Recruiting in China After COVID-19: HR Planning and Talent Acquisition for SMEs

By Ellen Yin, Assistant Manager, HR, Dezan Shira & Associates Shanghai Office

COVID-19 has caused great disruptions to China’s economic activities. Industries, such as catering, tourism, film and television, and retail, have been hit badly due to the pandemic outbreak. Many enterprises, especially small- and medium-sized enterprises (SMEs), have had to suspend new hiring or even downsize staff to cut labor costs and survive financial difficulties.

That said, now is also a great time to reconsider the firm’s human resources (HR) planning and recruitment arrangement. Here is why.

Firstly, SMEs can evaluate and adjust their business development plan, dissolve unnecessary business units, and set up new lines of business that meet the new market needs.

Although the COVID-19 pandemic has taken a toll on many industries, some industries, such as healthcare, e-commerce, online education, online medicine, telecommuting, and gaming, have seen explosive growth. Overall, COVID-19 will have a profound impact on future economic activities. To stay agile, enterprises should seize new market opportunities to achieve business transformation and stabilize their core business. For example, in the early days of the infectious outbreak, Chinese electric-vehicle maker BYD launched the world’s largest medical mask plant to meet the huge demand of masks at home and abroad.

Compared with large companies, SMEs can be more flexible in achieving business transformation. They can reorganize their HR structure and start recruiting talents more quickly to prepare themselves for potential changes. Given their limited resources, such entities must be adaptable to survive and stay relevant in the market.

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Secondly, SMEs should develop medium- and long-term human resource planning strategies to prepare well for new challenges in the post-COVID-19 era.

COVID-19 is now under control in China. Daily life and economic activities are gradually returning to normal. To restore the economy, the Chinese government has issued a series of preferential policies that will be effective until the end of 2020, including tax and fee cuts and social insurance exemptions. It is a rational choice for foreign companies to do business in China, under the current circumstances.

Moreover, it would be much easier for SMEs to locate targeted talents with lower employment costs under COVID-19.

In China, there are structural problems in labor supply – high quality talents with high skills are difficult to obtain due to the fierce competition. By convention, Chinese employees choose to quit jobs before the Chinese Lunar New Year and look for new job opportunities after the holiday.

However, the COVID-19 outbreak right before the holiday unexpectedly disturbed the established rhythm. A lot of people found it difficult to get themselves suitable jobs after the festival. Some companies laid off their employees due to the pandemic. Given this situation, it is a good time for companies to hire outstanding talents.

Recruitment is a fundamental and important part of HR management and for the business growth of the company. The first issue a foreign-invested enterprise (FIE) may encounter after entering China is hiring suitable local employees to support its business development.

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Recruitment is an important means for companies to obtain talents. If companies cannot find suitable employees over a long period, their ability to operate normally will be affected, resulting in the waste of time and money.

Naturally, recruitment serves as the foundation for HR management. If the recruitment work is not efficiently executed, it will affect all other aspects of HR management, such as employee training, compensation and benefits, performance evaluation, labor relationship, etc. In case an unqualified staff is employed, it will cost much more time and money in conducting training sessions to ensure the employee fits in the team. Therefore, recruitment can determine the success or failure of HR investment.

Generally, we divide recruitment into internal recruitment and external recruitment – internal recruitment includes post rotation, promotion, reassignment, and internal referrer, whereas external recruitment is to locate external talents through campus selection, websites, and job fairs.

An SME with a small number of employees and simple organization structure will rarely need to employ a large number of employees. Therefore, most SMEs do not have a local professional HR team to support the recruitment work. There are some concerns when they hire new employees:

1. Foreign-invested SMEs are not familiar with the local labor market, such as the talent pool situation, the salary range, the employment cost, etc. Thus, it is very hard for them to come out with a reasonable HR solution. Ultimately, the recruitment becomes more difficult and the recruitment cycle gets prolonged.
2. Information asymmetry is common in the recruitment process. Normally there are two kinds of recruitment information. One, is the information companies and candidates both know well, including company information, job description, and salary range. The other, is the information candidates know well but companies don’t, such as candidates’ personality, actual capability and knowledge, motivation for applying to new jobs, individual qualities etc. For foreign SMEs that have just entered the China market, they will not be familiar with the local talent market and will lack effective talent assessment tools and means of selection – this will put the firm at a disadvantageous position.
3. It is difficult for SMEs to attract talents considering their employer brand hasn’t been well recognized in the domestic talent market.
4. SMEs normally want to hire employees with multiple skills to handle different roles, which will cause ambiguity and uncertainty in the role description. This makes it harder for them to proceed with the recruitment work, as well as perform the later job analysis.

Recruitment is a challenging work that imposes high standards for recruiters when done right. Below we list out the key stages of the recruitment process and summarize the required competencies and knowledge for a qualified recruiter.

To meet their integral recruitment needs, SMEs can outsource their talent acquisition to a professional recruitment service vendor like Dezan Shira & Associates. DSA can improve the SME’s market position by helping build a good employer brand identity among potential candidates. In addition, DSA has a rich recruitment experience, a specialized talent pool, good connections in different industries, provides an objective third-party judgment, and possesses the effective talent assessment tools to help SMEs obtain the most qualified candidates.

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