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http://www.hreonline.com/HRE/images/BillKutik106x106.jpgSurprising State of HCM in China

Between Oracle HCM World in Chicago and SAP SuccessFactors' second annual HCM Influencer Summit in San Francisco, I attended the first HR Tech China in Zhuhai: 12 time zones away from home so exactly half-way around the world. But it felt like Silicon Valley.

Tuesday, April 26, 2016
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Wouldn't it be great to tie together my recent travels to major industry events in Chicago, Zhuhai and San Francisco with one incredibly insightful and pithy column comprising a world view of the state of HCM? But each event offered so much news and insight that I'm going to limit this one to China. Look for more on the other two conferences later.

The first HR Tech China Conference was an experiment for HRE, which runs the original HR Tech Conference in the United States. No foreign company tries to do business in China without a partner well-connected with the government, and China Star, an HR outsourcer formerly owned by the government, fit that bill perfectly and ran a first-class event.

This was a China technology conference for Chinese HR executives and vendors, but with substantial U.S. representation.

While China Star sometimes seemed to dominate the gathering, HR Tech China Co-Chair Steve Boese acted as master of ceremonies with professional simultaneous translations delivered through high-tech mobile devices. In addition to local luminaries, the agenda featured U.S.-based HCM speakers, such as Jason Averbook (former CEO of The Marcus Buckingham Co., who delivered a keynote); analyst Ray Wang; and recruiting experts Kevin Wheeler, Madeline Laurano (who wrote a good blog) and Trish McFarlane (who also did).

Former U.S. Secretary of Labor Elaine L. Chao was the hit of the event with a terrific keynote in both Mandarin and English.

I moderated a panel with Asia/Pacific and China general managers from vendors SAP, ADP and Cornerstone, plus Oracle VP Product Strategy Zach Thomas.

The event featured 50 exhibiting vendors (almost 40 Chinese) and an estimated 3,000 attendees, almost all local. In addition to the vendors represented on my panel, exhibiting companies from the United States included Skillsoft, Avature, HRCI and Ramco Systems, plus Ascenders (the former Talent2 from Australia) and Ingentis from Germany.

After a banquet the night before the start of the conference that seemed like a Chamber of Commerce meeting for Zhuhai, the event itself opened with speeches by more government officials. These are rarely stirring (at any conference in any country) because they are read word-for-word since each word has been approved by at least a dozen people in as many government agencies.

At HR Tech China, an official named Zhongming Wang stood out with something important and compelling to say. His official title is quite long -- Deputy Secretary General, All-China National Association of Industry and Commerce -- and his speech title suffered in translation: "Supply Side Structural Reformation Drives Human Resource Transformation."

But his message was clearer: He explicitly reminded the audience that China once had a government-planned economy that dictated (my example follows) that 50 million pairs of shoes would be manufactured the following year with little idea of the demand for them. Forget which styles!

China is now making the difficult transition to a market-based economy in which it needs to match supply and demand for the first time.

"Thirty years ago, we were so poor, and we still have 17 million people in poverty," he said. "Now, we are the world's second-largest economy, but cannot continue to rely on our huge workforce and remain at the lower end of production."

To prevent the economy from "plummeting" (that was the official translation), Wang said, China needed to focus on HR and "mass entrepreneurship," creating the greatest possible freedom for individuals to start new businesses, even in their homes, and most importantly, promote innovation.

"Chinese products are not sought after [see my previous column Made in Japan] like Apple's," he said, "but we can use our late-comer advantage to become a powerhouse through innovation."

Then he talked about Jeff Bezos' rocket company and the Matt Damon movie The Martian. Do you think China has any catching up to do with us about how its leaders are thinking?

Any remaining doubts were dispelled watching CEO Weiguo ("David") Ji of Beisen Cloud Computing during his breakout. His company is close to being China's Cornerstone OnDemand. After starting as a psychological-testing company in 2002, he pivoted to all-cloud talent-management apps six years ago and now has the full suite, with 4,000 customers.

Ji looked like just another Silicon Valley guy on stage and talked like one, too. He openly discussed how China's economic slowdown has resulted in heavy employee turnover, as did SAP's General Manager for Greater China Kevin Lin on my panel. Ji also talked about how the Internet and social networks have changed Chinese companies; how companies don't want to use software systems that are even five years old; and how they must manage the entire employee lifecycle, including development. I had to blink to remember where I was sitting.

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Later, his Vice President of Marketing Yan Gao, who got her MBA at Georgetown, pointed out that Beisen has had three rounds of venture-capital investment, started building a core HR module two years ago, already has predictive analytics and is going public in two or three years. Naturally, it also has hopes of entering the United States after that.

Beisen has prospered by selling talent-management apps to HRMS customers of older Chinese vendors such as Neusoft, FESCO (started in 1979 and now partnered with Addeco) and Computer & Technologies Holdings' Platinum Software, as well as SAP and Oracle. Do SuccessFactors and the former Taleo also spring to mind?

It was difficult to find any evidence that China was in any way "behind" the HCM industry in the United States.

The strongest emotional reaction for a first-time visitor to China is the amount of construction that's visible everywhere, including an 80-story building being topped off right next to the futuristic convention center hosting the conference and a 30-mile-long bridge being finished connecting Hong Kong on the east side of the river mouth to Macau (the former Portuguese colony now China's Las Vegas), and Zhuhai on the west. (We all admired the bridge on the hour-long ferry from Hong Kong to Zhuhai.)

Like the seven-mile-shorter Chesapeake Bay Bridge - Tunnel in the United States, it will include above-the-water spans and causeways, plus deep tunnels to allow the passage of the giant container ships, coming into Hong Kong every day.

Sure, China has lots of problems to deal with. But The New York Times recently reported that the government is cutting back on building 200 planned new coal-fired power plants that cloud the air in major cities throughout the country. The amount of new power they would have generated is equal to what Britain currently uses from all sources!

So I left with the feeling that China might be running the world in another 30 years. But at least we'll still have better movies.

HR Technology Columnist Bill Kutik is co-chair emeritus of the 19th Annual HR Technology® Conference & Expo, back at Chicago's McCormick Place, Oct. 4-7, 2016. Watch the 15th episode of his broadcast-quality video series, Firing Line with Bill Kutik® to learn how analyst Holger Mueller's secret suggestion before buying predictive analytics.

 

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