turtle.jpgChina's looming skills shortage does not get a lot of coverage but it is a growing problem, not least for western businesses in China that need to recruit skilled local talent.

Brian Schwarz, a Shanghai-based writer and EngagingChina reader, has written an excellent article in Asia Times on the attempts of one Chinese city, Shanghai, to lure back the “sea turtles” — Chinese working abroad — through job fairs and recruitment drives in the US.

Local governments in other cities are taking similar actions in a bid to counter the looming skills shortage. According to a McKinsey Global Institute study, Chinese companies trying to expand abroad will need up to 75,000 internationally experienced leaders if they want to continue to grow over the next 10 to 15 years. Currently, there are only 3,000 to 5,000 suitable men and women in the whole country.

The problem does not just effect managers. The shortage of world-class university graduates in key occupations such as finance, accounting, engineering and business represents a major problem for multinationals in China and for Chinese companies.

Labour turnover is approaching 50% in many industries and businesses have reportedly been forced to increase wages and improve working conditions to attract and keep their best workers.

Nothing wrong with that, of course, and it might help shake off China's sweat-shop image in the west. But increased competition for workers will drive up labour costs and dull what has to date been China's principal competitive edge.

Western businesses attracted to China by the prospect of cheap and plentiful workers could be in for a shock in the not too distant future.

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