Summary
The next push by the government is "Service Outsourcing" which aims to:
1) Make use of the boom in white collar labor - University graduates in China ballooned from 600k per year in 1998 to more than 7.5 MM in 2009;
2) Increase competitiveness and transparancy by encouraging use of third-party outsourcers for Chinese businesses and government agencies;
3) Limit dependency on manufacturing to power the economy - billed as a "green initiative" but also developing a "Service Economy" of 300 MM people.
Analysis
Chinese nationals between the ages of 15 and 64 make up approximately 25% of the world’s work force. In recent years, we have all become familiar with the productivity of Chinese unskilled-labor as China churned out much of the world’s manufactured goods. What most of the world has not yet seen is China’s skilled white collar labor force – which for most of recent history has lagged behind the rest of the world. Mao’s cultural revolution virtually closed all of China’s university’s form 1968-1978 –– which meant until the time that Beijing University re-opened in 1976 there were hardly any university graduates at all in China. When the schools began opening their doors the demand was massive . . . and by 1998, when I launched my first company in China, the number of tertiary program graduates in China was approaching one-million people per year -- about half the 2.0 million that graduated in the USA or the 1.5 million that graduated in India. Impressive growth from 0 – 1 million in 20 years, but not really too mind-blowing, considering in a country of 1.3 billion people.
What has happened since 1998, is mind-blowing. China went from under a million graduates per year in 1998, to 2.0 million to an estimated with 7.5 million in 2010! At the same time the US continued to graduate about 2.0 million per year (nearly ¼ China’s) and India, with nearly the same population as China inched up to slightly under 2.0 million. The Philippines, with a population of 100 million, stayed relatively flat at about 0.6 million graduates per annum.
Another interesting phenomenon is the number of Chinese kids going abroad for an education and the staggeringly high rates at which they return to China to start their working lives. In Australia alone, an estimated 20,000 mainland Chinese nationals graduate from Aussie schools each year. If you think the average Chinese family is not well-off enough to send their kids to a good school, think again. Just imagine what happens in a society populated with education obsessed parents that has both 40% average savings rate and a one-child policy. Chinese parents send their ‘little emperors and emporesses” to the best schools they can afford and then put a lot of pressure on them to come back to the family in China to build their lives.
More on this at http://nexthorizon.typepad.com
Another interesting phenomenon is the number of Chinese kids going abroad for an education and the staggeringly high rates at which they return to China to start their working lives. In Australia alone, an estimated 20,000 mainland Chinese nationals graduate from Aussie schools each year. If you think the average Chinese family is not well-off enough to send their kids to a good school, think again. Just imagine what happens in a society populated with education obsessed parents that has both 40% average savings rate and a one-child policy. Chinese parents send their ‘little emperors and emporesses” to the best schools they can afford and then put a lot of pressure on them to come back to the family in China to build their lives.
More on this at http://nexthorizon.typepad.com
Thomas Reilly consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
