September 13, 2017 12:15 pm JST

China's Huawei makes hiring splash in Japan by doubling salaries

Rewarding engineering excellence may change the way local companies pay

HIROSHI MURAYAMA, Nikkei senior staff writer and FUMIE YAKU, Nikkei staff writer

Huawei is after Japanese engineering ability and is willing to pay handsomely for it. © Reuters

TOKYO -- China's Huawei Technologies is causing a stir among young Japanese job seekers by offering monthly salaries of around $4,000 for prospective science and engineering graduates.

Huawei, the world's No. 3 smartphone maker by sales, will set up a major "production research laboratory" in Japan as early as this year, and is determined to hire the best engineers.

Monthly salaries will start at 401,000 yen ($3,650) for bachelor's degree holders -- roughly double the going rate of salaries offered by Japanese companies -- and 430,000 yen for master's degree holders. By offering higher pay, Huawei is looking to attract talent that would otherwise opt to work for Japanese peers, such as SoftBank and Nippon Telegraph and Telephone.

"Most Japanese science and technology majors want to join famous Japanese companies. To attract the best talent we have to offer a good working environment and a good compensation package, including welfare benefits," said Ruri Tomioka, director of public relations at Huawei Japan.

"We do not think this salary is especially high. Most foreign companies offer a similar salary level to hire good engineers," she said.

Huawei is investing around 5 billion yen in the new research lab in Funabashi, Chiba Prefecture near Tokyo, with more spending under consideration. The company intends to leverage Japan's cutting edge production technology and quality control methods, so as to apply to its production sites around the world. 

Huawei plans to employ several dozen engineers at the lab, combining the best of Japanese manufacturing with Chinese-style high-volume production to ensure both quality and cost-competitiveness.

But it does not plan to reward its employees with a one-size fits all pay scale -- like most Japanese companies do. It mainly wants Japanese engineering skills. Quality control is foremost, and Huawei is willing to pay.

Parental guidance

Huawei has seen instances of graduates interested in joining, but whose parents are reluctant about their children joining an "unknown" Chinese company. They would rather they joined the "engines" of Japan's post-war economic growth, such as Hitachi or Fujitsu.

Huawei's posting on the Japanese recruitment site Rikunabi is for science and engineering majors expected to complete an undergraduate or graduate program between September 2017 and March 2018. Four types of jobs are on offer, including telecommunications network engineer and terminal equipment testing engineer.

The offer has received a different response back in China. "Is 400,000 yen high?" asked one commenter on the online media outlet Cankao Xiaoxi (Reference News), an affilate of the official Xinhua News Agency. "Salaries at Japanese companies are low," commented another.

The difference in cultural and business norms between China and Japan may partly explain why some Chinese are puzzled by the reaction to Huawei's salary offer in Japan. China tends to reward engineering excellence, seen as key to innovation. Japanese companies tend to reward engineers and general office managers equally.

Starting salaries for new graduates are roughly the same in Japan, regardless of whether they have science or general studies degrees. A 2016 survey by the Ministry of Health, Labor and Welfare found that freshmen bachelor's degree holders at Japanese companies took home an average of 203,400 yen a month.

In China however, it is normal for information technology engineers to receive higher salaries than employees with arts or general studies backgrounds, even in their first year. Indeed, engineers are among the top earners -- one reason some Chinese have been perplexed by how Huawei's salary offer has stirred things up in Japan.

Japan's pay chart for new graduates is rooted in a deeply held notion that companies must turn new hires into fully rounded employees, regardless of academic background. 

Moreover, it is common to change jobs in China. Thus companies must lure IT engineers, who are in high demand, with bigger salaries to ensure they are not easily poached. Science majors are especially sought-after, leading talented students to flock to science departments.

Few monetary benefits

With few monetary benefits coming with science occupations in Japan, university applicants have been eschewing science and engineering. 

While salaries and wages for Japanese 20-somethings do not vary much, regardless of job specialty, differences do emerge with length of service. In many cases, it it those with backgrounds in arts or general studies who end up as board members.

According to the health ministry, pilots took home the biggest monthly paycheck in 2016 at 1.49 million yen. They were followed by lawyers at 480,000 yen, and chartered accountants and tax accountants at 460,000 yen. Real estate appraisers came fourth at 430,000 yen.

Lower down the scale, natural sciences researchers earned 390,000 yen. System engineers and programmers trailed at 330,000 yen and 260,000 yen respectively.

It became even more tricky for manufacturers when financial institutions began to hire science and engineering students in mass to create complex derivatives.

At Japanese companies, researchers even with discoveries with global impact do not benefit greatly from personal compensation.  

In one instance, a lawsuit was filed by Shuji Nakamura, who won the Nobel Prize in physics for developing a blue light-emitting diode, against his former employer, chemical maker Nichia, demanding fair remuneration for his invention.

Similarly, flash memory developer Fujio Masuoka filed a patent suit against former employer Toshiba.

Huawei's high salaries could change the way Japanese companies reward their staff. Meanwwhile, Japanese students will have 4,000 reasons to give dad when he asks why they are not working for Hitachi or Fujitsu.

Nikkei Asian Review Chief Desk Editor Ken Moriyasu contributed to this report.

SoftBank Group Corp.

Japan

Market(Ticker): TKS(9984)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 93,370.39M
Shares: 1,100.66M

Nippon Telegraph & Telephone Corp.

Japan

Market(Ticker): TKS(9432)
Sector:
Industry:
Communications
Major Telecommunications
Market cap(USD): 108,199.22M
Shares: 2,096.39M

Hitachi Ltd.

Japan

Market(Ticker): TKS(6501)
Sector:
Industry:
Producer Manufacturing
Industrial Conglomerates
Market cap(USD): 36,368.66M
Shares: 4,833.46M

Fujitsu Ltd.

Japan

Market(Ticker): TKS(6702)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 15,025.05M
Shares: 2,070.01M

Toshiba Corp.

Japan

Market(Ticker): TKS(6502)
Sector:
Industry:
Consumer Durables
Electronics/Appliances
Market cap(USD): 10,929.91M
Shares: 4,237.60M

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