Human resource management is a dynamic and constantly changing process, which is also applicable to the human resource management of enterprises going international. As international business has become an indispensable part of many Chinese enterprises, the management of international human resources and organizational structure has also entered a more mature and systematic stage.
In this process, as a talent solution partner for enterprises going international, LHH FESCO, the Beijing-based human resources management consultancy I am with, has witnessed mutual growth of enterprises and individuals. Unfortunately, there are also failures. It is gratifying to see that a growing number of enterprises going global are paying attention to the long-term planning and strategic deployment of human resources, rather than just focusing on short-term talent recruitment. They have realized that to succeed in the global market, they need to build an overseas talent ecosystem. This system covers a series of planning and design, from market access to talent attraction, team building and development, and business compliance. Only by truly understanding the local market and talent demand can they accurately invest in people and achieve sustainable development.
Although Chinese enterprises are at different stages of going global, they face some similar challenges. Talent attraction and retention, business compliance, and cultural integration are three major challenges they face in international expansion.
An expatriate employee suffering from burns is taken by an emergency medical charter flight to a hospital in Jakarta on the evening of April 1, 2022.
Retaining Talent in a BANI World
Talent search and retention is undoubtedly the most pressing issue, which has a far-reaching impact on the sustainable management of enterprises. Senior talents excelling in sales and marketing are in high demand for most Chinese businesses we serve.
According to our internal data, demand for such positions accounts for as high as 65 percent of our business, which is followed by demand for senior engineers and technical experts, making up around 18 percent and 20 percent, respectively. Demand for directors or strategic mangers of overseas branches makes up around 13 percent of our business.
Enterprises in different stages of going international have slightly different demands for talents. From our observations, an overemphasis on sales personnel but less attention to management talents shows that Chinese businesses are still at an early stage in reserving talents for their long-term presence in a foreign market. In the long run, it may lead to an imbalance in the structure of their international talent team, which in turn will have an impact on the implementation of their talent management system in overseas markets.
For instance, there may be hidden dangers at key areas, such as talent localization, cultural integration, the setting and distributing of compensation and benefits, the reserve and development of overseas talents, data security, and business compliance.
In addition, due to the lack of in-depth understanding of overseas markets and local networking, enterprises may make mistakes in talent strategy. Most enterprises that have just gone global have not yet fully established themselves as a respectable employer brand overseas or are in the initial stage of brand building. As a result, they find it difficult to attract high-quality talents from the local market.
From a talent perspective, the world is in a BANI (Brittle, Anxious, Nonlinear, and Incomprehensible) era. Career people are looking for a more secured way to take control of their future. Knowing what employees are thinking can be beneficial for businesses to retain talents.
According to a survey of 30,000 employees and business managers around the world conducted by the Adecco Group for five consecutive years, uneasiness is a common feeling among employees. More than 70 percent of them prefer to stay with their current company, up 12 percent from the previous year, indicating that employees are less willing and likely to leave their jobs.
For them, stability and certainty are of paramount importance. They want employers to provide them with skill upgrading and career mobility opportunities to help them rebuild confidence and motivation. Half of employees say it is the employers’ responsibility to help employees understand the changing nature of work, and 42 percent say it is the enterprises’ responsibility to make sure employees are equipped with necessary skills to adapt to the future.
For employers, this means that fundamentally, the strategy to retain talents lies in employees’ in-house mobility, skill upgrading, and development opportunities. This can not only consolidate the loyalty of the existing personnel in the organization and enhance the core competitiveness of the enterprise, but also help improve the talent supply chain from within.
Knowing Local Laws and Regulations
Labor laws and taxation laws vary in different countries. Chinese companies need to strictly adhere to local employment laws and regulations to ensure that the recruitment process is legitimate. For example, as their projects finish, some Chinese companies may have to cut the project departments or branches overseas. Risks may arise correspondingly, such as labor disputes. It will hurt the company’s reputation overseas and even lead to legal penalties. Companies need to develop capabilities to deal with such problems reasonably in accordance with the law.
In addition, in Europe and the United States where market regulations are well established, there is a higher threshold for market access. For example, there are mandatory DEI (Diversity, Equity and Inclusion) reporting requirements.
Therefore, enterprises need to understand local laws, identify risks, and make contingency plans before going global. They should also pay attention to policy trends and deal with hidden dangers in a timely manner. This can be addressed by having an overall human resources solution partner who not only understands the operation mode and development demand of Chinese enterprises, but also has long-term cooperation in many popular investment destinations overseas.
High Demand for Cross-Cultural Training
Among the enterprises we have served, the demand for cross-cultural training has risen by 165 percent over the last two years. The demand for such training in investment destinations surged 78 percent over the last six month. Such training revolves around language skills, communication and cooperation skills, local culture and customs, corporate culture and business philosophy, as well as local laws and regulations.
Labor laws are highlighted in training in laws and regulations. For senior executives sent to an overseas investment destination, the most important ability they need is cross-cultural leadership. Our clients usually purchase our service package integrating senior executive recruitment and cross-cultural leadership training because they realize that finding the right person is just the beginning, and how to equip them with necessary skills to obtain local support and secure long-term development is the key to success.
According to our survey, enterprises that have carried out systematic cross-cultural training outperform in terms of workforce efficiency, local market response speed, and product or channel management efficiency in overseas markets.
Chinese and foreign employees of a tunnel project of China Railway 18th Bureau Group plant trees in Medina, Saudi Arabia, on March 28, 2023.
Building an Overseas Talent Ecosystem
Building a talent ecosystem is not an easy task, and it is even more difficult to build a talent ecosystem that knows yourself and knows “others” (“others” refers to entities other than the enterprise, such as employees, local partners, and local labor unions). The following question lists can be used to see if an enterprise is well-prepared for global expansion.
The “know yourself” questions include: What kind of talent does my overseas business need? What kind of person do I need to recruit at home and what kind do I need to hire locally? Is my talent planning conducive to the development in the next three to five years? How to find local talents? How to set the remuneration? How to do background check for locally recruited employees? How can I run a business smoothly? If the person is not suitable, how can I terminate labor contract legally? How to apply visa for employees to be sent to a foreign country? Who can help me deal with emergencies? Have I got a contingency plan?
The “know others” questions include: Are my employees ready for working in another country? Will they be able to adapt? What else can I do for them? Is employees’ career expectation in line with the direction of my business development? Do I know the local labor unions? How are labor laws? Are there risks with people I hire locally? What do they expect from working for me? How are they different from domestic employees? Do I have a reliable local partner? Who are they? How should I find such partners?
As a professional workforce solution provider, we suggest that enterprises examine from a macro perspective their recruitment strategy, employment training and development, management of labor relations, employer brand building, and strategy for talent attraction. Well prepared in human resources, they will find it more smooth to explore foreign markets and better adapt to global market competition. 
WU LILI is CEO of LHH FESCO, a human resources management consulting joint venture founded in Beijing in 2021.
