Editorial
Analysis
China’s people problem
Problems recruiting and retaining workers, particularly skilled ones, are
raising the cost of doing business in China.
Can China—population 1.3 billion—really be running short of people? In many of
the most important parts of its booming economy, the answer, increasingly, is
yes. Though China has a vast pool of unskilled labour, firms in the south now
complain that they cannot recruit enough cheap factory and manual workers. The
market is even tighter for skilled labour. As the economy grows and moves into
higher value-added work, the challenge of attracting and retaining staff is
rising with the skill level, as demand outstrips supply. The result is
escalating costs for firms operating in China.
The particular shortages mentioned most often are of creativity, of an aptitude
for risk-taking and, above all, of an ability to manage—in everything from human
resources and accounting to sales, distribution, branding and
project-management.
Though developing economies often encounter talent shortages as they start to
grow, China’s history has left it with some peculiar deficits. Its Confucian
heritage, which emphasises rote learning and hierarchy, may partly explain why
many graduates, despite good paper qualifications and English language skills,
are often cautious about taking the initiative. Some firms complain that China’s
one-child policy has made it harder for them to find natural team-players. That
there are few MBA programmes in China may not help either.
Chairman Mao’s Cultural Revolution in 1966-76 wiped out a generation of
management potential, as millions of Chinese learned that capitalism was evil.
After a lifetime under socialism, many lack the mindset to adopt western working
practices.
Foreign firms now invest some $1 billion a week in China. As they expand, they
increasingly need workers able to handle the complexities of multi-site
operations. Staff shortages threaten these plans.
Business plans for China rarely reflect the cost and time involved in recruiting
and retaining local staff. Firms are finding that they cannot replace expensive
expatriate staff with cheaper local hires (“localise” in the jargon) as quickly
as they hoped. Many underestimate the cost of local staff. Chinese graduates
often have an inflated view of their own worth, complain some foreign managers.
Pay and benefits are soaring. A Chinese middle manager at a foreign company in
Beijing or Shanghai can now command total annual cash compensation (salary plus
bonus) of US $27,000- US $32,000. Senior managers receive between US $46,000 and
US $54,000 and top executives can expect US $80,000 to US $90,000 or more. While
underlying inflation in China is around 2 per cent, average annual salary
increases for mid-level and senior managers are now 6-10 per cent.
Basing production in mainland China remains cost-effective for most foreign
firms. But the growing shortage of executive talent may make the growth
assumptions written into many business plans over-optimistic.
Bagamoyo
needs attention
Bagamoyo town which had earned itself fame thanks to a number of things is now
said to be a hub for smuggled goods from the Isles. The goods are smuggled
through the panya routes.
The town, with a historical background as a holding centre for slaves in transit
to Zanzibar, has now gained another reputation of being a ‘warehouse’ for
smuggled goods. The authorities seem to have kept silent on the issue.
Last year, the media reported consistently on the issue of Bagamoyo being a
centre for smuggled goods from the Isles which prompted the smugglers to keep a
low profile.
Apparently following last year’s reports in the media, most people believed that
the problem had either been taken seriously by the authorities or arrests had
been made to bring to an end the malpractices.
But to the astonishment of many, the problem has occurred again; maybe this time
with more vigour and new strategies from smugglers.
It is encouraging to note that the Minister for Finance, Basil Mramba is aware
that the Bagamoyo panya routes have greatly eroded the government’s revenue as
all the goods were not charged with necessary taxes.
But to make matters worse, evidence has been availed by local people that the
smugglers collaborate with the police, enabling the culprits to conduct their
business without interference.
According to a local English daily, an unspecified value of some goods from the
Isles was recently offloaded near Bagamoyo and later transferred to Dar es
Salaam and other points upcountry.
If reporters from Dar es Salaam are aware of what is going on there, how about
the local authorities?
Do they want to tell Tanzanians that they are not aware of what is happening? It
is high time action is taken to safeguard the revenue of the country.
Analysis
Why poverty
reduction strategies fail in Tanzania
Tanzania has embarked on a
number of strategies towards poverty reduction. But it seems as if the impact is
not felt the way it should. Most probably for lack of education for the majority
of Tanzanians coupled with uneven spread of resources, argues Timothy
Kitundu.
The initial poverty reduction programme, which was implemented from between 2000
and 2003, was aimed at promoting educational standards, improving health
services, providing clean water, building roads, improving agriculture and
combating HIV/AIDS.
Poverty alleviation has been hampered by the uneven provision of resources
increasing the gap between urban and rural areas, men and women and the poor and
rich.
The government has tried to address this by introducing credit facilities in
some parts of the country to help women groups to secure micro credit
facilities.
Recently, a woman named Mama Rashid from Morogoro said that the government is
trying hard to support women entrepreneurs come across barriers: lack of
education and borrowing conditions.
She said, in some cases women fail to access micro-credit facilities because of
the complicated mode of application, which includes the submitting of a
well-constructed project write-up accompanied with other documents which can be
a difficult task.
“But our fellow women who are better off with education or those financially
well-off can afford to hire experts who make presentable project write-ups. This
has denied the non-educated to access these facilities. Wealth circulates in the
hands of those who are well-off,” she added.
The poverty reduction programmes and development projects are not evenly
distributed geographically. This has created more affluent areas, attracting
more attention compared to poorer regions.
During a recent seminar for MPs on the Economic Growth and Poverty Reduction
(MKUKUTA) Strategy, MP for Masasi (CCM), Raynald Mrope said that there was a
need to consider the poorest regions when it comes to poverty reduction.
He said, Mtwara and Lindi remains the poorest regions in the country because
poverty reduction initiatives and development projects are apportioned to more
affluent areas such Kilimanjaro, Arusha and Dar es Salaam. Nothing was being
done to curtail poverty in the two regions.
Another contributor, Aridi Uledi MP for Nanyumbu (CCM), said that most of the
poverty reduction strategies are good but the problem is that over 80 per cent
of the ordinary people are normally not incorporated when formulating the
development policies and that most policies are simply forced down their
throats.
Definitely, such policies can never suit the people and cannot be easily
implemented because in the first place, people feel that the policies do not
belong to them but are imposed on them.
The other problem that brings about a failure in implementing poverty reduction
policies and strategies is their sustainability.
A good example of this is some of the staff quarters for doctors, nurses,
teachers and etc,that have been built but have remained unoccupied, simply
because the government does not have enough workers, according to Mbaruk
Mwandoro, MP for Mkinga (CCM).
Poverty eradication programmes and development projects should be prioritized.
More affluent areas make the implementation process easier as already such areas
have well placed infrastructure, its people are more educated and sustainability
is certain.
However, if poverty is to be eradicated or reduced to a certain degree, then the
starting point should be in areas where abject poverty prevails. It is not
different from attending patients; the one who is in the intensive care unit
receives first priority compared to the one who is less critically ill.
The business
of design
In an economy where style is king, we all need to start thinking and acting
more like design.
Quick, what’s your IQ? No, not your intelligence quotient – your imagination
quotient. In this turbulent, get-real economy, the advantage goes to those
who can outimagine and outcreate their competitors. So says Roger Martin,
dean of the University of Toronto’s Rotman School of Business.
Martin believes that the North American economy is radically transforming.
As the production of goods and services increasingly becomes routinized, the
cost advantages across a growing array of industries accrue to China and
India. Scale alone is not enough to thrive in a world where markets are
rapidly globalizing; incremental improvement won’t deliver a decent ROI.
Companies will continue to prosper only if they push to the higher ground of
innovating and creating “elegant, refined products and services” – which
might well be produced elsewhere.
The upshot, says Martin, is nothing less than the emergence of the design
economy – the successor to the information economy, and, before it, the
service and manufacturing economies.
In a global economy, elegant design is becoming a critical competitive
advantage. Trouble is, most business folks don’t think like designers. In a
recent interview in Toronto, Martin asserted that real value creation now
comes from using the designer’s foremost competitive weapon, his
imagination, to peer into a mystery – a problem that we recognize but don’t
understand – and to devise a rough solution that explains it.
The trouble is, when confronted with a mystery, most linear business types
resort to what they know best: They crunch the numbers, analyze, and
ultimately redefine the problem “so it isn’t a mystery anymore; it’s
something they’ve done 12 times before,” Martin says.
And that, Martin claims, means traditional organizations must reinvent
themselves to perform more like design shops. In this new world, there are
fewer fixed, permanent assignments. Instead, work flows from project to
project, and people organize their lives around their projects, just as in a
design shop.
Design-influenced companies also understand their customers at a profound
level and mobilize around that insight.
Organizations that embrace a design-based strategy also employ the practice
of rapid prototyping. Whereas conventional companies won’t bring a product
to market until it’s “just right,” the design shop is unafraid to move when
the product is unfinished but “good enough.” Designers learn by doing: They
identify weaknesses and make midflight corrections along the way.
Martin believes that business schools are out of position for the emerging
design-based economy. That view has led Martin and a handful of other
pioneers to lead a groundbreaking effort to redesign business education
itself. In a first step, Rotman has allied with the Ontario College of Art &
Design to launch a series of joint courses. The Illinois Institute of
Technology’s Institute of Design recently launched a nine-month-long
executive master’s degree program in design methods. And Stanford University
has committed $35 million to launch its “d.school,” where people from large
companies and startups alike will come to learn design thinking.
And that’s only the beginning. Rotman, the Institute of Design, and the
d.school are in the early stages of mapping out a new discipline, “business
design,” which will seek to yoke business schools’ rigor, practicality, and
business relevance with design schools’ creative problem solving and
intensive understanding of the customer. The goal is to create a new
generation of design- and business-based talent factories that will help
fuel the North American economy as it undergoes its next great
transformation.
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