PR in China as Costly as California

Why is PR in China as costly as California? We hired a new person in Beijing today. Every time I hire someone new it raises the question of why it is as expensive to hire a graduate from Beijing as one from California. This is both confusing to clients who perceive China as a ‘low cost’ outsourcing market and a challenge from a business-owner’s perspective. The calculation used in negotiations with potential staff is equally confusing. As the owner of an agency, I have to offset both the disbelief of clients and the disappointment of candidates in the pursuit of a profitable business. Though China produces some 2.4 million graduates annually, finding employable ones is like looking for a needle in a haystack. An advertisement on Zhaopin or 51Job will yield hundreds of identical CVs from people with names like ‘Snow’, ‘Rain’ and ‘lovemachine’. Conversely, professional networks draw a smaller, more distinguished band of aspirants but place independent agencies like EASTWEST, up against multinational corporations that offer international brand cache. Once an independent agency like EASTWEST finds a likely candidate, we use the Topgrading methodology to get ‘the right people on the bus.’ We have a ‘get to know you’ questionnaire for the candidates to answer that helps whittle the candidate list down by 80%. This more personal interaction reveals more about applicants. In one instance, a candidate with seemingly flawless responses confessed after being questioned that a friend had written the responses for her. After a battery of tests and questionnaires, the negotiations start. These negotiations are often so open to interpretation that we had to create a spreadsheet to explain the difference between net, gross income and total employment cost. In China the government claims almost 60% of gross income with short and long-term benefits most staff prefer to offset. This is because they are a combination of state and city taxes deducted from the employee’s paypacket and the company’s payroll. Let’s take, for example, a recent college graduate placement: Net salary RMB:5,000 ie. take home pay Add: Pension @ 28% – company @ 20% – personal @ 8% Unemployment insurance @ 2.5% – company @ 2% – personal @ .5% Injury insurance @ 0.4% – company only Parenthood insurance @ 0.8% (Only for Beijing permit holders) – company only Basic medical @ 12% – company @ 10% – personal @ 2% Housing fund @ 24% – company @ 12% – personal @ 12% Gross salary RMB6949  i.e. salary plus staff contributions to government, which the employer pays. Total cost to employer RMB10055 per month i.e. salary, plus staff plus company contributions to government. RMB 10055 is the equivalent of US$1478 per month, or US$8.49 per hour, for a graduate without work experience. This is the same cost as some enterprising American graduates who find marketing work on elance.com. To hire a graduate whose parents invested in overseas education, the costs increase by 20-30%. An agency has to take into account a number of costs in order to be profitable, and has to factor in fixed overheads including recruitment, rental, equipment, marketing and the costs of doing business including taxes and insurance. After analyzing all the different costs associated with PR firms, the business of PR essentially becomes an exercise in Human Resources. An overriding difficulty in hiring for PR in China is the relative immaturity of the PR industry here, which results in a particular need for PR training.   The China PR Industry Association, CIPRA was founded in 1991, some 20 years later than the Institute of PR in Singapore.  As a result there simply isn’t the depth of talent available in China. In addition, the ability to import talent is vexed by the need for Mandarin skills – not commonly found among PR professionals overseas. Therefore, extensive training becomes a pre-condition of recruitment at all levels. In PR talk, the key messages become: China has a shortage of quality PR people; the hidden expenses are high; we operate in an immature industry. All these combine to make building a professional PR firm in China not only a taxing process, but an expensive one – making PR almost as expensive in China as in California. Independent agencies must therefore be dedicated to their cause and ready to incur American-level expenses if they want to be successful. At EASTWEST, we’ve done the work and hand-selected the best employees. As a result, our bilingual team is made up of both local and foreign-educated members who are ready for clients no matter where they come from or how they want to get noticed. To find out more about getting noticed in Asia, contact us at pr@eastwestpr.com

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