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China and India: Comparative HR Advantages

Source | Mercer Consulting

Noodles are costlier than dosa and so are their cooks! Employees in China cost their employers more than their Indian counterparts, reveals Mercer’s 2005 China and India: Comparative HR Advantages report. While India certainly is less expensive than China, the report shows that neither country has a clear advantage over the other in any of the important aspects of human resource management.

Drawing partly from the What’s Working country reports for China and India, this report compares economic trends, HR and business issues, remuneration levels, and regional differences among cities in each country. China and India: Comparative HR Advantages is a ready reference for HR managers to understand the emerging issues and trends in HR practices of these two countries.

The table below highlights some of the findings of the report and shows where there are differences and similarities between the two countries. The report is quite revealing and a valuable source of information on HR practices in two of the most important emerging markets worldwide.

Everyone with an interest in China and India should have a copy!

 Find out more about this report

China and India: Comparative HR Advantages

 

Similarities

Differences

Economic perspective  

Population

Population of over 1 billion

India‘s population continues to grow with a birthrate of 2.9

 China‘s birthrate stabilized at 1.9

Urban vs. rural

Majority of population lives in countryside – 60% in China and 70% in India

Chinese cities on average larger than Indian cities

Economic growth 

Not a single year of recession in 1990s; economic growth outpaced industrialized world and among top worldwide 

India‘s growth has been significantly slower than China during the past 20 years

Salary increase and inflation

Salary increase very consistent year after year: China at 6%; India at 10%

Inflation consistently averages 4% per year in India; inflation fluctuates between -1% and 4% in China 

Business and HR issues

Cultural challenges

Both countries rely strongly on a system of values that emphasizes ethics and traditions; both have a strong respect for hierarchy

An emphasis on teamwork and loyalty often characterizes the Chinese workplace

Indians generally are open and receptive to differing beliefs and cultures

What drives employee engagement? [1]

§  Confidence in senior management (1 India; 4 China)

§  Fair pay; given performance
(2 India; 2 China)

§  Sense of personal accomplishment
(4 India; 1 China)

§  Comparable benefits to the industry (5 India; 3 China)

§  Regular performance feedback (6 India; 7 China)

§  Organization reputation for customer service (3 India)

§  Reasonable workload (7 India)

§  IT systems (5 China)

§  Training opportunities (6 China)

Remuneration

Remuneration levels

Many IT and customer service jobs (e.g., Network Specialist, Customer Service Officer, Software development Manager, Software Development Engineer) are paid at similar levels in both countries

Annual total cash compensation for most senior positions is 90-100% higher in China than in India; total pay for lower positions is generally 20-45% higher in China than in India

Pay practices

India and China are both among the lowest paying countries in the world, ranking 3rd and 11th lowest overall

Variable pay is far more important in India than in China; in China, variable pay (bonuses, incentives, etc.) account for 10-15% of total fixed pay, while in India, variable pay adds up to more than 100% of total fixed pay

Regional differences

Cost of living

The quality and cost of living in New York far exceeds that of any cities in China or India

Living costs in China are significantly higher than India; Bangalore is the least expensive and Beijing the most expensive major city in the two countries, with a 30% difference separating the two

Quality of living

The Guangzhou quality of living index is only six percentage points higher than Mumbai

 

Quality of living in both countries is lower than most of East and Southeast Asia.

Nearly 20 percentage points separate Shanghai (highest in the two countries) and Chennai (the lowest) quality of living ratings.

 

[1] This response was based on a survey conducted by Mercer Human Resource Consulting in both India and China. The question was: “What drives employee engagement?” The survey is included in the What’s Working country reports for China and India, Mercer Human Resource Consulting, 2004. A synopsis can be found in China and India: Comparative HR Advantages.

 

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