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Jobs head eastward as multinationals cut costs

By Liu Jie (China Daily)
Updated: 2007-06-27 09:28

Baker said that in addition to the cost of workers, MNCs' decision to keep or expand their workforce in China is due to the large market.

"Normally, they want a lower manufacturing cost base for their global business," Baker said. "Secondly, they want to supply the local market and can only be competitive against local companies over time if they have a similar cost base."

Bill Amelio, Lenovo's chief executive, said the reason behind relocating jobs to emerging markets was to be "closer to Lenovo's suppliers and manufacturing operations".

PepsiCo, the world's No 2 soft drink company, has announced a plan to double its workforce in China over the next half decade as it fights for a bigger slice of the growing market.

Meanwhile, because of the shortage of experienced local senior managers, MNCs transferred senior foreign managers to join the local management team.

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"Those senior managers are assigned to implement corporate production, supply, financial and other business systems, all of which require in-depth knowledge of the systems themselves and long work experience in MNCs," said Baker, a veteran MNC consultant.

Baker forecast that MNCs will ultimately phase out their senior foreign managers and replace them with Chinese managers they have been training to take over.

He said Chinese managers will be more effective in managing Chinese staff and operating in the local market, which can save costs and improve corporate profit growth.