According to a report published in October 2005 by McKinsey & Company, China is not producing enough well-trained graduates who are suitably qualified to work for global companies.  This study involved interviews with eighty-three human resources professionals who hire local graduates in China.  It concluded that less than 10 percent of Chinese university graduates had the skills necessary to work for foreign companies, compared with 25 percent of university graduates from India.  The research found that Chinese graduates lack practical skills in areas of teamwork, project management, and software development, as well as proficiency in English, which are necessary to be successful in large global businesses.  The research team attributed these problems to the fact that Chinese universities tend to focus on theoretical and textbook learning instead of emphasizing practical application of knowledge.

Multinationals, Sino-foreign joint ventures, and Chinese companies with global presence could have more difficulty finding suitable university graduates to fill their positions in China.  This shortage of well-trained graduates could also hamper China´s attempt to transform from a manufacturing economy into a more sophisticated service-based economy.

Nevertheless, China continues to produce a tremendous number of university graduates; about 3 million Chinese students will graduate this year, while over 1 million students will graduate in the United States.  Chinese universities are beginning to invite foreign professors to join their faculties and to improve research centers.  However, India´s English-speaking graduates will be at a significant advantage when competing for jobs in service-based and IT industries.