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From Wang & Li CEO, Larry Wang.
Earlier this year, many of the senior managers and executives I talked to were sharing with me their expansion plans for this coming year here in China. For those of us leading international businesses in the mainland, the expectations from both ourselves and from our overseas headquarters is to deliver strong, double digit growth for our operations in this market. With so much business potential still to be realized, that kind of expectation for China is fully expected.
With the global financial crisis hitting multinationals hard around the world right now though, a significant change to that growth equation has started to happen. Corporate headquarters are still expecting the same level of aggressive growth for their China operations for this market, especially as their 2009 business forecasts for major markets like the U.S. and Europe take a big hit. But instead of supporting that growth with the increased headcount that was originally budgeted earlier in the year, in many instances it must now happen with whatever current resources are in place.
For instance, one regional VP of a major, international internet company told me of his plans to launch a new service here in China where he was to build a department of 10 people to drive the business. Recently, however, he’s been told by his HQ that he no longer has the headcount to build his department, although the target _object_ive has not changed. What he will need to do instead is pull and coordinate resources from their other worldwide operations to drive the project and deliver the same result here in China. Although this is the mandate his HQ has given him, “virtually impossible” is his assessment of using this approach to achieve the original _object_ive.
In another instance, an IT consulting firm gave us 10 new, internal positions to help them fill just two months ago. We also attended their new office opening last month, which is big enough to accommodate their aggressive growth plans in China and nearly 50 people over the next 2-3 years (currently, they have less than 20 headcount). Just last week though, they let us know that they are putting off their hiring plans until first quarter of next year. And that’s only if they are able to win some new consulting projects during this time to justify those additional headcount now. If they can’t grow their business in the mainland as originally projected, then they are concerned about carrying a long-term, office lease for a place that is 2-3x bigger than what they can utilize over the next year or longer.
Hopefully, these and the many other examples we are seeing of multinationals in China being asked to freeze their hiring here is only a delay, or push, in their staffing plans for this market. And as the situation gets even more difficult in other places around the world, what we will end up seeing see is actually an acceleration of activity in the mainland as companies try to compensate for considerably lower revenues elsewhere. In my opinion, we should know whether that scenario plays itself out in this way in the next three months or so.
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