Fashion’s China Hiring Challenge

Earlier this month, Bottega Veneta announced a management reshuffle involving senior figures in its Asia business. As part of that, Dario Gargiulo, the brand’s chief marketing and digital business officer took over as managing director for greater China, a role that has become increasingly hard for multinational firms to fill after ‘zero-Covid’ restrictions eroded the attractiveness of working in the country.

In Shanghai, where most global fashion brands base their China operations, the number of French and Italian citizens registered with their governments each fell by 20 percent after last year’s severe lockdowns, according to a report by the European Union Chamber of Commerce in China. Though some executives in charge of the market at group level are Chinese, such as LVMH’s Andrew Wu and Kering’s Cai Jinqing, at brand level, many are still expats hailing from a brand’s home country.

China is famously tricky to manage but it has always been a plum assignment. In recent years, its status as the world’s largest luxury market made it a stepping-stone to nabbing a more senior global role later in a manager’s career. A decade ago, the market was growing so fast that insiders jested even a mediocre manager could yield double digit growth.

However, with the post-Covid reopening rebound weaker than expected and rising geopolitical tensions with the west making the local operating environment even more complex, growth in China is now harder won. Persuading top talent to either move to China or remain there has become significantly harder too, even with a premium placed on salaries, perks and other incentives brands may use.

Pay for top jobs at multinational companies is typically is higher than in Europe, recruiters say, and a standard package for a managing director or general manager level to be based in China typically includes “housing allowance, a driver, high-end health insurance and international school tuition for children,” said Anna Yuan, an associate manager in the Shanghai office of global recruitment consultancy Michael Page. Such packages are less commonly available even for an assignment like Hong Kong.

VF Corporation was one of the most high-profile companies to shift its Asia headquarters from Hong Kong to Shanghai in 2021 but because it occurred during Covid restrictions, a number of staff delayed their moves to the mainland, or used tactics to avoid physically being there like relocating on paper but taking extended trips abroad then blaming quarantine hassles for not going back in.

But since China’s reopening in January, major fashion firms are signalling their commitment to the market with the leaders of every major luxury group from Capri’s John Idol to LVMH chairman Bernard Arnault and Kering’s François-Henri Pinault paying visits to the country. In this climate, the top brass feels compelled to strengthen their local workforce but finding the right managers can be harder than it once was. And it’s not just a challenge for fashion players.

Sephora China is said to be scouting for a new country head, Bloomberg reported citing anonymous sources, as the beauty retail giant looks to revamp its business there.

Although it’s less of a candidate’s market than it was at the end of last year, “it was much [easier to recruit and retain talent] pre-Covid for sure. Now there’s no strong attraction to come to China,” said Shanghai-based Johannes Tan, the APAC solutions director at WilsonHCG, an international executive recruitment firm.

The pandemic brought unique challenges. After an initial outbreak of the virus at the start of 2020, life within China normalised. Although people had to contend with long quarantines up to 21 days long to enter its borders, even to go to Hong Kong, so long as one was willing to stay within mainland China, it was a market that was open and thriving while other global regions were shut.

However, many expat workers who patiently stuck it out found their breaking point came last year when the Omicron variant prompted the country to impose harsh months-long restrictions. People were sent away to mass quarantine camps and residents experienced food shortages.

“I was talking to one executive on my last trip, who gave me the number of quarantine days he did in that three-year span and it was like 200 days,” said Brian Busse, senior principal at global executive search firm Kirk Palmer leading its Asia recruitment practice. As time went on, it became harder for foreigners in China who could not see family or friends back home. All in all, recent events “certainly opened up [managerial] spots.”

“There’s a camp who are just kind of disillusioned by 2022 and the handling of Covid by the government,” said Busse. “There’s also a feeling among some I’ve talked to that the government is kind of watching ordinary people a bit more. It used to be more theoretical but now it feels more real. There’s some who fundamentally disagree with the direction of the country and aren’t willing to move back.”

More broadly, recent Chinese government raids on companies like Bain, Mintz Group and other foreign due diligence firms have sent a chilling effect throughout the international business community. Although fashion and beauty companies are less likely to be directly affected by China’s new anti-espionage laws, it adds to the atmosphere of unease in operating — and working — in the country as tensions with the west keep rising.

In April, the US Chamber of Commerce in China expressed its concern over the increasingly negative investor climate in the country. “The services these firms provide are fundamental to establishing investor confidence in any market, including China,” it said.

A European Chamber of Commerce business survey published in June also added to the growing pessimism. Moreover, it showed that “significant localisation of company staff has also taken place over the last half decade, with 16 percent reporting their China operations no longer employ any foreign nationals.”

Yuan said that recent events have created greater opportunities for local hires. “For the Chinese candidates, they’re quite interested in some senior roles, especially in the luxury industry here in China because it’s more stable than the rest of the retail sector,” she said.

“Luxury has the most hiring needs but then for the premium and designer fashion brands they are also expanding quite quickly. Besides that, sports brands, especially specialised brands for golf, cycling, and running, are also expanding quite quickly,” Yuan added.

Busse suggests there is another cohort who may be ripe for recruitment. “There’s a lot of clients asking us ‘where do we find returnees?’… [so] for Chinese-descent living abroad… I think now is the time that mainland Chinese in other countries can certainly go back [as well as] Singaporean or Malaysian Chinese and Taiwanese [who have experience in mainland China].

However, working in China may now be less appealing for some of these candidates as they have the same concerns as “Western talent [who] just felt sort of trapped there [during Covid restrictions],” he said.

Still, some candidates will find that a job in China’s fashion capital is more attractive than just the tangible benefits of the compensation package combined with the valuable experiences managers gain working in a culture and language as important as China’s.

“The liveability has exponentially gone up every year and [when] I was in Shanghai last month it just felt like it’s reached a level to be a really a world-class Asian city competing with Seoul or Hong Kong as far as the infrastructure, things to do, eating out, people looking fashionable and it feeling modern and the ease to get around,” said Busse.

But Busse also warns that there is an “expiration date” for some returnees. “It is worth noting that the longer you’re away, the less appealing you are,” he said.

“It depends on the function. For digital e-commerce, if you’re gone for two or three years, it’s already too long. It’s changed so much in that time that you’re not relevant anymore. But maybe a retail or a merchandising function, you could be longer but you do start to lose credibility with your peers and colleagues and just become out of touch with the market.”