British industry is voicing concerns over the Government’s proposal to introduce a cap on the number of skilled non-European nationals entering the UK to work.
The Government’s rationale is to reduce net migration to tens of thousands and tackle unlimited migration, which, it says, places unacceptable pressure on public services, housing and school places.
The Government’s aim is to demonstrate to the public and frequently hostile press that immigration is under control.
In an area that receives little accurate debate, it should be noted that skilled non-EU nationals who come to the UK to work are not entitled to claim benefits for themselves (or their families) and are not entitled to free housing.
From experience, they often take out private medical insurance and send their children to private schools.
The Government’s stated aim of reducing migration contradicts with their wish to continue to attract the brightest and best people to the UK. It fails to recognise that by imposing restrictions and uncertainty against the best and brightest in the world coming to the UK (and the businesses and services that want to employ them) we will not attract talent but instead lose out to our global competitors.
If a UK business wants to employ a non-EU national, it must register first with the Home Office as a sponsor. They will then be allocated certificates to sponsor non-EU skilled workers.
At my firm we have acted for clients who have been granted hundreds of certificates and also a business which has registered to obtain one certificate to make a strategic hire of an “A” star in their sector. This system was working for employers.
However, July 2010 saw the Government without notice reduce allocations of all existing employers. Consequently, for example, a client with 300 plus allocations saw a reduction to 50. Anyone who wants to register as a new sponsor since the interim limit was introduced will find that they will be given no allocation of certificates with little hope of being able to request an allocation on an exceptional basis.
I advised a niche sector client – one of three in their market in the UK – who had offered a high level post to a leading operations director in their sector based in Australia.
They decided not to pursue the recruitment because of the uncertainty caused by the interim limit and are instead considering transferring operations to Australia. The impact to the UK economy is stark – jobs may be lost to Australia.
There is also uncertainty as to how the cap will work when introduced in April 2011. Will certificates be on a first come first served basis until the annual cap is reached? It is unclear whether the annual quota will be broken down on a monthly or quarterly basis.
It is suggested that a panel of senior UK border Agency managers will have power as to how the allocation of certificates will be distributed in a particular month/quarter.
This begs the question how this panel will deal with competing interests between, for example, a hospital that wants to bring over a leading neurosurgeon and a design company which wants to bring over a leading designer from say, Japan, to fulfill a contract it has secured with a Japanese client.
What happens to the loser in this round? Are they allowed to enter the subsequent month/quarter’s lottery? There are many unanswered questions.
Businesses often plan their recruitment months if not years ahead. We act for Blue Chip retailers who look to recruit trainee pharmacists and trainee opticians while their potential recruits are at university. Because of the lack of interest in studying these subjects amongst UK students, a large proportion of their recruits are international students.
In particular, where small and medium businesses operate, the requirement to recruit foreign nationals can be business critical; that is, they cannot afford to wait to have their foreign talent stuck in a quota queue system.
Moreover, if a UK hospital or university wanted to recruit a leading foreign specialist doctor or academic, that talented person will have other options around the globe other than the UK.
The Government has faced widespread and significant opposition against the cap. It will be better served allowing the current system to bed in further which has sufficient checks to ensure that the system is not being abused.
Currently, a business needs to illustrate that they have tested the resident labour market through advertising before allocating a certificate of sponsorship to a non EU national.
It could take a generation before the resident work force is in a position to fill the gap in the market that necessitates the UK’s current dependency on foreign migrants.
In the meantime, UK immigration policy must encourage businesses which are attracting the best minds, investors and multi nationals globally to ensure that our key sectors remain world class and competitive.
A leading world specialist will inevitably attract the best team around him and this can only benefit the UK in up-skilling its resident workforce.
Instead, the UK’s attractiveness is being hampered, particularly because of foreign press picking up on the hostility towards immigration in the UK press.
The Government still can be forgiven for saying that it got it wrong and that they will not impose the cap.
It’s obvious the top entrepreneurs and investors understand that India and China are the future of our global economy. Do you?
One of India’s wealthiest business leaders, Anil Ambani, invests $325 million in Steven Spielberg’s movie studio DreamWorks – something unimaginable just five years ago. In turn, Warren Buffett invests $230 million for a 10% stake in Chinese electric car manufacturer BYD, the same investor who shunned technology investments earlier this decade. It’s obvious the top entrepreneurs and investors understand that India and China are the future of our global economy. Do you?
With over 1 billion people moving into the middle class, effectively increasing the global market for products and services by 50% over the next decade, can your firm afford to ignore the single largest market opportunity in the history of business? It’s time you consider “going east” as part of your 2011 strategic plan. And it’s as critical for small to mid-size firms to make the move as it is for top investors and large corporations.
MADE IT IN CHINA
Two entrepreneurs helping others make the leap are Graham Jeal and Simon Cann, authors of a new book series entitled Made It In…. Graham, a British-born entrepreneur who has been building companies in China since 2001, is the former president of the Entrepreneurs’ Organization (EO) chapter in China. Cann, a prolifi c writer, has been a management consultant to companies spanning the music, entertainment, and broadcast industries.
I met Graham and Simon on my last trip to China and was impressed by their enthusiasm and initiative to encourage others to leave the comfort zone of their own markets and venture out into some of the leading business hotspots around the globe.
In their first book, Made It In China, they feature specifi c lessons learned from nine entrepreneurs including Graham, who have built manufacturing plants, launched internet businesses, started hotels and restaurants, and created large sales organizations within China. One of the entrepreneurs was even the first foreign participant on China’s equivalent of “The Apprentice.” In all cases, these entrepreneurs left their home countries and built businesses in a culture different from the own – and their stories are both inspirational and instructive.
In all cases, these entrepreneurs left their home countries and built businesses in a culture different from the own – and their stories are both inspirational and instructive.
Other countries in the series include Vietnam, Russia, and Kazakhstan with more in the works. I encourage you to go to their website www.MadeItIn.com to learn more.
COMING WITH QUALITY
Another must read book for growth firms wanting to dominate their industry is Hermann Simon’s Hidden Champions of the 21st Century. I was speaking with Hermann Simon upon his recent return from China. He brought news that Chinese firms are focused on building competing quality products that will challenge even Germany’s lead in many export areas – and that they are building factories in Germany and the U.S. and other parts of the world. They want to get “in our backyards” before we get in theirs! And with over $2 trillion in surplus cash vs. a projected U.S. 2011 $14 trillion deficit, they have the financial muscle to do it.
No longer will the “Made in China” label mean low cost or low quality. Their entrepreneurs are hungry to learn from the best and bring their business models, products, and services to other countries.
India is aiming for the same upgrade to their brand. Seen primarily as a cheap supplier of back office functions, they are building global brands and bringing their products, like the $2500 Nano car, to the developed world. And with one of the youngest populations in the world, India is well poised to incubate entrepreneurs that will be hungry to get into other markets. Again, it will be crucial for established businesses to plan their India strategy for next year and beyond.
WHOLLY OWNED SUBSIDIARIES
Hermann Simon notes, based on his research of the world’s top mid-market companies, that they almost always set-up wholly owned subsidiaries vs. licensing or joint venture relationships. It’s been critical for these fi rms to control their brands and have their own people “on the ground” in other countries. And they tended to expand into one or two diff erent countries each year, with many now having operations in over 50 countries.
When these “hidden champions” are asked which countries they’re focused on for the next decade, it is India and China.
When these “hidden champions” are asked which countries they’re focused on for the next decade, it is India and China. And while it might be too late for manufacturers outside these countries to make inroads as quickly, the customer service models and cultures of the west will not be easy to imitate by the eastern entrepreneurs. This is the distinct advantage, plus a long history of good management practices, that entrepreneurs in the west have as they pursue these eastern markets.
Read the two books mentioned above and make 2011 the year you focus on the east.
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Thalej Vasishta, Managing Director of the Paragon Group has launched Paragon Law and assisted other businesses with market entry into China, provides 5 quick tips on dealing with Chinese counterparts;
To make things happen in China, you have to know people. “Knowing” is what the Chinese mean by “guan xi” or “connections.” When you cultivate “guan xi” with Chinese people, they will often do anything to please you including important introductions to people they know. However, if you start trying to do business before people get to know you and feel comfortable with you, it is unlikely you will be successful.
The Chinese enjoy small talk and pleasantries. The importance of hosting and budgeting for dinners and lunches where a relationship can be developed should not be underestimated. They want to learn more about you and start to build a long term relationship before conducting business. This is why it takes longer to get things done there. Therefore, initial meetings rarely produce direct results.
The Chinese people are conditioned by centuries of history to obey their political leaders the way they obey their parents. If you’re the only person who travels to China but you need your wider team to help out with operations, introduce them formally to your Chinese contact, especially in person. It is this that forms the basis of trust.
Chinese people have a habit of saying “yes” to show that they’re paying attention or that they’re following what you say. In this context, the word “yes” doesn’t mean that they agree with what you say or with your terms.
Decision makers will tend to be of the older generation and rarely speak English. It is key for any meeting you use an interpreter who is both good and you feel comfortable with. Therefore spend time selecting and getting to know an interpreter.