China’S Brain Drain

Abstract

Based on China’s status quo of crisis management, the study collects data and information to analyze the reasons for brain drain which is a major problem of Chinese enterprises. Moreover, differences between the U.S. and China system of human resource management will be discussed to provide suggestions for resolutions for improvement of talent maintenance.

Introduction

In the past two years, continuous emergence of business crises happened at home and abroad giving rise to increasing awareness of crisis prevention and response experience. Crisis management, as a significant part of human resource management, attracting more greater attention of human resource managers and executive managers (Jun Sun, 2005).

Wikipedia has the definition that:” A crisis is a turning point or decisive moment in events. Typically, it is the moment from which an illness may go on to death or recovery. More loosely, it is a term meaning 'a testing time' or 'emergency event'. It is a concept in economics (discussed elsewhere) and in international relations, discussed below.

Renowned domestic crisis public relations expert ChiaoCheong Yu founded a definition of crisis: the crisis is serious losses or serious threat of loss contingencies a corporation (personal) suffered. To both individuals and businesses, the crisis has two meanings, namely, "risks and opportunities" that is the watershed in the turn of fate of organizations and individuals. For better or worse, how crises are managed is the deciding factor.

For domestic HR managers, crisis management is a new task that includes many aspects, such as job-hopping, production contingencies, tense labor relations, etc., and so a series of crises caused huge losses to the enterprises. At present, China's enterprises are more vulnerable to such personnel crisis, products & services crisis and industrial crisis, among which personnel crisis ranks first in the crisis list. Personnel crisis will bring about a consequence of other crises, followed by a credibility crisis, information crisis, financial crisis and an operational crisis. Thus, prevention of personnel crisis is urgent and essential so that corporations can reduce potential crisis to minimum.

The major problem of personnel crisis is brain drain, an intellectual movement from less developed countries to highly developed countries. A worldwide competition for intellectual capitals has been widespread. From 1949 to 1973, U.S. introduced 160 thousand technological talents from all over the world. Those intellectuals created 1,000 billion revenues for post-war U.S. and established U.S. as an economic power (Jiang Wei, 1994). Multinational enterprises take advantage of high pay, promotion, development opportunities to attract talents from the third countries. China and other developing countries are facing severe brain drain and talents competition. Now China is making new policies to try to maintain local talents and attract foreign experts.

The first part of this article will tell the status quo of crisis management in China’s enterprises. The second part of the article is to analyze major reasons of personnel crisis, that is, brain drain. Data and examples are collected to explain competitive advantage foreign corporations have over China’s corporations. The third part will discuss the differences between the HR system used by U.S. and China human resource management on the basis of crisis management.

Key words: crisis management, brain drain, foreign enterprises, China’s enterprises

I. Status quo of crisis management in China enterprises

According to a survey of senior managers, 50.4% of interviewees heard of “crisis management”; 25.07% of them had no idea of “crisis management”; 24.53% of them had no concept at all. With regard to the concept of “emergency”, 42.32% of senior managers viewed dangerous implications with a bearing on units and individual development as emergency; 35.58% considered crisis as “emergency” (though “emergency management” is still a rising term in management); those who mistook “intractable problems” as crisis accounted for 22.1%. 　

The graph below indicates low talent utilization in China enterprises. Personnel crisis has been a severe test for China’s human resource management.

The survey above and below were conducted among readers of the Chinese edition of the Harvard Business Review and alumni and business partners of IMD respectively.

These observations reveal firms receiving far less of their "talent capacity" that their employees are capable of giving.

Faced with crisis, enterprises can not only expose problems in products and services, but also expose deficiencies in enterprise management. In this poll mentioned above, 33.33% of staff expressed positive support for corporations resolution to crisis; 15.19% people will be out of situation; In addition, 20.51% of people will consider overall situation and make a wise decision on organizations critical juncture, and if enterprises can not restore its reputation, they will consider the option of replacing work; 30.97% will proactively switch jobs.

Though employers value loyalty in selection, it is critical for corporations to hold up employees’ loyalty to business by establishing a cohesive corporate culture and maintaining close internal public relations. Only when enterprises endowed employees with a sense of belongings will they safeguard the reputation and image of the enterprises.

II. Multinational enterprises’ competitive advantage over Chinese talents

Go back to year 2004 and 2005, surging redundancies and job-hopping revealed frequency and seriousness of personnel crisis. Job-hopping accounts for only 9.53% of human resource crisis (Jun Sun, 2005). Huge iceberg remains under water.

Advanced economic situation attracts talents

Intellectual drainage refers to intellectuals moving from a less developed country to a highly developed country. It is widely acknowledged that advanced regions attract more talents and investment. Whether a country is economically developed depends on its foreign-invested enterprises and expatriates.

Whether a transnational company is prepared for global success depends