China Doesn’t Have the Right Workers to Boost Xi’s Favorite Tech Jobs

(Bloomberg) — Over the past decade, Chinese tech giants like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. as a key driver of its economy, drawing the lion’s share of the best talent to work in their ecosystems that govern everything from messaging to payments. .

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Their boom years have come to an abrupt halt, with a regulatory crackdown, economic slowdown and recurring Covid lockdowns forcing them to cut thousands of jobs.

The hiring momentum has shifted to a growing number of Beijing-favored industries, from electric vehicles to biopharmaceuticals and artificial intelligence, where China is trying to develop its own cutting-edge technology that can outpace the rest of the world to provide – and prevent it. to rely on Western innovation. Job postings in these industries, collectively known as “Hard Tech,” have increased by as much as 382% over the past year, while the internet sector has seen a 40% drop in numbers.

But a skills mismatch in the highly educated part of China’s workforce is forcing the transition, with many of those released from the internet sector lacking the skills to compete in the emerging industries where capital funding is needed. states and enterprises flowing.

It’s a discrepancy that’s partly due to the high unemployment rate, especially among those aged 16 to 24 in China, and could slow progress in priority industries with talent shortages.

That’s the picture from a new range of data from Maimai, a career-oriented social platform that can be considered China’s LinkedIn, but with a much wider reach: two out of every three staff members employed by the Chinese tech companies use the site is larger. They are required to submit proof of employment to enable some interactive functions, and 80% of users do so, allowing Maimai to see detailed company and sector trends that national statistics cannot provide.

For the first half of 2022, jobs fell on Maimai for the “Pure Internet” sector – including Tencent, Alibaba and Bytedance Ltd. – 40% from a year ago. In “Hard-Tech” sectors such as new energy vehicles and new energy generation, job postings increased by 382% and 215% respectively. Openings in new electronics, AI and biomedicine increased by more than 100%.

A closer look at job flow data over the same time period — which tracks people who update their employer information on the site — shows the obstacles facing job seekers leaving Internet companies.

Among those who leave the Pure Internet category, most end up in adjacent industries such as corporate digital services, e-commerce and gaming. In the first half of 2022, only 7% moved into AI, 5.2% into electric vehicles and 2% into electronics, a category that includes semiconductor chip makers. Less than 0.6% went into biomedicine.

Those Hard Tech industries are fighting over a small pool of candidates, with stiff competition for key technical jobs, said Lin Fan, Maimai’s founder and chief executive officer. In the AI ​​industry for example, there are an average of 12.5 companies competing for one vision algorithm engineer, according to Maimai data. For experts in natural language processing, more than 2 companies are interested on average.

“There are many talented people in the internet sector now, they are people with general skills, but there are not many general talents that can overcome technical barriers,” said Zeng Xiangquan, professor of labor economics and director of the China Institute of Employment . Research at Renmin University of China in Beijing.

The skills needed in the internet sector are primarily algorithm and software construction along with operations and marketing, Zeng said. But the skills needed by emerging hard-tech companies are industry-specific skills that combine software, hardware and mechanics, he noted.

“The career shift from the internet sector to these emerging industries, whether it’s biomedicine or chips, the shift has to happen. But this change is not that simple,” he said.

Adding to the problem is that the tech giants in China paid quite well during their time in the market, making these new job seekers expensive for emerging tech industries. These companies also provided benefits such as dining halls and gyms.

Ye Yichuan, a 29-year-old product manager at an AI healthcare company in Beijing, changed jobs three times after leaving his e-commerce employer in 2016. First he joined a live-streaming company, then an AI-recognition firm voice, slowly building. up their skills.

It was a difficult and lonely path, he said, and few people around him were making the same push, out of inertia and lack of industry expertise. “I noticed that the space for growth in the internet sector has shrunk and the boom years are behind us,” he said. “When the industry has gradually turned into a rat race, and your inputs are not producing as much output, it’s time to look for the next blue sea. What’s the point of waiting to end?”

Despite the barriers, Ye said her operational skills from the internet sector, such as the ability to quickly scale businesses and combine online and offline channels, were in demand by emerging industry employers, resulting in that his career can be changed.

Chinese government policy is pushing this pivot, with billions of state funds pouring into emerging industries where Beijing wants to be self-sufficient, if not globally dominant. What Maimai’s job transfer data shows is that these kinds of state-led economic transfers can take a long time to produce results.

“Even when policies and some incentives for employers were reduced, unemployment did not improve significantly,” said Liu Peiqian, chief China economist at NatWest Group Plc. “That in itself shows that structural unemployment is also a problem on the ground.”

Still, the country’s strategic approach to supporting certain industries has created companies that are some of the world’s largest manufacturers of smartphones, solar panels, car batteries and active pharmaceutical ingredients, and officials are now focused on advancing their do in frontier technologies such as space. exploration and biomedicine.

While people in the workforce may currently be facing severe downsizing, future generations of young graduates could fill the skills gap.

“We are not talking about the next few quarters, but rather, in the next ten years, would China be able to get more of the dividend from more skilled workers,” Liu said, pointing to the Chinese universities pump out 11 million graduates. every year.

CEO Maimai Lin believes it will take three to five years for the barriers facing today’s young talent to ease, unleashing a new chapter of Chinese innovation.

“The era of the great migration of talent has begun,” he said. “Just like 20 years ago, a large number of young people fled to the internet sector and started an internet revolution, today’s young people will flock to the Hard-Tech industry.”

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