Cesar CantuChina is about to move its tremendous economic and bureaucratic machinery to compete more effectively in the global, increasingly accelerated tech market.
Chinese authorities recently announced a three-year plan which aims to upgrade its digital and non-digital workforces, training them in cutting edge and market-relevant technologies, such as AI, big data, data security, integrated circuits and smart manufacturing.
The plan consists of a wide array of programs that will remain active until 2026. These programs include a transformation of China’s school system. Chinese colleges are expected to introduce new majors related to the digital economy and educational programs for the training of workers and technicians that will directly serve the needs of local companies.
It also contemplates the attraction of “high-level digital talent” –both Chinese expats and foreign workers– to feed China’s economic machinery.
China is seldom mentioned as a competitor in the global tech talent market in spite of its impressive numbers. It is estimated that the country produces around 3.5 million STEM graduates each year and has about 7 million software engineers.
Even then, the second largest economy in the world has been struggling to keep up with local demand for expertise in high-skill tech, such as AI. It has been reported that, for every five AI-related jobs in the country, there are only two candidates available.
To make matters worse, China, with all its economic prowess, hasn’t been able to put an end to brain drain. Top Chinese engineers and developers keep moving to the US, Canada, Australia and other Western nations, where salaries are (generally) better and the long shadow of the Chinese government isn’t as prevalent.
In other words: China hasn’t been able to catch up with its own demand for digital skills, even with its impressive academic, economic and professional apparatus. In that context, it’s not surprising that Beijing is going full-throttle in its ambitions to improve its current workforce and lure both expats and foreign experts into its orbit.
One has to wonder, however, given China’s large and deep economic footprint worldwide, if this three-year plan will affect labor market dynamics in the APAC region or even beyond.
Challenges for a giant
China’s status as an economic giant might give the impression that it can attract foreign talents with the same ease as some of the West’s most developed nations, such as the US, Germany, Canada and Australia. That’s not necessarily the case, though.
“Data shows that China has not featured among the most popular destinations for expatriate talent,” commented John Nurthen, Executive Director of Global Research at advisory firm Staffing Industry Analysts (SIA). “Even though the Chinese government’s plan may successfully persuade high-level digital talent to return to China, attracting foreign talent could prove challenging due to language, cultural, political and pay issues.”
The fact that Mandarin Chinese is spoken mainly within China and its territories can prove a real problem for foreign workers, explained Mr. Nurthen. Plus, there are cultural and political factors at play.
“Cultural and political differences across Southeast Asia are quite diverse, so the Southeast Asian tech labor market is highly fragmented,” Mr. Nurthen added. “China would need to offer high-quality, highly-paid jobs alongside an attractive lifestyle to make tech talent apply for a work visa appealing.”
The Chinese government did not specify where it would be shopping for talent. It might stick to Southeast Asia, but it could also try its hand in Eastern and Western Europe, Australia, the US or Latin America. Even then, the challenges identified still apply. Talents from countries outside of China might find more interesting options elsewhere; if not economically, at least culturally, socially and politically.
It goes the other way around too. Some might regard China as an “expat factory”, but that’s not the same thing as being a source of talent for the global labor market the way it happens with Eastern Europe, India and parts of Latin America. Companies in the US, Canada, Western Europe and other developed economies might prefer to shop for engineers in well-known offshore and nearshore locations instead.
“Knowing that the cost to hire a software developer changes drastically from region to region and that great software engineers are not only found in overseas regions like Eastern Europe or Asia, hiring talent from regions with the same or overlapping time zones as those of the company’s HQ, or nearshoring, is an option companies will continue to be increasingly interested in,” commented Damian Wasserman, Co-Founder of nearshore staffing firm BEON.tech.
Cause for worry?
China’s three-year plan might rouse some fears among headhunters and providers of global tech talent. It seems, however, that Beijing’s strategy is aimed at dealing with the shortcomings of its own economic structure at the moment.
“The country can avoid skills shortages if it successfully trains its own workforce in the skills necessary to harness its digital potential,” explained John Nurthen. “With a population four times that of the US, China has a significant local market for digital services as well as being the world’s largest exporter with some very prominent software firms.”
China’s hunger for talent over the next three years has the potential to impact wages in the APAC region, and perhaps even in zones of Europe. For the Americas, however, that impact will most probably be negligible.
“Although Asian regions or even European regions could see their wages impacted by this strategy, it’s also true that the tech talent bond between the US and LATAM keeps growing stronger and could potentially remain unaffected or even benefit from this change,” commented Mr. Wasserman.
Providers of global tech talent –businesses, cities and even whole countries– need not worry about China’s three-year plan. Its aims differ from those of emerging and well-established nearshore/offshore locations.
Nevertheless, Beijing’s strategy can provide a useful roadmap for any other entity interested in upgrading its workforce to meet the coming demand for expertise and the coming challenges of the tech industry.
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