HONG KONG (Reuters) - American-born Thomas Kwan's career has taken off since he moved to China to work as the country manager for a U.S. health products company.
"If I'd stayed in the U.S. I wouldn't have had the same opportunity for advancement," said trilingual Kwan, 46, who was brought up in a Cantonese-speaking household in Virginia and also speaks fluent Mandarin and of course English.
"The U.S. is still a Caucasian-dominated society," added Kwan, who now lives in Shanghai.
China's rapidly expanding economy has created a seemingly insatiable appetite for Chinese-speaking managers.
Yet even though 3 million university graduates enter China's workforce every year, multinational companies are finding it hard to find local talent to meet that demand.
Companies that are successful in luring top notch recruits are at an automatic advantage in the race for a piece of China's $1.3 trillion consumer market.
But competition for good quality hires, especially experienced managers, is fierce.
Companies in China will need 70,000 middle and senior managers over the next five years, according to executive search firm MRI Group, but they are unlikely to find them.
"We'll be lucky if we can identify 50 percent of that number," said Erica Briody, director of MRI China.
Since last year, PricewaterhouseCoopers has posted Chinese recruiters in the United States, Britain and Australia to scout for graduates at university campuses as they seek to keep pace with business growth in China by recruiting 3,000 people a year.
They are targeting Chinese students studying abroad as well as experienced foreign professionals with a Chinese heritage such as Kwan.
"The economic boom in China means the talent needs are demanding. We are building a talent pipeline for the future," said Angela Jiang, a PricewaterhouseCoopers recruitment manager based in New York and responsible for finding U.S.-based talent for the firm's China operations.
Recruiting qualified Chinese-speaking managers is crucial for firms, especially multinationals, as they seek to capitalize on business opportunities in the world's fastest growing major economy.
"Multinational companies are looking to China to grow their organizations," said Briody. "If they can't get the talent their expansion plans will be limited. Ultimately they can't be competitive."
A report by the McKinsey Global Institute in 2005 said fewer than 10 percent of China graduates who applied for jobs at multinationals had the right skills and qualifications to work there. Poor English was the main shortcoming.
The Asian Development Bank in its 2008 Asian Development Outlook says the skills shortage is aggravated by China's failure to produce the right kind of graduates rather than too few.
In 2005, it says, 3.1 million people graduated from universities in China, nearly three times the number of graduates in the United States. Some 600,000 of them were engineering students, nearly 10 times the number in the United States.
Yet only a fraction were seen as suitable recruits by firms because China graduates may be well versed in theory but often lack practical problem-solving skills, analysts said.
"While the root cause of China's skills crisis lies in the leap in demand for skills, the education system has failed to keep pace," the ADB said in the report.
China's rote-learning based education system doesn't help produce managers, says Shanghai-born Stella Hou, Hong Kong general manager of HR services company Hewitt Associates.
"Our education system doesn't give us a lot of soft skills training," said Hou. "Most Western companies advocate being vocal. That limits the opportunity for Chinese employees to show how capable they are. Indians, for example, are much more vocal."
However, Rajan Srikanth, Asian head of HR consultants Mercer, says firms should change their management style to fit in better with local cultures.
"Americans' approach to global leadership has been imperial," he said, suggesting that companies seeking to leave their mark in China should opt for "collective leadership" which is more in line with Asian management styles.
Srikanth also says firms should recognize that China graduates need to go through in-house training programs to learn the "soft skills" they might lack straight out of university.
That is exactly what multinationals such as Coca-Cola Co are trying to do -- develop managers with an international outlook.
"Despite there being 1.3 billion people, those with the ability to operate in an international environment at managerial level are in great demand," said Jonathan Taylor, vice president of human resources for Coca-Cola China in Shanghai.
The soft drinks company sends management trainees from China to centers around the world. It has six mainland Chinese working at its headquarters in Atlanta who will take up leadership positions in China in 12 to 18 months time.
If it cannot develop enough Chinese managers, the company would have to parachute in more expatriate managers to keep pace with business growth, says Taylor. But that's not ideal.
"Having international talent as part of the mix is key because our customer base is truly global and diverse," he said. "But if companies are going to be successful here they need to be developing and retaining Chinese talent."
PricewaterhouseCoopers says hiring overseas Chinese is a good option until China's managerial labor force develops.
"They (overseas Chinese) might not have lived in China but they know about the culture from their parents so they can adapt more easily to the environment," said Jiang. "They have better language skills and they can help train local staff."
American-born Chinese, who not so long ago would have balked at living in China, are now eager to participate in the country's economic transformation, she says.
"We expect them to stay 2 to 3 years but we've found they'll often stay longer."
Kwan, who has been in China for four years, says his understanding of Chinese culture is as invaluable as his linguistic abilities when it comes to managing his China team.
"Here, I am bicultural. I understand that Western culture and Chinese culture are different and that Chinese don't normally speak out," he said.
"Whereas Americans are encouraged to challenge their boss to explain things, I have to ask Chinese staff what they think and encourage them to speak up. A lot of expat managers fail in China because they don't understand that Chinese don't tell you what they think."
Editing by Megan Goldin