up. A good example is BMW. After operating in China for more than two decades, BMW set up a virtual learning academy in 2014 to offer an integrated training platform to all associates of BMW and BMW Brilliance Automotive in China. Another company example is China’s most-used Internet service portal provider, Tencent. As a fast-growing organization with young employees whose average age is 27 years, the company launched Tencent Academy in 2007 to attract and develop talent. To support the company’s business expansion, Tencent Academy started in 2014 to offer training courses on emerging topics to its supplies and the general public. By doing so, the Academy not only supports internal TD but also directly contributes to the company’s external growth strategy (W. Wang, 2015).

Discussion and Recommendations

Despite the promising policies and diverse practices as present above, China continues to struggle to provide talents needed by its market. Our analysis shows a large disparity in TD needs according to unique industry demands, regional differences, and institutional structures. To recap, here are highlights of the critical issues:

The lack of systematic TD planning and strategic approaches at multiple levels,

The execution gap between TD policies and talent practices,

The discrepancy between the rapid economic development and the slow supply of education and training,

The unbalanced development across industries and geographical regions,

The incompatibility of the higher education system with the market need for talent,

The conflict between huge demand for and limited supply of high-level talents.

Although these issues prevail across industries, regions, and different types of organizations, they are manifested differently in terms of the degree of seriousness and intensity. Therefore, when identifying strategies to close these gaps, a “one-size-fits-all” approach would not be effective. Therefore, we encourage policy makers, government officials, business leaders, and human resource developers to take a contingency approach to gain a more accurate understanding of the talent demands in China. Doing so will allow for targeted and customized TD policies and strategies. In this direction, we recommend some areas for policy consideration and action planning.

Adopt an Open System Perspective to TD

As this article illustrated, TD issues in China are not one-dimensional but complex and contextual. This calls for a system approach to examine all key variables that would impact TD outcomes. Using talents for agriculture as an example, the government’s concern about the critical shortage of next generation farmers has led to the development of several national level documents and policies (No. 1 Central Document of 2012 and 2013) and the 18th CPC National Congress Bulletin. These initiatives will not be effective unless other support systems are changed. For example, a new household registration system is needed to promote mobility of the agricultural population (E. Liu, 2014). Stigma associated with farming as an occupation needs to be removed so that farmers will no longer feel like the second-class citizens. Equitable income needs to be provided to incentivize rural residents or attract younger generation to farming. Unless all these elements are considered, the critical shortage of farmers will remain a challenge to China.

Align Higher Education With Market Needs

Current higher education in China has proved to be highly ineffective in meeting market demands; this is largely because it is not aligned with the actual industry needs. As China moves forward with its TD goals, reforming higher education systems should be placed as the top priority because universities are one of the key supplies of talent needed by China today and for many years to come. Therefore, much more careful thoughts and efforts need to be given to (a) orient educational curricular toward market needs, (b) identify core competencies needed by different industries, and (c) connect theory with practice through experiential learning. To this end, we recommend that higher education administrators and faculty form partnerships with practitioners to collaboratively design educational programs that are grounded in practical concerns of industries. On the other hand, we encourage organizations to open their door to university students through internship programs and applied projects. This will help university students gain better insights into industry needs and firsthand experiences before they graduate from college.

Innovate Vocational, Technical, and Professional Training Systems

Lacking an effective training system in place appears to be a common challenge across all industries. As a result, many different sectors across the country face the shortage of skilled, talented people. This issue is particularly prominent in agriculture, the service industry, and in Western China. Given that China has historically been an agricultural-based society, its strategic vision of modernizing agriculture requires more than just commitment, but also a well-prepared agricultural workforce, which China calls “new type professional farmers.” Therefore, China needs to take a systematic approach to develop professional skilled farmers who can contribute to its agricultural modernization vision. For example, there is an urgent need to redesign vocational and technical programs to provide essential skills for modern farming. There is also a need to reform rural compulsory education and increase learning participation by rural residents. Finally, at the central government level, there is a need to reconsider the current resource allocation approach so that more financial resources can be invested to incentivize younger generations to pursue agricultural education.

Develop Effective Incentive Programs

Incentives are important to attract talents to work in regions that are less economically developed (e.g., Central and Western), as well as in industries that are less appealing (e.g., farming) or have high turnover (e.g., tourism). Based on our talent needs analysis, industry and region play a significant role in individuals’ career decisions. Therefore, policy makers and government agencies at various levels must think of ways to attract talents in less advantageous regions and industry sectors. Initiatives such as The Thousand Talents Plan are great examples, but they focus mainly on attracting talents from overseas; and programs of this nature are also needed to recruit domestic top talents.

Establish an Accountability System for Policy Implementation

One challenge facing China going forward is as follows: How can China put its well-intended policies in action? It appears to us that China does not lack talent policies, but what it does lack is the capability of implementing policies to achieve desired outcomes. We frame this problem as an “execution gap.” When, how, or to what degree China’s macro- and micro-level initiatives have been executed by lower-level governments, particularly at the county, township, and village levels, are largely unknown. In the cases where programs have been implemented, there is a great deal of inconsistency or inefficiency in actual implementation. Therefore, we recommend that the central government establishes an accountability system that outlines in detail the implementation process and success indicators. In this way, the central government will be able to measure and track the impact of its policies and programs and close the gaps in implementation. To facilitate policy execution, it is also important to provide adequate support from the upper-level administration. For the central government, it is critical to establish a region-based, industry-specific mechanism for resource allocation. This will ensure that the lower-level governments are equipped with necessary financial, physical, and human resource for successful policy execution.

Develop a Strategic Research Agenda

As an emerging phenomenon, TD has attracted much attention from scholars; and, more is needed to help build a comprehensive and thorough understanding of talent needs in different contexts and for different industries in China. Current TD research has taken a piecemeal approach; though the findings advance our knowledge, they do not present a holistic picture. We encourage academic–industry collaborative research to take advantage of scholar’s research expertise and practitioners’ practical experiences. As this article shows, using the classification approach, we were able to understand talent needs and related challenges in much more depth than what we would have if we took a generic approach. Therefore, we recommend more research using the classification approach to capture context-specific needs for TD in China. Finally, one area that is worth immediate research attention is the impact of globalization on TD in China. As the globalization trend continues to intensify, talents will become more and more boundaryless. The phenomenon of “brain drain” will likely become an even bigger concern. Therefore, research on “brain gain” strategies (Pan, 2011) would be timely and meaningful.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Author Biographies

Jia Wang is professor of human resource development (HRD) at Texas A&M University, College Station, TX, USA. Her research focuses on HRD issues in five interacting dimensions: national and cross-cultural HRD, workplace learning, organizational crisis management, workplace incivility, and career/family issues. Her research has been published in a wide range of international journals and disseminated through over 110 conference presentations. She currently serves as the Editor-in-Chief of Human Resource Development Review and is also a member of the Editorial Board for three other international HRD journals.

Jian-Min Sun is professor of management at the University of Auckland, School of Business, New Zealand, and an adjunct professor at the School of Labor and Human Resource at Renmin University of China, Beijing. His research interests include strategic HRM, leadership, and cross-cultural management. He has published in journals such as Journal of International Business Studies, Leadership Quarterly, International Journal of Human Resource Management, Human Relations, British Journal of Management, among others.

References

Appell

(2015). China managers feel brain drain. Pensions & Investments, 43(3), 0003.

Ardichvili

Zavyalova

Minina

(2012). Human capital development: Comparative analysis of BRICs. European Journal of Training and Development, 36, 213-233.

Bai

Sun

J.-M.

(2011). HRM and employment in the service industry. In Sheldon

Kim

Warner

(Eds.), China’s changing workplace: Dynamism, diversity and disparity (pp. 220-237). London, England: Routledge.

Chen

C. Y.

(2010). Research on human resource development of modern logistics. Resource Development & Market, 26, 636-640.

Chen

S. N.

(2007). The possibility and strategy research on the integration of skills talents in the pan-pearl river delta. Special Zone Economy, 226(11), 15-17.

Cooke

F. L.

Saini

D. S.

Wang

(2014). Talent management in China and India: A comparison of management perceptions and human resource practices. Journal of World Business, 49, 225-235.

Dai

X. H.

(2006). Strategic thinking on promoting the development of rural practical talents in Sichuan. Rural Economy, 9, 105-107.

Geng

X. J.

(2004). The urgent neediness of the implementation of rural talent development. Chinese Talents Magazine, 5, 50-51.

(2004). China’s Industrial Technology (ebook). London: Routledge.

10.

Hartmann

Feisel

Schober

(2010). Talent management of western MNCs in China: Balancing global integration and local responsiveness. Journal of World Business, 45, 69-178.

11.

(2013). Labor and employment law development: China. Employee Relations Law Journal, 39(3), 71-74.

12.

Huang

H. Y.

Z. Y.

(2008). Innovating talents development and management strategy in Nanjing. Science and Technology Management Research, 28, 149-151.

13.

Chermack

T. J.

Lee

Lin

(2006). National human resource development in transitioning societies in the developing world: The People’s Republic of China. Advances in Developing Human Resources, 8, 28-45. doi:10.1177/1523422305283056

14.

Lane

Pollner

(2008). How to address China’s growing talent shortage. The McKinsey Quarterly, 3, 33-40.

15.

C. M.

(2012). Research on development of modern Logistics talents under the background of industrial upgrading—Taking Zhejiang Province as an example. Science and Technology Management Research, 32(10), 152-156.

16.

Sheldon

Sun

J.-M.

(2011). Education, training and skills. In Sheldon

Kim

Warner

(Eds.), China’s changing workplace: Dynamism, diversity and disparity (pp. 111-128). London, England: Routledge.

17.

Qiu

Jiang

Y. J.

(2015). The “bottlenecks” and solutions of enterprise skilled personnel based on the survey of 363 enterprises in Chongqing. Science & Technology Progress and Policy, 3, 149-153.

18.

Lian

F. L.

(2010). Some thoughts on human resources development and management in state-owned coal companies. China Coal, 3, 25-27.

19.

Liu

Wall

(2005). Human resources development in China. Annuals of Tourism Research, 32, 689-710.

20.

Liu

(2014). Research on Chinese rural human resource development and management under the new situation to strengthen. Applied Mechanics and Materials, 687-691, 4759-4762. doi:10.4028/www.scientific.net/AMM.687-691.4759

21.

Liu

(2010). Progress and prospect on the study of rural hollowing in China. Geographical Research, 29, 35-42.

22.

Liu

Sun

(2013). The influence factors of regional science and technology talent development environment in China. Social Sciences in Guangdong, 3, 29-35.

23.

D. P.

Chen

(2012). Talent development strategies of Wenzhou in modern service industry under the new situation. International Business Research, 33(6), 38-44.

24.

Luo

M. J.

Song

B. J.

(2011). The key tasks and suggestions of the talented resources development in ChangZhuTan urban agglomeration under the background of “two-types society” construction. Population & Economics, 1, 46-50.

25.

W. M.

(2002). Try to talk about problems and countermeasures of E-commerce talent development. China Economist, 11, 103-104.

26.

(2008). The problems and countermeasures of conference and exhibition human resources development in China. Special Zone Economy, 2, 226-227.

27.

MaimaitiYaer

Aili

(2009). The analysis on the current situation and policies of the human resources development on the frontiers in the west China. Heilongjiang National Series, 6, 137-142.

28.

Ministry of Education. (2017). Guideline for manufacturing talent development. Retrieved from http://www.moe.gov.cn/jyb_xwfb/s7600/201702/t20170214_296155.html

29.

Nankervis

A. R.

(2013). “Building for the future?” Government and industry responses to the challenges of talent management in China following the GFC. Asia Pacific Business Review, 19, 186-199.

30.

Pan

(2011). Education abroad, human capital development, and national competitiveness: China’s brain gain strategies. Frontiers of Education in China, 6, 106-138. doi:10.1007/s11516-011-0124-4

31.

People’s Daily. (2010, June 8). China adopts more open policy to attract foreign talents. Retrieved from http://en.people.cn/90001/90776/90883/7016300.html

32.

Shen

(2007). Labor contract in China: Does it protect works’ rights? Journal of Organizational Transformation and Social Change, 4, 111-129.

33.

Shen

Shi

Y. R.

(2007). Transportation talent development based on the knowledge sharing. Transportation Enterprise Management, 22(1), 65-66.

34.

Sina Education. (2017, January 9). 2017高校应届毕业生逼近800万 15年间增长651 [University graduates reached 8 million in 2007, increasing 651 times in 15 years]. Retrieved from http://edu.sina.com.cn/gaokao/2017-01-09/doc-ifxzkfuh6193266.shtml

35.

Silva

J. D.

(2012, September 1-8). The war for talent in China. Ivey Business Journal. Retrieved from https://iveybusinessjournal.com/publication/the-war-for-talent-in-china/

36.

Slater

(2017, March 2). China industry classification system: An introduction. Retrieved from https://www.chinacheckup.com/blogs/articles/china-industry-classification-system

37.

Sun

(2013). Investigation and consideration of support mechanisms about innovative scientific and technological talents for private enterprises in Zhejiang Province—Empirical investigation based on high-level scientific and technological talents in Hangzhou FPI. Science and Technology Management Research, 33, 126-132.

38.

Tang

X. L.

(2014). Transformation and upgrading of private enterprises and innovative talents development strategy: Take Ningbo as an example. Enterprise Economy, 11, 72-76.

39.

Torraco

(2005). Writing integrative literature reviews: Guidelines and examples. Human Resource Development Review, 4, 356-367. doi:10.1177/1534484305278283

40.

University Graduate Survey Report. (2017). Retrieved from http://www.chashebao.com/shiyebaoxian/17488.html

41.

Wang

D. H.

Zhang

K. Y.

(2009). The strategic choice and the status of China’s rural resources development. Problem of Agricultural Economy, 9, 15-19.

42.

Wang

N. F.

(2004). Try to talk about the railway high skilled talent development. Railway Transport and Economy, 26(11), 21-22.

43.

Wang

(2015, March). Riding along the dragon. Talent Development, 69(3). Retrieved from https://www.questia.com/read/1G1-413786032/riding-along-the-dragon-in-china-talent-development

44.

Wang

Z. Y.

(2011). The tourism talent development research in Henan province. Chinese Talents, 14, 30-31.

45.

Wang-Cowham

(2011). Developing talent with an integrated knowledge-sharing mechanism: An exploratory investigation from the Chinese human resource managers’ perspective. Human Resource Development International, 14, 391-407.

46.

Z. Y.

(2006). The status, problems and countermeasures of China’s agricultural science and technology talent development. Human Resource Development of China, 9, 15-19.

47.

Z. Y.

Fan

X. R.

(2006). The empirical research on agricultural technicians in the west China. Issues in Agricultural Economy, 3, 34-36.

48.

Xiao

(2008). Human resource development issues in the implementation of the Western China development strategy. Human Resource Development International, 11, 67-79.

49.

Xie

(2001). Training and development in the People’s Republic of China. International Journal of Training and Development, 5, 223-232.

50.

Yang

Wang

(2009). Successes and challenges of developing human capital in the People’s Republic of China. Human Resource Development International, 12, 3-14.

51.

Yang

Zhang

(2014). National human resource development in the People’s Republic of China. Advances in Developing Human Resources, 6, 297-306. doi:10.1177/1523422304266076

52.

Yang

L. G.

Z. C.

Han

(2013). Research on the problems and countermeasures of strategic emerging industries’ talent exploitation. Science & Technology Progress and Policy, 30(19), 143-147.

53.

Yang

(2013). Demographic changes in China’s farmers: The future of farming in China. Asian Social Science, 9(7), 136-143.

54.

Yin

X. Y.

(2011). Problems and countermeasures of human resources development in state-owned enterprises. Human Resource Development in China, 10, 82-83.

55.

Zhao

Z. Q.

(2012). The study on development proposal about the science and technology HR based on Synergy Theory in mid-China. Scientific Management Research, 30(3), 105-107.

56.

Zhong

M. L.

(2010). Hainan tourism talent development research under the construction of international tourism Island. China Business & Trade, 24, 66-67.

57.

Zhu

C. K.

(2005). The talent development strategy to increase the competitiveness of electronic information industry in Shanghai. Science and Technology Management Research, 25(2), 19-21.