Expats to complement haigui employees at TNCs in China

The increasingly common combination of a foreign testamur and a local “shenfen zheng” ID card is transforming the employment market in China.

Fresh off long-haul flights with new Chanel handbags in tow and hoodies from IVY League or G8 universities stashed in their suitcase, thousands of Chinese grads are returning to China and jostling for position to work with large international companies such as KPMG and IBM.

The rate of returned Chinese, popularised in China as haigui or ‘returning sea turtles‘, has accelerated due to changes in skilled migration and a weak employment market in Western countries following the Global Financial Crisis.

The earlier waves of returned Chinese graduates are also gradually advancing into senior management positions and taking the seats of their foreign predecessors at executive meetings.

Characterised by their bilingual language ability, experience abroad and foreign diplomas from top-ranked universities, the CV of returning Chinese graduates offer an appealing value proposition for HR Managers. Returning Chinese also accept a lower wage than foreign hires and those moving into senior positions assume local contracts minus the lucrative benefits of an expat package.

The once highly hoisted welcome banner for foreign professionals in China has also blown over. Recent years have been marred by a gradual downsizing in the number of expat packages and localisation of work contracts. High inflation, resulting in increased living expenses, and adverse environmental conditions in China have also influenced expat families to leave. In addition, inexperienced professionals and recent graduates on a foreign passport are also being turned away under new strict visa regulations.

The authorities have announced that China will no longer issue work visas for foreign graduates without two years relevant work experience in their country of origin. The message has reverberated from the Entry & Exit Bureau in Yonghegong to Chinese diplomatic postings and visa processing centres around the globe.

These shifts have dramatically transformed the internal dynamics of international companies in China. In Beijing, there is only a handful of Australian born employees working for the top four Australian banks, Telstra, Rio Tinto, and Macquarie Infrastructure. Cochlear has recently localised senior management, and giant foreign companies with more than 2000 employees in Beijing, including KPMG and E&Y, would be hard-pressed to field a social basketball team of foreign employees.

Not all bad news for foreign professionals

However, whilst the job market in China is becoming increasingly more difficult for expats, the recent popularity of haigui hires does not augur the end of an expat career in China.

Imbalances in the HR demographic of transnational companies have already disrupted the company culture and productivity levels in numerous companies. The internal culture inside global entities such as E&Y and GSK now resemble the internal lining of a Chinese company, which has caused serious repercussions for both companies and very publicly in the case of the latter.

The flood of Chinese graduates into international companies has also washed up new problems for senior management. Imperfect levels of spoken English, under-developed team-work skills, and a lack of practical experience have combined negatively with high salary expectations and dissatisfaction over the pace of career progression.

This is not to say that returning Chinese students aren’t capable and can add value to international companies, but the rapid intake of local hires and localisation of staff has disrupted the internal balance of numerous companies.

Foreign talent still highly desirable in China

Companies are now desperate for a new wave of foreign talent to lift productivity, foster innovation and polish the output of Chinese colleagues. A new HR cycle may not be imminent just yet but young foreign students studying in China should not be concerned but consoled by recent trends in the employment market.

The golden period of lucrative expat packages and lax visa restrictions is unlikely to return but these changes will help shape a new breed of foreign professionals. The next generation of expat workers will have typically spent their early 20’s studying in China (often free of charge under the auspices of Chinese government scholarships) and have at least two years work experience in their home country.

Returning foreign passport holders to China will offer a unique set of experiences and skills that their returning Chinese counterparts cannot match. Importantly, leadership, problem-solving and team-work skills are taught from an early age in the West but these core competencies are difficult to grasp and all too often avoided by China’s one-child generation.

The new class of expat workers will be able to utilise their previous professional experience, skills and contacts to inject international best practices and corporate culture back into transnational companies in China and develop strong international links.

Competent Chinese language skills or experience studying outside of Beijing and Shanghai will allow the next round of expats to be more versatile and take up new posts in the growth markets of second and third-tier cities. They will also be well versed with local customs, confident to conduct business and prepared to manage a Chinese team of employees.

In regards to salaries, the job market will find an equilibrium between the productivity and positive influence of foreign hires, and the realistic expectations of expats eager to return to China and ready to take on a local contract.

Cycles have long proven powerful brokers in the Chinese economy and an eventual return to balance in hiring policies should ensure the long-term livelihood of foreign companies in China and provide the rise of a new generation of foreign professionals.

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