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Wednesday,May 02, 2018

Second-tier locations drawing away some of best and brightest


Hao Zhongxiu and his wife, both information technology engineers in Beijing, are used to the lengthy workplace discussions that inevitably follow any change to the capital’s household registration policy.

The participants may change, as people come and go, but for those from other parts of China, the central question remains the same: Does this mean I can now get permanent residency in Beijing?

Household registration certificates, known as hukou, give nonnative residents access to the same social benefits as locals, including health insurance, and enable their children to attend local public schools. In effect, they radically reduce the cost of living in the capital.

Hao, who works for social network Sina Weibo, said the discussions among his colleagues about residency are more frequent than ever since the release of three documents related to Beijing’s hukou policy in the past two months as the city steps up efforts to attract and retain high-end talent.

"The government’s restrictions on hukou applications have been kind of loosened as the competition for talent escalates nationwide. It’s a good sign," said the 28-year-old, who moved to the capital in 2012 after graduating from a university in his native Inner Mongolia autonomous region.

However, despite Hao’s optimism, recruitment industry insiders say the recent moves by Beijing and Shanghai to respond to the growing demand for well-educated, highly skilled employees - fueled by China’s move toward an innovation-driven economy - may have come too late.

The country’s best and brightest are already considering other regions, insiders say, largely due to the high threshold for applying for hukou in megacities and the incentives being offered by smaller cities.

Domino effect

In March, Beijing launched a pilot program to offer hukou to the talent the capital needs, such as people in senior positions at high-tech or innovative enterprises. The capital also launched a point-based application system on April 16, with candidates graded on factors including education and entrepreneurial ability.

Meanwhile, Shanghai published a document in late March targeting top talent in 13 sectors, including artificial intelligence and quantum science.

Wang Huiyao, founder and president of the Center for China and Globalization(CCG), an independent Chinese think tank, said the two cities drafted the policies to address the fact more top-level workers are heading to second-tier cities, which have also introduced preferential policies like removing hukou application thresholds or providing accommodation subsidies.

Wuhan, the capital of Hubei province, announced a plan in February last year to attract 1 million graduates over the next five years. This resulted in a domino effect, with dozens of cities following suit with enticing policies.

"Previously, many talented people chose to work in Beijing and Shanghai because they wouldn’t be able to get hukou in a second-tier city either. But with the fast development of second-tier cities and their lifting of hukou restrictions, we’ve seen talent flowing out of first-tier cities," Wang said.

Last year, the number of people who left Beijing surpassed those arriving, and many of those who left had the kind of talent the capital needs, he said.

With China shifting to an innovation-driven economic mode, "local governments have realized the importance of talent," Wang added.

Chen Yu, vice-president of the China Association of Employment Promotion, said the country has lost its demographic dividend due to an aging population, while many workers with repetitive tasks have been replaced by machines. The competition for talent is inevitable as the country turns to the "talent dividend" for development, he said.

Welcome move

Chinese search engine Sogou, which is headquartered in Beijing, has welcomed the capital’s talent drive.

"As a science and technology enterprise, we are encouraged," the company said in a statement, adding that the hukou system has long been a restrictive factor that has left science and technology companies at a disadvantage when hiring technical personnel.

"Some companies have had no choice but to base research institutes in other cities to attract talent," according to the statement, which praised Beijing’s efforts to lower the threshold as timely and necessary.

Zhao Rui, a senior consultant at Leadership Consulting, said the capital’s policy change is good news for her company, too, as it mainly serves enterprises in the high-tech sector. Many high-end Chinese workers want to know upfront whether a prospective employer can help them get work and residency permits before taking an offer, so a good hukou policy is crucial, she said. "Beijing and Shanghai will continue to attract highly sophisticated technical personnel," she added, "while second-tier cities will attract well-educated hardworking young people in the internet and e-commerce sectors."

However, some headhunters have said they doubt the policies of Beijing and Shanghai will be effective in attracting high-end talent because they still set high thresholds.

According to Beijing’s document in March, those with important positions at high-tech enterprises as well as those working at the headquarters of innovative enterprises and at new-type research and development institutions in Beijing are now eligible to apply for hukou. So, too, are those with an annual taxed salary at least six times of the average in the capital.

Yet many who fall into these groups are probably in a position to have green cards in developed countries and have little interest in obtaining Beijing hukou, said Guo Tao, CEO of Connected-R International, a Shanghai-based headhunting company. Meanwhile, he added, people in the middle-income range - many of whom desire hukou to send their children to public schools - do not qualify.

"A big proportion of the talent in the IT sector prefer Hangzhou over Beijing based on our experience," Guo said in an earlier interview. "Beijing has been making efforts to introduce talent from the United States and Europe, but I believe it’s neglected the domestic talent a bit compared with other Chinese cities."

Hu Xin, founder of Soft-Power Headhunting, based in Beijing, said a relatively small number of midlevel talent are leaving first-tier cities in favor of smaller cities where they see better development opportunities, perhaps closer to their hometowns. Like Guo, she cited Hangzhou as a draw for those working in e-commerce.

"First-tier cities used to have an edge because of their access to information. But with the development of transportation and communication, information has become increasingly transparent. The gap between first-and second-tier cities in information access has narrowed," she said, adding that talent can now be successful in smaller cities using the same business modes as in the major metropolises.

Zhao Meng, who works in Beijing for British recruitment firm Michael Page, said the capital’s new initiatives may be more beneficial for international companies than domestic private enterprises.

China’s private companies often avoid tax by not accurately declaring their employees’ salaries, therefore workers who actually make the grade in terms of salary may not be eligible for hukou because their company’s records do not reflect their real situation, according to Zhao, who added that this is not the case with international companies.

Hao at Sina Weibo said he has seen many of his friends, mostly IT engineers, leave the capital, primarily due to the pressure that mounts after having children, as they seek access to public schools without a local hukou. However, he and his wife plan to stay.

"As people from northern China, we want to stay in the north, and Beijing is one of the best options," said Hao. "And, one day, it’s possible the policy may be loosened even further so that we may be lucky enough to be beneficiaries."


From China Daily,2018-5-2