Installed Talent in Tier II China Cities Suzhou & Chengdu

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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
CHENGDU
Chengdu is Chinas 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" Suzhou 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 governments efficiency in dealing with foreign investments

Chengdu

Parameters
City Population (2011) MSA* Population Area Official Language

Chengdu
7,123,697 14,040,000 12,132 sq. km Mandarin

Suzhou
6,376,600 11,800,000 8,488 sq. km Mandarin

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 countrys GDP

Literacy Rate
Unemployment Rate Population Growth Rate Legally Employable Population Key Industries

93.7%
3% 0.48% 11,230,000 Pharmaceuticals, ICT, Automotive, Aerospace

93%
4.3% 2.44% 8,662,000 ICT, Electronics, Textiles, Chemical, Mech. components

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 worlds top manufacturing location of laptops and digital cameras
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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

Suzhou is amongst the eleven cities in China with GDP per capita of more than US $10,000
GDP Per Capita, 2010
$15,000 USD $10,000 $5,000 $0 GDP Per Capita Chengdu Suzhou
Chengdu

GDP, 2010
$160 USD Billion $120 $80 $40 $0 GDP Suzhou $82 $143

$12,211 $7,200

Suzhou was one of the first Chinese cities to cross the US $10,000 GDP per capita level in 2007 Chengdus 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

Foreign Direct Investments, 2010

Suzhous 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 Chengdus FDI is second in Western China, there has been a growing number of hightech, software and hardware firms establishing themselves in Chengdu. Foreign direct investment showed a steep increase of 73.6% in year 2010
FDI in USD Billion $10 $8 8.3 4.8

$6
$4 $2 $0

FDI Chengdu Suzhou

Industry, 2010
12%
Primary Secondary Tertiary (Service)

2% 41%

48% 40%

57%

Chengdu

Suzhou

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 Chengdus 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

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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
Total Installed Talent Pool, 2011
IT Services 18,500 Installed Talent Pool 44,000 25,500 Software PD* Hardware PD* 156,000 13,500 48,000 7,500 6,000 Software PD* Hardware PD* R&D

Chengdu

Suzhou

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
Zinnov 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 10

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INSTALLED TALENT POOL

The proportion of female employees in engineering sector decreases with increase in experience level
Engineering Gender Diversity Overall Gender Diversity Ratio (Male/Female)

0 to 3 Year

60%

40%

Suzhou

3 to 6 Years

80%

20%

40%
35%

60%
65%

6 to 10 Years

84%

16%

Over 10 Years

92%

8%

0% Male

50% Female

100%
Male Female

Chengdu

Zinnov
Note:Source: Invest in Chengdu; Suzhou Statistical Yearbook 2011; Talent Neuron Pool Modeler 2009, 2010, 2011, Primary Interviews with various Stakeholders in China

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LOCATION ATTRIBUTES: CITY OVERVIEW

Suzhou is amongst the eleven cities in China with GDP per capita of more than US $10,000
Chengdu Other Software Companies Key MNCs
Oracle Motorola Software Ericsson HP EMC Myriad Dreamwork Gameloft Sobey Digital Technology Co. DHL Maersk Tencent Nokia Siemens Networks Accenture Wipro 3i Infotech NIIT IBM Intel Foxconn SAP Unisys ZTE Fujitsu Symantec Alcatel Lucent Tieto Damco Lafarge Freescale Accor Manulife Cisco Systems Dell

Suzhou Other Software Companies Key MNCs

Robert Bosch Emerson Electric Harman Microchip Technology National semiconductor First International Computer Motorola

Sample List

Domestic Companies
JinTian HuaCheng HiSoft Vanceinfo Neusoft Beyondsoft Elegon lanxum Weflexforce Chengdu Shuguang Optic Fiber Network Sichuan Xiyasheng Electronics Tech Co Chengdu Huari Com. Tech. Co Huawei China Telecom China Mobile ZTE SNDA Symbio Kingdee Digital China

Domestic Companies
Unitedinfo Worldwide Crop Nanjing Dema Technology Co Isoftstone Information Service Corporation Masson Tech Ltd Senso Software Company Anlysun Electronic R&D Co Shanghai WIK Network Tech Co.,Ltd

Panasonic
Samsung CommScope

Shenzhen Sinrui Technology Co

Global-Standard Testing Service Co Beijing Morlab Communications Tech. Co

Pixelworks
Cisco Yageo Qimonda Schott Fujitsu

BI Consulting Group Limited

Shijiazhuang Dingnuo Business Management and Consultation Int'L Safety Testing & Certification Net World Standarization Certification & Testing SIEMIC Info Tech ltd Promise Technical Consulting Co

NALCO
NSK Philips Seimens HP IBM iGate Patni

Shenzhen Pema Product Service Co

Global-Standard Testing Service Co Beijing Morlab Communications Tech. Co

Note: Source: Invest in Chengdu; Chengdu Municipal Bureau of Commerce, Chengdu HiTech park official website; Suzhou Statistical Yearbook 2011; Invest in Suzhou

Zinnov

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INSTALLED TALENT POOL: ATTRITION TRENDS

Attrition rate is lowest in Chengdu, around 8%, as compared to other Tier II locations
Average Attrition Rate in Software Industry in Chengdu and Suzhou
20%

Key Reasons
Unmet Job Role Expectations

16%
12%

8 - 12% 5 to 9% 4-8% Management and Work Culture Issues

8%
4% 0%

High Performance Pressure Junior Level Middle Level Experience Level

Senior Level
Lucrative Job Market

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

Competitive Peer Group Pressure

International Exposure Opportunities

Limited Autonomy in Team Management Fear of getting type-casted with a specific work profile
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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
Average Time to Recruit Talent in Chengdu and Suzhou Measures to Retain and Motivate Employees

Designation
Entry Level Engineering (Software Engineer 1) Developer 2 Senior Developer Principal Engineer Management Level

Hiring Time required

2 weeks 6 weeks 2 weeks 6 weeks

Monetary Incentives/Bonuses High Performance Incentives

Employee Recognition Programs

Education/Training incentives

4 weeks 8 weeks 6 weeks 5 months 6 weeks 3 months

Long Service Rewards Flexible Working Hours Stock Options

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%

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

Zinnov

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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

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

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.

Zinnov

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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

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