I was asked to do additional reporting and write an article about China’s firms and the labour market. It doesn’t matter if it is international companies or domestic firms, the young people of China care about hukou, salary and career development. I interviewed my university friend Wu Danni who spent a couple of months in Australia for her journalism exchange. It was great to get a thorough first-hand perspective on the importance of the hukou. I really did took some aspects of my life for granted. Again, although I can understand why the government installed such a system, problems linger- they always do. A huge country with a huge population = lots of headaches.
Do young Chinese prefer homegrown firms?
For some young Chinese, the desire to work for foreign companies – once seen as the gateway to better opportunities – may be losing its appeal.
24-year-old Mo Zilu, who’s due to graduate from Zhejiang University of Technology this year, is one such example.
“In the past, the dream job would be a position at a foreign company with a better prospect and salary. But with Chinese companies improving now, the difference in the salary isn’t that great anymore,” said the information and computer science major who has set his sights on telecom-equipment giant Huawei Technologies.
Wu Danni, a fresh graduate from Tsinghua University also told CNBC that she wouldn’t mind working for a domestic firm.
“Homegrown companies are becoming popular since they are developing well and there is [still] room for growth. Employees also have the chance to go abroad for training which expands their opportunities,” the 25 year-old said.
Recruitment experts say this shift has much to do with Chinese firms gradually closing the gap with their foreign counterparts in terms of remuneration and training.
“The change resulted from multiple reasons including a willingness by private firms to recruit candidates with high qualities. They also care more for employees by providing them with all-rounded trainings and meeting salary expectations,” Mr. Raymond Wong, general manager at Hudson ICT China wrote in an email to CNBC.
Chinese students’ preference to work for foreign companies fell 17 percent on year in 2014, according to a survey of 51,000 undergrads from 100 mainland universities by employer branding firm Universum in April.
While the tide is turning, experts think this gravitation towards homegrown businesses may be sector specific.
“For certain sectors like IT and internet we noticed an increase in preference especially for those homegrown companies with large market shares like Lenovo, Tencent, Alibaba and Baidu. For other industries like banks and energy, the preference for state-owned companies remains prominent,” says William Wu, country manager, China, Universum.
According to Universum’s findings, the Bank of China remains the most ideal employer among business students. Industrial and Commercial Bank of China (ICBC) and Citi rose one spot each to the second and third positions. Homegrown lenders have widened the gap with their foreign peers on key strengths like secure employment and financial strength.
Huawei, another homegrown firm, was named the top choice among engineering students. It rose from the third position last year, overtaking second-ranked Google.
“Huawei has invested largely in its employer brand on campus for many years, in addition to the sizable job opportunities the company offers to graduates. Also the company is well known for its global presence,” says Wu.
“The internet, e-commerce and high-tech business are very inviting to the youngsters today. From their perspective, these jobs fulfill their spirit of risk-taking and entrepreneurialism,” Hudson’s Wong said.
Young job-seekers are worried
China will see a record 7.27 million college graduates in 2014, according to state broadcaster CCTV. Amid signs of an economic slowdown, Premier Li Keqiang called for 10 million new urban jobs to be created this year, but this has not allayed young job-seekers’ concerns.
Universum says Chinese undergrads have lowered their salary expectations by 3 percent to 6,454 yuan ($1,036) per month this year due to a double whammy of an economic slowdown and fierce labor market competition.
Young Chinese whom CNBC spoke to cited another source of worry: the hukou, China’s household registration system.
The hukou ties access to public services like health care to a person’s place of birth. Originally implemented to control people’s movement across the country, this restriction is now a major barrier for the urbanization process. Millions of migrant workers living in urban cities are denied essential benefits like education with the lack of a local hukou.
Based in Beijing, 25-year-old Wu said the hukou plays a big part in her job hunt: “For government–related enterprises, you have a higher chance of getting a Beijing hukou so it makes things easier as compared to joint ventures or private companies. It is a major factor and it limits your options.”
For Zhou, it’s more about planning for the future: “Some students prefer lower salary with hukou to higher salary without hukou because it impacts your future plans in terms of buying houses, cars, and even the choice of schools for your children if you choose to stay in big cities like Beijing and Shanghai.”
However, Hudson’s Wong notes that Beijing has been trying to resolve inconveniences related to the social security system.
“Over the past years, the government has been gradually releasing the hukou restriction. At the same time, the growing number of private and international schools is making life easier for those who do not have a local hukou. Many companies are also coming out with policies to help talents from other cities settle down,” Wong said.
— Written by See Kit Tang; Additional reporting by Wendy Min