"Professional services such as accounting, consulting, or executive search are intangible in nature and so intrinsically the traditional mindset is not willing to spend money on these services. However, there has been a positive sign of expenditure in this dimension for auditing services or corporate advisory for example, which represents new market potential for executive recruitment. Leadership consulting and assessments are even newer concepts in the market, and they are still undervalued."

Jonathan Zhu

PARTNER PRACTICE LEADER, CHINA LIFE SCIENCE & GOVERNMENT AFFAIRS, HEIDRICK & STRUGGLES

April 24, 2018

How has H&S established its presence in the China life sciences industry?

If you look at the market, there are two segments — domestic Chinese POEs (Privately Owned Enterprises) and multinationals (MNCs). We cannot ignore either segment but the focus has mostly been with multinationals in the life sciences for three reasons. First, the MNC sector is very competitive, but relatively easy to execute compared to POEs, as utilizing professional services is a relatively new concept for the POE sector. Secondly, the receivables from multinationals are relatively reliable. Third and most importantly, the talent pool for both sectors is coming from multinational companies, so we are able to offer a strongly focused expertise that allows us to serve better across all sectors in the market.

H&S offers expertise not just in executive search, but also in the leadership advisory space. Can you elaborate on how H&S has evolved its service?

H&S is the first executive search firm established among the global top 5 firms. Looking at their revenue stream, consulting and assessment have gained an even greater share than the traditional search business within some of the firms.  Being a public company allows easy access to our financial records to understand our operating models and revenue streams. Our new CEO Krishnan Rajagopalan’s aim is to continue to strengthen our position in executive search while aggressively expanding into leadership consulting & assessment (Heidrick Consulting). H&S has made major efforts to expand into this sector by consolidating leadership consulting assessment services to increase market impact.  

How would you describe the attitude towards services such as executive recruitment from domestic Chinese companies?

30 years ago, all the companies in China's market were public. With the emergence of the private sector, all the resulting wealth in the market can be defined as “new” wealth. The spending pattern from this sector versus “old” money are very different. New wealth takes a more short-term mindset and prefers to invest in things that can be touched and felt. Professional services such as accounting, consulting, or executive search are intangible in nature and so intrinsically the traditional mindset is not willing to spend money on these services. However, there has been a positive sign of expenditure in this dimension for auditing services or corporate advisory for example, which represents new market potential for executive recruitment. Leadership consulting and assessments are even newer concepts in the market, and they are still undervalued. Therefore, executive search will remain the core business for firms like ours in China while anticipating the market maturity for other offered services.

How would you describe the current dynamic between supply and demand of talent in the China life sciences industry, and how do you expect this dynamic to evolve?

The talent landscape in U.S. and China are vastly different. China’s demand is much greater than the supply of talents, whereas the opposite scenario is true in the US. This makes top level management positions in China a huge area of demand and the top layer of the industry enjoys very high compensation. The income gap between the top and the bottom is significant because everyone wants the same people, which is driving demand.

The future of the industry is dependent on the development of that management minus two layer. A lot of young people in China have the opportunity now to go overseas. My advice for this generation is to stay in the overseas market as long as possible before returning back. I truly believe only getting an education abroad does not provide the full scope of knowledge necessary to fit into the mainstream market. Three things best provide you with perspective through exposure: reading a lot of books, traveling a lot of roads, and meeting a lot of people.

How does H&S intend to support the China life sciences industry as it prepares to take the lead as the largest pharmaceutical market in the world?

Simply put, we are in a very unique position to help individuals, organizations, and industry. To gauge the quality of a leader, we look at three things. The first is decency, defined as a combination of integrity, compassion and humility. The second quality is the individual's capabilities, and the third is charisma. We weight these characteristics respectively at 50%, 40% and 10%. Through our efforts, we aim to make the industry reflect these qualities, which will encourage a solid foundation for a better world.

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