BEIJING, Oct. 11 -- Despite its apparently vast labour supply, China faces a looming shortage of home-grown talent, with serious implications for the multinationals now in China and for the growing number of Chinese companies with global ambitions.

    So found new research issued over the weekend by McKinsey Global Institute (MGI), McKinsey & Company's economics think tank, and McKinsey's China office.

    Less than 10 per cent of Chinese job candidates would be suitable to work in a foreign company within the sectors of services and exports, MGI said.

    To avoid a talent shortage and to sustain its economic ascent, China must produce more graduates fit for employment in world-class companies, whether they are local or foreign ones, the report said.

    Commenting on the report's findings, Andrew Grant, a director who leads McKinsey & Company's Greater China Practice, said China's looming quality labour shortage could stall its economic growth and its migration up the value chain from manufacturing to services.

    China must dramatically increase funding for its universities, improve its English-language instruction by recruiting teachers from abroad, and do more to attract home the many students who study abroad, the director said.

    The year-long study, which included interviews with 83 human-resource professionals involved with hiring local graduates in low-wage countries, revealed:

    Out of nine occupations studied (engineers, financial workers, accountants, quantitative analysts, generalists, life science researchers, doctors, nurses, and support staff), only 1 out of 10 Chinese job candidates would be suitable for work in a foreign company. For example, despite having a pool of 1.6 million engineers, only 160,000 of these are considered suitable for work in multinationals, about the same as in the United Kingdom.

    In China, engineers' education is biased towards theory. They receive little practical experience or involvement in teamwork projects compared with graduates in the West.

    For jobs in the eight other occupations studied, poor English skills was one of the main reasons given for rejecting Chinese job applicants.

    Companies that are already in China and serve its fast-growing domestic market may also have difficulty finding enough suitable employees in key service and managerial occupations.

    China will produce 1.1 million graduates suitable for employment in world-class service companies from 2003 to 2008. Over that period, large foreign multinationals and joint ventures alone will have to employ an additional 750,000 graduates.

    In addition to front-line staff, there is an acute shortage of middle managers: over the next 10-15 years, China's companies will need 75,000 managers who can work effectively in global environments. Today, they only have 3,000 to 5,000.

    On top of the generally low suitability of Chinese graduates, they are also widely dispersed and not very mobile.

(Source: China Daily)