Shanghai Daily News

Local headhunter firms showed little concern about a loss of market share after Pudong District announced last week that foreign enterprises could hold up to a 70 percent share of a domestic agency.

The announcement of the new policy on August 17 was made to attract more overseas investment into the sector. Pudong is the only district in China's mainland that has been allowed to pilot higher investment limits. Previously, the ownership limit was 49 percent.

Daniel Zou, associate marketing director of China Human Resources Company's Shanghai branch, said the influx of foreign capital would not shrink local agencies' share. He believed that the Chinese market capacity was largely underestimated.

"Since the market is far from overloaded, the key is not about the stockholding share, but to build up a healthy environment for competitors to make more profit out of a bigger market."

Zou's firm, China HR, is partnered with Monster.com. The world's biggest online headhunting company invested US$50 million in China last year to acquire nearly 40 percent of China HR's stock.

With the business continuing to grow, he estimated that China HR's yearly revenue would increase by 10 percent this year.

A Shanghai Shengcai Human Resources marketing official surnamed Wei said she was not surprised about the announcement. She said foreign headhunters had been coming into China's mainland since 1997.

"We can forecast that the door will open wider for foreign headhunters through growth in the Shanghai market," Zou said. "It will be a big challenge for local agencies, but I would like to see both parties profit through mutual cooperation."

China entered the World Trade Organization in late 2001. As one of the country's Special Economic Zones, Pudong currently has more than 14,000 foreign-owned enterprises. In addition, 75 multinationals have set up their regional headquarters in Pudong.

Local officials estimated the number of white-collars needed in Pudong will increase to 730,000 in 2010 from 430,000 at present.

Shengcai HR's Wei emphasized that local firms still had the advantage of knowing the domestic market and its rules.

"Multinationals may have more experienced employees and established standard systems for operation, but we know the different needs of local people and firms. There will be a process of localization for those big overseas players," she said.

China HR's Zou added local agencies should learn more about overseas regulations in their process of internationalization.

Pudong government also announced that top foreign personnel agencies would receive a 100 percent tax exemption in their first two years and 50 percent in the following two years. Office rental subsidies were also being offered.

Last year, the Shanghai human resources industry generated revenue of about 10 billion yuan (US$1.25 billion), according to government documents.