Bachelor's, master's or vocational school: which degrees are in demand in China

Across all areas, the master's degree was the most sought-after qualification. According to the study by transformis and ECNU, 46 percent of companies were primarily looking for master's graduates, 41 percent for bachelor's graduates, 8 percent for graduates of vocational schools and 6 percent for doctoral graduates.

The overall figure conceals the differences between areas. The report notes that, despite the oversupply of university graduates, companies did not necessarily prefer the higher formal degree. Figure 4 of the study (n = 215) distinguishes three organisational areas: research and development (R&D), commercial, meaning administration, and technical, meaning production and technical execution. For each area it compares two values: which degree companies preferred and which level of education the graduates they actually hired had.

For recruitment, this distinction matters more than the overall figure. Filling a position in development means searching in a different market than for administration or production. The following sections go through the three areas one by one.

R&D had the highest requirements. 56 percent of companies preferred a master's degree here, 20 percent a doctorate and 22 percent a bachelor's degree. Vocational schools accounted for only a narrow remainder that the figure does not quantify. R&D is therefore the only area in which doctoral graduates were a significant target group.

The profiles hired were different. Of the education levels of the graduates recruited, 44 percent were master's degrees, 37 percent bachelor's degrees, 12 percent doctorates and 7 percent vocational schools. The bachelor's degree was thus 15 percentage points above the preferred value, while the master's degree and the doctorate were below it.

At the same time, R&D was, alongside the technical areas, one of the fields in which companies found it hardest to recruit suitable graduates. Figure 3 of the study (n = 66) shows the reasons for recruitment problems. For R&D, companies mainly cited insufficient specialist and methodological competences (29 percent) and too little practical experience and knowledge (23 percent). In no other area were these two reasons so far ahead. Whether applicants can apply methods confidently therefore cannot be read from their degree alone.

In administration, a narrow majority of companies preferred a bachelor's degree to a master's. 51 percent preferred a bachelor's degree, 42 percent a master's degree and 6 percent a vocational school qualification. Doctoral graduates hardly played a role.

Among the graduates hired, the picture shifted further towards the bachelor's degree. It accounted for 56 percent, the master's degree for 32 percent and vocational schools for 11 percent. The master's degree was thus 10 percentage points below the preferred value.

The distribution of recruitment problems is striking. For commercial positions, companies cited insufficient specialist and methodological competences, insufficient intercultural experience and insufficient social competences at 20 percent each, too little practical experience at 18 percent and insufficient personal competences at 15 percent. The study counts stays abroad and language skills as intercultural experience. No single reason dominates. If you are filling commercial positions, these figures suggest that language, experience abroad and collaboration count as much as specialist knowledge.

For technical roles, meaning production and technical execution, a narrow majority also preferred a bachelor's degree. 44 percent wanted a bachelor's degree, 41 percent a master's degree. At 15 percent, vocational schools reached their highest value of the three areas here.

Of those hired, 52 percent were bachelor's graduates, 27 percent master's graduates and 20 percent graduates of vocational schools. The share of master's degrees was thus 14 percentage points below the preferred value, further than in any other area.

Alongside R&D, the technical areas were the hardest to fill. Here too, the reasons are widely spread: too little practical experience and insufficient social competences at 20 percent each, insufficient intercultural experience and insufficient personal competences at 18 percent each, and insufficient specialist and methodological competences at 17 percent. In technical areas, specialist knowledge is therefore the least frequently cited of the five reasons. When selecting for technical positions, practical confidence and teamwork therefore deserve at least as much attention as certificates.

The report states that companies often had to compromise on the preferred formal qualification when recruiting. Figure 4 shows what that looked like. In all three areas, the share of master's degrees among those hired was below the preferred value, and in R&D the share of doctorates was as well. Bachelor's degrees and vocational schools, by contrast, were above it everywhere. The gap for the master's degree was largest in the technical areas (41 to 27 percent), followed by R&D (56 to 44 percent) and administration (42 to 32 percent).

The background is a tight market. One third of the companies surveyed were unable to fill all the positions they had advertised for graduates in the two years before the survey. According to the report, competition for the few talents drove salaries up and made recruitment and employee retention more difficult.

For workforce planning, this means that a job profile tailored to the preferred degree did not reliably describe, according to the 2015 figures, the person who would ultimately be hired. Whatever is missing between the requirement and the degree a person brings must be covered by onboarding. You should therefore plan for this part when drawing up the job profile.

Figure 5 of the study (n = 215) compares, for each degree, the expectations regarding the level of competence development with the degree to which these expectations were met. For doctoral graduates the values were 88 and 59 percent, for master's graduates 79 and 50 percent, for bachelor's graduates 76 and 44 percent. For graduates of vocational schools, expectations of 76 percent were met by only 33 percent.

The gap therefore grows the lower the degree: from 29 percentage points for doctoral and master's graduates to 32 for the bachelor's degree and 43 for vocational schools. The report concludes that expectations of vocational school graduates are the lowest, but that the difference from the competences they actually contribute is the largest in this group. Between the organisational areas, by contrast, the values differed little: R&D 80 to 59 percent, administration 78 to 60 percent, technical 77 to 57 percent.

This mainly affects technical areas. That is where companies most often preferred vocational schools, and where 20 percent of hires came from this group. According to the study's figures, it is not enough in this area to plan for vocational school graduates with lower expectations. Onboarding has to close the largest gap of all degrees.

The report explains the finding with the status of vocational education. It had a poor reputation in China. Despite a clear oversupply of academics trained far from practice and a simultaneous shortage of qualified skilled workers, pupils and parents preferred university studies to vocational training. As reasons, the report cites the state of the vocational education system and educational ideals according to which vocational training was only considered when the general educational path remained closed. A university degree, by contrast, promised a higher salary, prestige and social influence.

The report describes the consequence as a labour market strongly geared towards production, into which academics with partly unsuitable training were pushing. The labour market still needed workers and skilled staff. The Chinese leadership countered this with a “28-point plan for the accelerated development of modern vocational training”. Under this reform, up to 600 universities were to be converted from the academic track into vocational bachelor's universities.

The report considers the reform a step in the right direction. However, it states that a shift from exam-oriented education to holistic quality education is needed at the same time. The study does not measure how far the reform has taken effect since the survey. The article on the employability of Chinese university graduates describes the causes in the education system in more detail, and the article on error culture in Chinese teams describes their consequences for how mistakes are handled.

The following approaches describe how transformis works, not results of the study. Recruitment methods from other countries differ significantly from Chinese practices. transformis therefore helps companies achieve the best possible fit between their own requirements and the competence and personality profile of the candidates. The yardstick is thus the person's profile, not just their degree.

For the period after hiring, transformis developed a concept in its research cooperation with ECNU that enables managers to assess the potential of young talent validly. transformis analyses this potential and enables managers to build on it with development planning aligned with the organisation's requirements and to evaluate its impact regularly. transformis has also developed its own onboarding concept for young professionals in China.

The article on the onboarding of Chinese graduates describes which competences take priority in onboarding. The article on the turnover of young professionals shows how companies retain the skilled staff they have hired.

The programme combining leadership development and talent development contains elements of the German dual vocational training system. In action-oriented workshops, managers learn to link theoretical knowledge transfer closely with the work processes that specific tasks of the organisation require. The approach thus starts where degree and practice diverge. transformis has had its own office in Shanghai since 2011 and has been working with ECNU since 2013. The China consulting page describes the full range of services.