The China Boom

  BackBy Alex Tong —

Testing has a long history in China. After all it’s part of Chinese culture to be tested and differentiated. However, many mistakenly believe that hardware, literacy, bandwidth and other technologies lag behind in developing countries such as China. But upon closer inspection, China reveals itself to be a qualification-driven society. The country is catching up with the rest of the sophisticated world of testing and certifications; its people increasingly are seeking qualifications to find and secure jobs to improve their lives.

Booming Economy Raises Demand for Talent

For the past two decades, the world has witnessed the fast economic development of China. The growth is far-flung, sweeping through all economic sectors and social strata. From 1978 to 2006, China’s gross domestic product (GDP) grew an annual average of 9.67 percent, according to the Chinese government. In 2007, China’s GDP grew another 11.4 percent, of which agriculture was up 3.7 percent, manufacturing increased 13.4 percent and the service industry was up 11.4 percent.

This boom has driven up the demand for talents of all sorts. However, there is obvious disequilibrium between supply and demand. According to a blue book report by the Chinese Academy of Social Sciences, while 10 million new jobs were created in 2007, another 25 million people were out of jobs, leading to an employment gap of more than 15 million.

Job Competition Drives Certification

China has a population of more than 1.3 billion, with the majority of knowledge workers concentrated in large metropolises and developed regions or cities along the coast. Due to geographic disparity in economic development, students from underdeveloped areas flock to large cities to seek jobs as a way to improve their lives.

According to data released by China’s Ministry of Labor and Social Security, from 2006 to 2011, young people entering the workforce each year will reach 24 million. Meanwhile, new positions created and those made vacant by natural retirement will total 11 million — and this doesn’t even figure in a possible economic slowdown.

According to a survey by the Chinese Social Academy, more than 90 percent of young graduates in China are frustrated with job hunting. Sixty-nine percent of students are willing to accept “zero salary” to get their first job experience, despite the fact that this is against the law.

Fierce competition in the Chinese job market provides huge commercial opportunities for the training and certification business. According to a report by IDC, titled “China Computer-based Testing 2006-2010 Forecast and Analysis,” 122.7 million candidates participated in certification exams in 2006, 8.9 percent more than in 2005.

Spending on all kinds of tests grew by 13.8 percent, higher than the growth rate of test candidates, with the total reaching $2.28 billion. The testing market revenue will increase at a 10.7 percent compound annual growth rate through 2010, driven significantly by the strong demand on the vocation-related licensure and certification tests.

Shortage of Qualified Talents

In contrast to this oversupply of labor, industries that demand skilled workers of a specific knowledge domain cannot find the talent they want. The Chinese economy is transforming primary and secondary industries into tertiary industries, and growth in tertiary industries has driven demand for a trained and qualified workforce.

Take finance professionals as an example: According to the Shanghai Foreign Economic Relation & Trade Commission, the shortage of finance professionals in Shanghai was more than 1 million in 2007. These professionals make up less than 1 percent of Shanghai’s population, while in other major financial centers such as Hong Kong and New York, they represent more than 1 percent.

Experienced professionals in other sectors such as advertising and tourism also are in great demand. According to data released by the Chinese Ministry of Labor and Social Security, in the IT industry, the shortage for testing engineers in China is nearly 30 million and grows 20 percent each year.

Government Policies Support Employment Qualification System

The Chinese government has long taken measures to set up the national qualification framework and support the standardization of professional entry prerequisites. In 1994, the Chinese Ministry of Labor and Social Security set up the national Occupational Qualification Certification system that sets the gateway standards for more than 90 occupations that require qualification certification to gain entry to the professions.

The range of occupations includes manufacturing and transportation, animal quarantines, retail and service industry and office workers, with each qualification certificate classified in five levels. The assessment of the qualification is based on the national occupational standard that tests candidates on occupational knowledge, operational skills and professional ethics.

Occupational Qualification Certification is considered part of the Chinese State Occupational Certification System. In 2007, the Chinese government announced 1,979 occupations, of which 1,200 are scheduled to be regulated with occupational standards before 2010. The Ministry of Labor and Social Security is working on occupational standards development for high-tech and modern service industries that require more advanced skills, including the environmental protection, electronic information and aeronautic and astronautic industries.

In addition, professional bodies have been established to train and supervise the qualification testing and certification of professionals such as bankers, accountants and securities professionals. These bodies have drafted legislation that is currently in progress, with an aim to regulate cheating and impersonation and to enhance the integrity and security of examinations.

Specialization of Services

The certification business in China previously fell under the jurisdiction of the test sponsor. Tests were conducted in paper-and-pencil format and delivered through the sponsors’ local agencies. The limitation of this delivery method has become apparent as the social demand for certification has exploded, requiring professional test-delivery services, testing methodologies and results analysis.

Commercial test-delivery partners have emerged as a result, ATA Inc. being the leading provider since 1999. Nowadays, a number of government-sponsored tests are being commercialized, meaning they are being published, delivered and promoted through third-party providers. Test sponsors no longer are the administrators of the test; instead, they become the policy and standard setters.

For example, ATA helped transform the qualification examination for the China Securities Professional, a yearly, paper-based test by the China Securities Regulatory Commission (CSRC). The test, taken by a few thousand in 2001, was converted into a computer-based format (CBT). Within two years, CSRC moved this test to a quarterly program with more than 180,000 test-takers annually. Leveraging the ATA platforms, CSRC now manages the processes and real-time information of candidates’ training, testing and career development.

Technology Infrastructure Supports CBT

China’s rapid economic development also is reflected in technology infrastructures such as telecommunication and Internet access.