BEIJING— Winter has come to the capital, and Wang Jie (a pseudonym) feels particularly cold. The multinational communication equipment company where he’s worked for 20 years has just announced widespread layoffs in the marketing, sales and service departments. Wang’s name was on the list.
When he joined the firm in 1994, he was part of the first batch of Chinese university graduates majoring in telecommunications. Like many of his classmates, he’d originally planned to go abroad for further study, but was persuaded to stay home by all the multinationals recruiting Chinese staff at high wages.
Not only was his first monthly salary — 3000 RMB ($495) — considered a very generous one at the time, he also climbed the ladder quite rapidly, moving from a technical support engineer to manager for the pre-sales technical service. Meanwhile, his company’s China branch also grew from a dozen of workers to nearly 60,000 today.
The cold wind blows
The downturn started three years ago. In the second-tier city where he is responsible, profits have continued to fall.
“The company has comprehensive compensation algorithms, and has agreed to give me a generous package,” Wang says. “It’s the psychological shock that is hard for me to take.”
Over the past two decades workers such as Wang Jie represented the symbol of an era. They had injected Chinese-style vitality into the foreign companies based here, while also introducing Western technology and vigorous management into China.
But more and more multinationals are now downsizing their Chinese operations. Some of them lay off the staff of an entire department, while others fire people a few at a time every week so as to spark less public attention.
Motorola laid off more than 700 Chinese staff in 2012. Nokia had announced total cuts of 10,000 people worldwide through 2013, of which a high percentage were Chinese workers.
Meanwhile, Chinese employees at IBM, which itself may lay off up to 8,000 this year, complain that while the workload has grown heavier, benefits have been reduced.
It used to be cool in China to be able to say you worked for a foreign company. Now that halo is replaced by a sense of helplessness.
A month ago, Lin was fired by Hewlett-Packard China. “After only 20 minutes of an individual meeting, and despite my years of service in this company,” he said. The American company’s layoff news brought quite a shock to China’s IT industry. Though not confirmed by Hewlett-Packard, an insider said the layoff affects around 20% of the company’s China workers.
Compared with Lin’s situation, Wang Jie’s superiors took a much more human approach. They tried hard to make the painful process of his exit as transparent and friendly as possible, even if he still feels bitter.
Where to go?
Moving from a foreign company to a Chinese one can be a rude shock. Take Chen, who used to work for IBM as a sales manager, where sharp suits, five-star hotels and leisure were a given.
“IBM was always behind me,” he recalls. “Anytime we couldn’t quite convince the potential customer, I just called and our foreign service support specialist would be right there. The company provided incredible resources.” Now working for a Chinese company, “to get any customer, I have to deal with everything all by myself,” he complains.
It’s undeniable that multinationals are at least 10 years ahead of Chinese enterprises in technology and services, and in particular at the core technology level. There is no sign yet that Chinese firms will overtake the multinationals in China in the near future.
But multinationals also have their limits. “The multinational leaves too little flexible control for their Chinese workers,” a business executive notes.
He cites the example of Yao, a mid-level manager who used to work for Motorola before joining Lenovo, China’s top computer maker, where he did not last long before being fired. “In general, Chinese staff who worked for multinationals only have to follow the directions of what is designated at headquarters,” the source notes. These local workers don't have the experience following the entire process of a project, including budgeting and execution.
This comparison is confirmed by another technical worker who had stints for both SAP and IBM. “In the multinationals, a worker tends to learn only the one thing in his post. They don’t provide local workers the chance of raising their self-worth,” he explains. “This is probably a major disadvantage that multinationals are facing in China.”
For those Chinese IT geeks who are recharting their career path, hanging on with foreign companies risks turning into a dead end. According to a survey conducted by Lenovo, younger Chinese people no longer see foreign companies as their first choice. Even though Microsoft China offers a 30-40% higher salary, many of these recent graduates say they’ll choose to work for a company like Lenovo.
Zhu Shaokang is one of those who chose to leave his multinational job when it was still early enough to switch career paths. As the general manager for the cloud computer and mobile Internet business services of IBM Greater China, he suprised those around him when he left a seemingly plum job for his age.
“I realized that when my team and I were in contact with all walks of life, even those who are looked down upon as provincial, I found my world of champagne and speaking in English is so out of touch with the pulse of Chinese clients.”