Study on Chinese human resources service industry
based on comparing with foreign HRSI
Shuang Zhao
College of Economics and Management
Dalian University
Dalian, China
Abstract—the paper discussed the status and countermeasures of
human resources service industry development in China based
on the comparative study. We collected data from existing
literature and opened the comparative study from five aspects:
comparison of the size of the industry, comparison of operating
mechanism, comparison of human capital, comparison of brand
strategy and comparison of policy support. At last we proposed
several suggestions from three aspects.
Keywords- human resources service industry; comparative
study; valaue chain
I. INTRODUCTION
Human resources service industry is one of the important
forms of modern service industries with high-tech, high value-
added, high human capital and high growth characteristics,
which has a strong effects on other industries. Currently,
human resource services industry in Europe and other
developed countries have made rapid development and made a
greater contribution to the economic growth. The paper
discussed the status and countermeasures of human resources
service industry development in China based on the
comparative study.
II. DEFINITION OF HUMAN RESOURCES SERVICE
INDUSTRY
A. Definition
Domestic scholar Baipeng (2004) divided human resources
services industry into narrow and broad scope. The narrow
scope defined human resources service industry as head-
hunting company and labor market. Head-hunting companies
provided service for senior personnel, and labor markets
provided service primarily for junior and intermediate
personnel. The broad scope was made up of professional
human resources consulting firms and management consulting
companies. They provided strategic and operational service [1].
Wangyi (2007) made a summary of foreign human resources
service industry, and pointed out that the definition of foreign
human resources service industry was mainly based on
statistical standards. The North American countries make
administrative and general management consulting service,
human resources and senior management executive search
consulting services, employment service, and profession and
management development training into the range of human
978-1-4577-0536-6/11/$26.00 ©2011 IEEE
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resources service industry. United Kingdom’s classification
criteria is a little different from America’s, which puts
employment and training related human resources service into
“enterprise management and management consulting”
category belonged to “other business services”. Singapore
allocates human resources service industry in the following
categories: human resources consulting service, employment
service and profession and management development training.
Although the domestic and international researches on human
resources service industry had no uniform definition of
conclusion, the scope of which included the common
components of human resources management consulting
services, employment services and training services [2]. “White
paper for human resources service industry in China 2010”
pointed out that there were six categories of human resources
service industry: the state-owned service enterprises, joint
ventures, and private service enterprises, the personnel system
of institutions, working systems and institutions, dedicated
human resources services [3].
B. Value Chain of Human Resources Service Industry
Value chain was proposed by Porter in 1985, which
contained two kinds of activities: support activities and basic
activities. In the paper, we applied the original value chain into
the study of human resources service, and constructed the
value chain of human resources service industry, showed in
Fig.1. The basic activities include six modules: human
resource planning, recruitment and allocation, training
development, compensation benefits, performance
management and staff relationship. These six modules are
essential for human resource management. The six modules
are correlated with each other in value, and the integration of
them has synergetic effect. The support activities contain
marketing, informatization and R&D. Marketing activities help
enterprises find unsatisfied needs, define and measure the size
and profit potential of target markets, and locate in the best
segmentation. Informatization activities help enterprises
realize the integration of each module and the general
information of enterprise management on the basis of
standardized data and information sharing platform. R&D
activities help enterprises create new markets, new products
and new service to maintain long-term profits.
 Marketing
Support
activitie Informatization
R&D
Basic
activities Human Recruitment Training Compensation Performance Staff
Resource Allocation Development Benefits Management Relationship
Planning
Figure 1. Value Chain of Human Resources Service Industry
III. THE COMPARISON OF THE DEVELOPMENT OF HUMAN
RESOURCES SERVICE INDUSTRY
A. Comparison of the size of the industry
1) The number of human resources service companies
Although there were spread increases of human resources
service industry in China, the overall strength still had gap
with the overseas, showed in Table I. Taking Shanghai and
Beijing as a case study, in 2009, the numbers of talent agency
was less than 1/4 of Tokyo, 1/5 of Singapore, 1/3 of New York.
In 2009, the turnover of Shanghai was equivalent to 21.96
billion, less than 1/3 of that of New York in 2002, and the
turnover of Beijing was equivalent to 19.05 billion, less than
1/3 of that of New York in 2002 [4,5]. Therefore, the human
resources services industry in China is still in the “childish”
stage, and the development is very a heavy task.
TABLE I. THE COMPARISON OF TALENT AGENCY INDUSTRY IN MAJOR
INTERNATIONAL METROPOLIS
Beijing Shanghai Tokyo New
(2009) (2009) (2004) York
(2002)
Institutions 605 688 3024 2377
Sales 19.05 21.96 - 69.66
(Billion)
2) The size of human resources service companies
According to the investigation of Shanghai human
resources consulting association in 2010, we found out that the
overall size of human resources service companies is small and
the number of employees is small. In the survey of 50
companies, the number of employees less than 20 people was
44%, the number of employees in enterprises more than 500
was 2%, the number of employees in enterprises between 200-
500 was 2%, the number of employees in enterprises between
50-200 employees was 24%, and the name of employees
between 20-50 was 28%, showed in Fig.2.
Although most business had fewer employees, they still
kept an optimistic attitude: 88% of enterprises believed that in
next three years the number of employees would grow, and
even 16% of enterprises believe that in next three the staff
would grow more than 20%. Therefore, we can see the huge
gap between Chinese human resources service industry and
that of developed countries in number and size, but there will
be a rapid growth of future employees and a large-scale
expansion of scope.
DERYH


 EHORZ


Figure 2. Distribution of Number of Employees
B. Comparison of operating mechanism
Foreign human resources service giants have formed a
complete set of mature operation mechanisms, including
information mechanism, professional service mechanism, and
globalization mechanism. Foreign human resources service
giants achieved a breakthrough in the information technology
and network development. In the current human resources
service markets, we can see the largest market portfolio is
employee dispatching and outsourcing, and the larger share of
total turnover is E-HR and management consulting. Now the
development of human resource management and services are
more and more dependent on information technology.
Foreign human resources service has took the road of
professional development. They make different service
solutions for different objects. For example, they provide
custom-built product or service for large enterprises and
multinational companies. Besides, the division of labor in the
business is quite detailed. For example, Hong Kong’s human
Singapore resources service achieved a considerable extent the degree of
(2006) segmentation, which included business/management
consulting services, salaries and benefits, education, training,
employee relations and communication, human resource
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consulting services, human resources outsourcing services,
- human resources information systems/computer software, legal
services/employment law/taxes, MPF/Pension, an so on.
Transnational network of human resources services has
been around the world. For example, Manpower Inc has more
than 4500 branches in 80 countries. Manpower Inc introduced
its business into China in 1964. Now it has more than 650
professionals in 19 cities and more than 3500 local and
multinational corporate clients.
C. Comparison of human capital
The qualities of employees are generally high in foreign
consulting agencies. Taking McKinsey as an example,
according to the statistics in early 1997, the percentage of
employees who owned MBA was 49%, and the percentage of
employees who owned doctoral degree was 16%. McKinsey
focused on consultants’ outstanding character, practical ability
to solve problems and the ability to communicate effectively
with people at all levels in the stage of recruitment.
Consultants must be professionals in one or two areas, with a
flexible mind, a wealth of knowledge, experience and honest
character.
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 According to the investigation of Shanghai human
resources consulting association in 2010, the education
background of employees in human resources service industry
was junior college or regular college course, showed in Fig.3.
The number of enterprises with junior college or regular
college course between 80%-100% was 29 (accounted for 58%
of the total).The number of enterprises with junior college or
regular college course between 60%-80% was 15 (accounted
for 30% of the total). The number of enterprises with junior
college or regular college course between 40%-60% and 20%-
40% was 5 (accounted for 10% of the total) and 1 (accounted
for 2% of the total). We also found out that the number of
employees who owned the master degree was small, and the
number of employees who owned the degree below junior
college was small too.
Survey results also showed that most employees had the
professional qualification certificates of talent agency division
and human resources management division. Most employees
have a professional background (Human Resource
Management graduate) or received human resources training
and certification authorities. We also found out that in existing
employees there were lack of senior consultants, market
operation personnel and business management personnel.
Therefore, in the level of human capital competition, our
human resources service industry is still at the early stage, the
quality of employees is generally low and is lack of high talent
competition.
EHORZ



 

Figure 3. Distribution of Degree (Junior College or Regular College Course)
D. Comparison of brand strategy
Human resources service industries in developed countries
have been developing for almost 60 years, and formed the
industrial development model after 1980s. In recent ten years,
the world’s leading human service providers has finished the
branding strategy and started the international expansion
strategy. International human resource giants focused on brand
building, and regarded it as the important basis for business
survival. In the process of brand building, they paid attention
to the high degree of harmonization of identity system, website,
name, and the concept. They also stressed the union
localization and diversification of products to meet the needs
of regional differences.
Compared with foreign human resource giants, the high
fame, fine reputation and high loyalty of domestic firms is not
high, and there is no high brand value recognition. In recent
years, the domestic enterprises accelerate brand building, such
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as FESCO, China star corp., www.zhaopin.com and so on. But
these companies are only serving at domestic home, and lack
competition with foreign human resources services giants.
Many other small and medium enterprises were lack brand-
building and competitiveness.
E. Comparison of policy support
Human resources service industries in developed countries
have been developing for almost 60 years, and formed a
favorable external market environment. Government created a
good business development and fair competition environment.
There is orderly competition within the industry.
In contrast, human resources service in China has not yet
formed a unified and standardized labor market. The
development environment of human resources service still
needs to improve. Firstly, there is lack of unified management,
which is the overall planning of management system,
development planning and legal regulation. At the same time,
there is lack of standard market order. One is legal norms, and
the other is industry standard service specification. Secondly,
the legal environment of human resources service market is
not perfect. Legislation needed to speed up in human resources
service market. The existing “Labor Law”, “Labor Contract
Law” and “Employment Promotion Law” provided a legal
base for the management of human resources service market.
But there are no dedicated human resources market regulations,
and the introduction of “human resources service market
regulations” is urgently needed.
IV. COUNTERMEASURES AND SUGGESTIONS
According to the analysis stated above, we proposed some
countermeasures and suggestions to develop the human
resources service industry in China.
A. Building strategic alliances with multinational companies
Foreign human resource agency giants have worked out a
set of mature and effective management model, marketing
model and capital operation mode. Domestic enterprises
construct strategic alliances with them can shorten the time for
strategic transformation and accelerate the accumulation of
learning experience. At the same time, with the debut of a new
labor contract law, the entry barriers of human resources
service industry are increasing, and a group of international
giants began to cooperate with domestic corporate to achieve
the integration of nationalization and localization. Under such
kind of background, there are good opportunities for domestic
enterprises integrating with the world market.
B. Making industry competitive strategies
Firstly, domestic human resources service firms need to
accelerate the information construction and transformation to
improve the modernization level of services. Human
Resources Service is a kind of information service in essence.
Electronic, information and net are the trends of development
in human resources service industry. Foreign human resources
service enterprises have entered the time of network service,
but many of our traditional human resources service industries
still remain in the initial stage of construction of internal
information management. In order to change the situation, our
human resources service needs to increase efforts in building
the hardware and software facilities.
Secondly, domestic human resources service firms need to
strengthen the cultivation of human resources service
commissioner, especially the senior consultant, marketing
developers and senior management personnel. These people
will fill the blank of domestic human resources service
enterprises’ capabilities to serve the higher needs.
Thirdly, domestic human resources service firms need to
accelerate the capital operation. Domestic human resources
service firms need to expand scale through capital operation.
For example, www.51job.com introduced 8 million
international venture capital, and now become the biggest
recruitment service providers with “newspaper jobs
advertisement + recruitment site + headhunters + human
resource software development” in one. In 2000, its annual
income was 8 million and the margin profit was as high as
15%.
Fourthly, domestic human resources service firms need to
accelerate the brand building and try to build domestic
“aircraft carrier”. In order to gain three brands, domestic
enterprises need to provide High-quality services. Human
resources services abroad have been able to guarantee high
quality, largely due to its standardized service processes and
norms.

C. Government policy support

Government should exit from the microscopic field of
human resources service industry and gradually separate the
government managed services and business market services.
After the change of functions, the human resources
departments of government should provide service in the
development of related laws and regulations, and create a
unified, sound and stable policies and systems environment.
Government also needs to give appropriate support in the
investment mechanism, price management, tax policy and
information services for human resources service industry to
promote rapid growth.

REFERENCES
[1] Baipeng. Study on the status and countermeasures of human resources
service industry. Coal Economic Research, 2004,10.
[2] Wangyi. Development of Human Resour ce Services Industry in
Foreign Countr ies: Current Status, Trends and Its Enlightenment.
Science & Technology Progress and Policy, 2007.
[3] Xiao ming zheng, Guo li juan, Gu jia dong. White paper for human
resources service industry in China 2010. People's Publishing
House,2011.
[4] Dong xiao hua. Development of human resources service industry in
Beijing. Chinese Talents, 2010,07.
[5] Chen xin guang. Study on the status and development strategie of
Shanghai human resources service industry s.China National Conditions
and Strength, 2010,3.

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