How European companies can navigate a changing labour market

In this article, Roland Brouwer, regional director for Europe and international relations at BIPO, explores the evolving dynamics of China’s labour market and the implications for European businesses. Once primarily viewed as a source of low-cost labour, China has undergone a significant transformation. Today, it is home to an increasingly skilled, purpose-driven, and digitally fluent workforce. For European companies operating in or expanding into China, this shift presents both new opportunities and complex challenges – demanding a more strategic, localised, and forward-looking approach to talent management.

A new generation, a new mindset

At the heart of ongoing changes to China’s workforce is Gen Z,[1] a new generation stepping into the workforce for the first time and bringing new expectations. This new generation makes purpose-driven career choices and approaches work through a lens of personal values and digital fluency. Unlike their predecessors, today’s young professionals are not solely driven by salary or job security. They value autonomy, purpose, professional growth and meaningful engagement with their employers.

Many companies have taken notice, but adapting to this mindset takes more than refreshing a job description. It requires a rethink of what it means to be an attractive employer in today’s China.

Human resources (HR) goes digital

Digitalisation has also become a driving force in HR. The entire employee journey—from recruitment to onboarding and engagement—is now expected to be digital-first, seamless and intuitive. Social media platforms like Xiaohongshu, WeChat and Douyin, which are primarily known for consumer engagement, have become crucial channels for employer branding and talent acquisition. Companies aiming to attract top talent must now establish a presence in these digital spaces where young professionals interact, explore job opportunities and evaluate company cultures.

Beyond first-tier cities

Even with compelling branding and advanced digital tools, hiring in China’s top-tier cities remains a challenge. The competition for skilled talent—particularly in sectors like research and development (R&D), technology, engineering, and environmental, social and governance (ESG)—is intense. Retention is equally difficult, with high turnover rates adding pressure to already stretched HR teams.

More companies are now focussing their recruitment efforts in second- and third-tier cities, where the talent pool is characterised by:

• lower turnover and higher loyalty, as employees are often more rooted in their communities;
• comparable quality of talent at lower cost, especially in technical and vocational fields; and
• willingness to invest in long-term development, providing fertile ground for sustainable growth.

The strategic value of internships

One of the most underrated tools in building future talent pipelines is the internship. At first glance, interns may not appear to be strategic assets. But for companies thinking long-term, structured internship programmes can be key to building loyalty, developing internal capabilities and gaining early access to promising talent.

Local interns offer cultural fluency and a strong understanding of domestic consumer behaviour. International interns bring something equally valuable: a global mindset and cross-cultural competence. They often act as a bridge between headquarters and local teams – supporting alignment and communication across borders.

Legal considerations for hiring interns

Hiring interns in China requires careful adherence to local regulations. For local students, internships often require approval from their universities and must be tied to academic programmes.

For international interns, the process is more complex. Companies must ensure compliance with visa regulations, typically requiring either a short-term work visa or business visa issued in advance. Additionally, stipends, insurance coverage, and official contracts may be required depending on the region and institution involved. Partnering with legal or HR specialists can help companies avoid compliance risks and maintain strong employer reputations.

Building a sustainable talent pipeline

To thrive in China’s fast-changing talent landscape, European companies must adopt a forward-looking HR strategy. It is no longer enough to fill vacancies. Businesses must invest in employer branding, enhance the employee experience, and align with the values of the modern workforce.

Practical steps businesses can take

• Establish long-term partnerships with local universities for pipeline development.
• Customise employee value propositions for different regions and demographics.
• Adopt hybrid and flexible work models to appeal to digitally native professionals.
• Develop local leadership to bridge cultural gaps and improve retention.

China’s talent landscape is undergoing a rapid and profound transformation. For European companies, success in this market will depend on more than just adapting to change – it will require leading it. By embracing digital HR practices, understanding the expectations of a new generation, expanding into emerging talent hubs, and investing in long-term talent development strategies like internships, businesses can future-proof their workforce. The companies that proactively align with these shifts—while staying compliant and culturally aware—will not only gain a competitive edge in China but also set a strong foundation for sustainable growth across Asia.

Roland Brouwer is the regional director for Europe and international relations at BIPO, a global HR and payroll solutions provider. He plays a key role in supporting European companies operating in Asia, especially in China, by helping them navigate regulatory, cultural and talent-related challenges.

BIPO is a global provider of payroll and people solutions, supporting businesses across 160+ markets. With a strong presence in Asia and Europe, BIPO combines local compliance expertise with cloud-based technology to help organisations manage their global workforce. Its HR solutions enable companies to simplify operations, enhance the employee experience, and remain agile in a competitive landscape.

[1] Gen Z refers to individuals born between 1997 and 2012, characterised by digital fluency, social consciousness, and strong preferences for flexibility and purpose in the workplace.