The Reapot disccuss about Suzhou and Chengdu being an upcoming tier -2 city in China for setting up facilities

1. Installed Talent in Tier II China Cities – Suzhou
& Chengdu
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3. 3
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Talent, Cost, Peer Group Footprint & Trends
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setup and expansion
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setup and expansion
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6. 520+ Cities
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Module 1: Talent Intelligence Module 2: Talent Analytics
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• Salary and Cost
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7

8. Zinnov 8
CHENGDU
• Chengdu is China’s fifth most populous city and provincial
capital of Sichuan Province.
• According to the World Bank's 2007 survey report,
Chengdu was declared "a benchmark city for investment
environment in inland China"
• Currently, it is the top investment location in inland China
due to a large graduate population, low operating costs,
most livable city reputation (western China), and
government’s efficiency in dealing with foreign investments
• China's state council has designated Chengdu as the
country's western center of logistics, commerce, finance,
science and technology, transportation
and communication SUZHOU
• Suzhou has second largest economy in the Yangtze River
Delta after Shanghai. It contributes 2.3% to country’s GDP
• As one of the Satellite cities of Shanghai, its infrastructure
is as good as any other Tier I city
• With stable society, convenient transportation, beautiful
environment, efficient government and considerate
service, Suzhou is most suitable to make an investment
• Suzhou was ranked 5th on the Forbes list of ‘Best Cities for
Business in Mainland China’ in 2010
• Suzhou is considered as one of the world’s top
manufacturing location of laptops and digital cameras
Parameters Chengdu Suzhou
City Population(2011) 7,123,697 6,376,600
MSA* Population 14,040,000 11,800,000
Area 12,132 sq. km 8,488 sq. km
Official Language Mandarin Mandarin
Literacy Rate 93.7% 93%
Unemployment Rate 3% 4.3%
Population Growth Rate 0.48% 2.44%
Legally Employable
Population
11,230,000 8,662,000
Key Industries
Pharmaceuticals,
ICT, Automotive,
Aerospace
ICT, Electronics,
Textiles, Chemical,
Mech. components
Chengdu
Suzhou
Note: *MSA – Metropolitan Statistical Area
Source: Doing Business in Chengdu; Invest in Chengdu – government website; Government of Chengdu. 2011-05-13. Retrieved 2012-03-16;
Government of Suzhou. 2011-03-18. Retrieved 2012-03-18; Doing business in Suzhou
LOCATION ATTRIBUTES: CITY OVERVIEW
Chengdu is the scientific and business hub of south west China; Suzhou is one of the most
important industrial centers in the Yangtze River Delta economic development zone
8

9. Zinnov 9
LOCATION ATTRIBUTES: CITY OVERVIEW
Suzhou is amongst the eleven cities in China with GDP per capita of more than US $10,000
$82
$143
$0
$40
$80
$120
$160
GDP
USDBillion
Chengdu Suzhou
$7,200
$12,211
$0
$5,000
$10,000
$15,000
GDP Per Capita
USD
Chengdu Suzhou
GDP Per Capita, 2010
Foreign Direct Investments, 2010
4.8
8.3
$0
$2
$4
$6
$8
$10
FDI
FDIinUSDBillion
Chengdu Suzhou
GDP, 2010
12%
40%
48%
Primary
Secondary
Tertiary
(Service)
Industry, 2010
2%
57%
41%
Chengdu Suzhou
• Suzhou was one of the first Chinese
cities to cross the US $10,000 GDP per
capita level in 2007
• Chengdu’s GDP per capita has been
increasing steadily from US $2,300 in
2001 to US $7,200 in 2010. GDP of
Chengdu showed a growth of 15% in
2010
• Suzhou’s economy boomed in the past twenty years. In year 2007, its utilized foreign
capital reached US $7.38 billion, the highest in the country. In 2010, Suzhou attracted
an FDI of US $8.3 billion, with 92% utilization rate
• Chengdu’s FDI is second in Western China, there has been a growing number of high-
tech, software and hardware firms establishing themselves in Chengdu. Foreign direct
investment showed a steep increase of 73.6% in year 2010
• Primary industry refers to agriculture, forestry, animal husbandry, fishery
• Secondary industry refers to mining, manufacturing, electricity, water, gas
production
• In Suzhou, services industry makes up 38% of the total industries, in
comparison with Shanghai and Beijing, where services industry make up
to 57% and 75% respectively
• Chengdu’s service sector already accounts for 48% of the economy and is
predicted to grow to 60% within the next 10 years
Note:
Source: Doing Business in Chengdu; Invest in Chengdu – government website; Government of Chengdu. 2011-05-13. Retrieved 2012-03-16;
Government of Suzhou. 2011-03-18. Retrieved 2012-03-18; Doing business in Suzhou , Suzhou Statistical Report, 2011
9

10. Zinnov 10
156,000
48,000
44,000
25,500
13,500
7,500
18,500
6,000
IT Services R&D
Chengdu
Software PD*
Suzhou
InstalledTalentPool
Hardware PD*
Software PD*
Hardware PD*
Total Installed Talent Pool, 2011
Note: * PD – Product Development
Source: Government of Chengdu – official website, Invest in Chengdu; Suzhou Statistical Yearbook 2011; Invest in Suzhou, Primary Interviews with various Stakeholders in China
• Chengdu is more R&D oriented compared to other Tier - II cities
• Suzhou is a kind of satellite city around Shanghai, it is more of a traditional manufacturing hub and can be developed into a Global
Delivery Center.
• Not many MNCs are present in Online Search Engines/Internet sector, so hiring has to be done majorly through the local companies
• In general, the Chinese R&D talent is skilled in Internet/mobile technology. Lack of discipline in structured code writing may be an
issue
INSTALLED TALENT POOL: R&D TALENT POOL SPLIT
Software product development forms around 45 percent of the total R&D talent pool for both
Chengdu and Suzhou
10

11. Zinnov 11
60%40%
Engineering Gender Diversity
92%
84%
80%
60%
8%
16%
20%
40%
0% 50% 100%
Over 10
Years
6 to 10
Years
3 to 6 Years
0 to 3 Year
Male Female
65%
35%
Male Female
Overall Gender Diversity Ratio (Male/Female)
Chengdu
Suzhou
Note:Source: Invest in Chengdu; Suzhou Statistical Yearbook 2011; Talent Neuron Pool Modeler – 2009, 2010, 2011, Primary Interviews with various Stakeholders in China
INSTALLED TALENT POOL
The proportion of female employees in engineering sector decreases with increase in experience
level
11

12. Zinnov 12
Key MNCs Domestic Companies
Oracle JinTian
Motorola Software HuaCheng
Ericsson HiSoft
HP Vanceinfo
EMC Neusoft
Myriad Beyondsoft
Dreamwork Elegon
Gameloft lanxum
Sobey Digital Technology Co. Weflexforce
DHL Chengdu Shuguang Optic Fiber Network
Maersk Sichuan Xiyasheng Electronics Tech Co
Tencent Chengdu Huari Com. Tech. Co
Nokia Siemens Networks Huawei
Accenture China Telecom
Wipro China Mobile
3i Infotech ZTE
NIIT SNDA
IBM Symbio
Intel Kingdee
Foxconn Digital China
SAP
Unisys
ZTE
Fujitsu
Symantec
Alcatel Lucent
Tieto
Damco
Lafarge
Freescale
Accor
Manulife
Cisco Systems
Dell
Key MNCs Domestic Companies
Robert Bosch Unitedinfo Worldwide Crop
Emerson Electric Nanjing Dema Technology Co
Harman Isoftstone Information Service Corporation
Microchip Technology Masson Tech Ltd
National semiconductor Senso Software Company
First International Computer Anlysun Electronic R&D Co
Motorola Shanghai WIK Network Tech Co.,Ltd
Panasonic Shenzhen Sinrui Technology Co
Samsung Global-Standard Testing Service Co
CommScope Beijing Morlab Communications Tech. Co
Pixelworks BI Consulting Group Limited
Cisco
Shijiazhuang Dingnuo Business Management and
Consultation
Yageo Int'L Safety Testing & Certification Net
Qimonda World Standarization Certification & Testing
Schott SIEMIC Info Tech ltd
Fujitsu Promise Technical Consulting Co
NALCO Shenzhen Pema Product Service Co
NSK Global-Standard Testing Service Co
Philips Beijing Morlab Communications Tech. Co
Seimens
HP
IBM
iGate Patni
Chengdu – Other Software Companies Suzhou – Other Software Companies Sample List
Note:
Source: Invest in Chengdu; Chengdu Municipal Bureau of Commerce, Chengdu HiTech park official website; Suzhou Statistical Yearbook 2011; Invest in Suzhou
LOCATION ATTRIBUTES: CITY OVERVIEW
Suzhou is amongst the eleven cities in China with GDP per capita of more than US $10,000
12

13. Zinnov 13
INSTALLED TALENT POOL: ATTRITION TRENDS
Attrition rate is lowest in Chengdu, around 8%, as compared to other Tier II locations
Key Reasons
0%
4%
8%
12%
16%
20%
Junior Level Middle Level Senior Level
Experience Level
4-8%
5 to 9%
8 - 12%
International Exposure Opportunities
Competitive Peer Group Pressure
Lucrative Job Market
High Performance Pressure
Limited Autonomy in Team
Management
Fear of getting type-casted with a
specific work profile
Management and Work Culture
Issues
Unmet Job Role Expectations
• The attrition rates are lower in Tier II cities as there are difficulties in mobility.
This is a great incentive for MNCs as they can get a good employer loyalty
• The attrition rate is also lower in organizations that provide comprehensive
training and have a consistent corporate culture
• The workplace environment and supplementary benefits play an important role
in facilitating retention efforts. Common benefits provided by companies
include supplementary meals, medical insurance, loyalty bonuses, performance
related income payments, off-days on special occasions and housing allowances
• A lot of foreign companies in Suzhou adopt these measures. Management
positions appear to reap the highest rewards, with some companies paying out
bonuses of more than three months salaries’ worth, subject to performance
• MNCs are also facing the consequences of market overheating. According to a
recent study, local privately owned enterprises are growing at a rate of 42%
Note:
Source: Primary Interviews with various Stakeholders in China , Press releases, Invest in Chengdu
Average Attrition Rate in Software Industry in Chengdu and Suzhou
13

14. Zinnov 14
Average Time to Recruit Talent in Chengdu and Suzhou
• Management candidates are often readily available but only at higher
salary levels, and their demands may not suitably fit with the internal
payment structure of the whole company
• This latest trend of high demands from candidates directly drives up
recruiting costs
• In addition, detailed screening and background checks – more stringently
needed in China – add to time invested into the process
• Typical hires ramp up in about 30 days
• Staying rate of fresh graduates in Chengdu is around 60%
Designation
Hiring Time
required
Entry Level Engineering (Software Engineer 1) 2 weeks – 6 weeks
Developer 2 2 weeks – 6 weeks
Senior Developer 4 weeks – 8 weeks
Principal Engineer 6 weeks – 5 months
Management Level 6 weeks – 3 months Stock Options
Flexible Working Hours
Long Service Rewards
Education/Training incentives
Employee Recognition
Programs
High Performance Incentives
Monetary Incentives/Bonuses
Measures to Retain and Motivate Employees
Career Expectations
Fast track career growth
Attractive pay packages
Challenging job profiles
Company culture
Professional training & development
Good prospects for high future earnings
Note: Source: Employment and HR Trends in China, Primary Interviews with various Stakeholders in China
INSTALLED TALENT POOL: ATTRITION TRENDS
Monetary incentives/ bonuses and employee recognition programs are the major measures
taken by the companies to retain and motivate employees
14

15. Zinnov 15
INSTALLED TALENT POOL: INNOVATION
Tier I cities in China are far ahead on innovation index as compared to Tier II cities
Innovation Capabilities in Tier I and Tier II Cities
Tier I cities like Beijing and Shanghai are high on innovation index.
Beijing leads in the internet domain, followed by Shanghai.
Tier I cities have skilled talent for niche segments like mobile technologies, data analytics, etc.
Tier I cities have strong base for cutting edge technologies, which is absent in tier II cities
Suzhou is low on innovation index, specifically in internet domain as it is dominated
by the outsourcing industry. MNC presence in this domain is almost negligible.
Chengdu is strong on innovation index in electronics domain. It has a number of
state owned companies.
Few MNCs and domestic companies are present in internet domain.
Tier I
cities
Tier II
cities
Note: Source: Interviews with globalization leaders from peer companies, Talent Neuron portfolio analysis framework, Talent Neuron R&D Council and Talent Neuron city analysis framework
15

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