In this China Briefing exclusive interview, Miriam Wickertsheim, Director at Direct HR, discusses key recruitment considerations for enterprises operating in China’s retail space, including the impact of rising wages, opportunities in Tier Two cities and the relevance of second language skills for sales staff in the retail sector.
For a foreign company thinking of setting up a retail shop in China, when should they start the process of recruiting personnel
In order to set up a retail shop in China, a foreign company needs to establish a foreign-invested commercial enterprise (FICE). One can choose to either set up this business entity alone or simultaneously set up a physical retail shop along with it. We recommend starting the recruitment process around three months before the physical shop is established. A shorter time period may not leave enough time for the recruitment process, and a longer one may prove unappealing to candidates since they would have a considerable wait before commencing employment.
How should companies go about recruiting retail personnel in China E.g., what websites and job fairs do you recommend Or should they work exclusively with recruitment firms such as yours to help them with hiring
This depends on the kind of employees that the retail business needs. Rather simple roles, such as sales representatives or warehouse assistants, are found in abundance on Chinese online job boards, such as 51job.com or Zhaopin.com. For senior roles, or roles that carry a greater importance to the management or strategic development of, say, a retail branch, we recommend using a recruitment service provider. This also enables the retail business to bring in existing know-how from competitors and target certain retailers or individuals as valuable additions to their own business. For retail fields such as luxury goods, a certain level of seniority will also be expected by customers as they make comparatively higher-value purchases.
What is the best way to screen personnel E.g., what qualities are the most important in candidates
A good retail employee should have excellent communication skills, good client/customer interaction skills, as well as a certain degree of loyalty to his/her organization. Also, depending on the nature of the business, employees’ solid product understanding is a must. It is recommended to hire experienced retail professionals who have prior relevant work experience in a similar role. Personal interviews are paramount, as soft skills in particular can only be assessed in such a way. The company should task a seasoned individual who knows the business to conduct the interviews with an eye for candidates’ cultural fit, e.g., ability to interact with a certain kind of clientele.
What types of personnel are the easiest and most difficult to hire in China, and why
The average sales professional working for a foreign enterprises in the retail industry is female, working in a first tier city, below 30 years old, and has less than five years of work experience. This is especially true for the fields of fashion and luxury goods, whereas the sports and retail specialist sub-sectors employ more men, who are on average a bit older. Overall, for mid-management roles, the employees are more experienced and tend to be more stable. Sales representatives are amongst the most available talents in the market, whereas the pool for seasoned retail professionals with strategic responsibilities is scarcer.
Is the personnel turnover in the retail industry high, and if so, why
For much of the Chinese workforce, the retail industry is not an attractive one to work in. They prefer working in a large foreign or domestic company as a white collar worker. This, in addition to the transferability of skills from one retail organization to another, is one of the reasons why turnover in the retail industry is relatively high. Another contributing factor is that career development opportunities in the retail business are limited, as they often have comparatively flat structures.
What can employers do to hire and retain quality personnel in the retail industry
I would say internal training and development plans are key factors for retention. Certainly, the aforementioned organizational structure pose a challenge, but one way to circumvent this would be to foster an attractive company culture, in addition to structured career programs.
Are increasing wages a problem for foreign retailers in China
Yes, increasing wages across all industries have been and remain a top challenge for companies operating in China. The steadily increasing minimum wage in different provinces and the increase of the salary demands of top talent have both greatly affected the salary development in the retail sector. At the same time, ongoing large-scale growth in the retail sector has enabled candidates to weigh professional opportunities by salary and smoothly transition from one company to another. The average salary increase a Chinese employee can expect from changing companies is around 25 percent of his/her annual gross salary. The expected year-on-year salary increase of staying within the same company ranges from just 5-10 percent.
Based on your observations, do you see a gradual shift of recruiting efforts from tier one to lower-tier cities
We still see around 40 percent of retail professionals for foreign companies are sought after in first tier cities. However we do note this changing in some sub-sectors; for example, fashion apparel retail is diverting to Shenyang and Chengdu, while retail specialists have started to focus on Nanjing and Guangzhou in the last two years. We also expect to see a steady increase of retail operations in third tier cities.
What do foreign investors setting up a retail business here need to know about the Chinese job market, e.g., something that may come as a surprise to them or be different from what they would expect in the West
The labor market in China is much more fast–paced and dynamic than that of Western countries. This means that Chinese talent is more volatile, faster to change their jobs and has higher expectation to a continuous career and salary development.
How important as a hiring criteria are language skills, i.e., do retail personnel need to be proficient in a foreign language, e.g., English, French, Italian, and if so how readily available are these candidates
We believe that English skills are sufficient, and today more and more of the younger generation brings in sufficient levels of English language for daily interaction with customers. For roles in a more pricey sector, or a retail business exclusively focused on a certain ethnicity, better skills in English or other languages may be required. However, English is still predominant as a first foreign language and the ability to speak a third language is often not found in candidates willing to work in the retail industry.
Miriam Wickertsheim is the Director at Direct HR, a China-focused specialist recruitment service provider. Miria has been in China for eight years and speaks German, English and Chinese. She has several years experience supporting SME’s and MNC’s with their mid to senior level hiring needs here in China.
This article is an excerpt from the April 2014 edition of China Briefing Magazine, titled “China Retail Industry Report 2014.” In this special edition of China Briefing, we provide an overview of the retail industry in China and the procedures for setting up a retail shop, focusing specifically on brick-and-mortar physical retail stores. Further, we have invited our partner Direct HR to offer some insights on the talent landscape in the retail industry, as well as tips for recruiting retail personnel in China.
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