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Expats' long march in China

Published on Friday, 25 Nov 2011
Peter Felix
President, Association of Executive Search Consultants
Photo: Gary Mak

Senior foreign executives working on mainland China prefer to stay on rather than go home after three years, according to a recent study by the London-based Association of Executive Search Consultants (AESC).

The survey of 100 top expatriate executives showed that 90 per cent of respondents intended to stay on for more than three years, with 57 per cent saying they planned to stay for five or more years. About 80 per cent held general management positions in China including CEO and chief operating officer roles, with many in multinational companies, earning up to US$150,000 (about HK$1.17 million) a year.

According to the survey, among the factors that keep these executives engaged are the dynamism of the mainland job market, its booming economy driven by a positive outlook, great purchasing power, and a fast-paced decision-making and deal-closing culture.

Respondents also appreciated the greater managerial freedom to enact real change. "What happens in one year here takes at least seven years in developed markets such as the United States and Europe," said one respondent.

AESC president Peter Felix said the results confirmed a shift in executive hiring patterns that has been taking place over the past decade. "Our survey is a snapshot that signifies that executives perceive China as a positive environment in terms of compensation and longer-term career potential," he told the Classified Post.

The intention to stay longer suggests a general satisfaction with the expat lifestyle and career options in China, dispelling myths of insurmountable cultural differences and the prevalence of short-term expat assignments.

"The traditional model of hiring senior expatriates has been shifting. In the past decade, China, Brazil, India and Russia have become markets in their own right that need long-term localised management expertise," said Felix.

"We are now seeing national and regional talent pools develop. There is a worldwide shortage of talent and companies are hunting in four key talent pools: Western-educated local returnees with multinational experience; regional executives who may not be Chinese; the localised expatriate pool; and the local talent pool."

Localised foreigners are hired at compensation packages different from those offered to expatriates and local employees, Felix said.

The study showed that executive pay on the mainland has become globally competitive over the past five years. Senior executives ranked China as the highest paying emerging market, ahead of Brazil and India. Multinationals were the preferred employer as they offer the highest pay, with a management style and culture close to international standards and practices.

On the flip side, the study revealed that 53 per cent of respondents had difficulty securing mainland executive positions, largely due to language barriers and lack of local contacts.

Executives also complained of a lack of regulatory transparency, corruption, policy ambiguity and a strong shortage of domestic talent, which is reflected in rising pay premiums.

A recent survey by human resources consultancy Aon Hewitt showed a salary increase of 9 per cent across all employee groups in China in 2011, and a projected increase of 9.5 per cent in 2012. Senior management received an 8.5 per cent increase this year, and can expect an 8.8 per cent rise next year.

"Even if there is a global recession, we will continue to see growth in China. It may slow down, but there will be growth," said Aon Hewitt managing consultant Tzeitel Fernandes.

"China is definitely an attractive option for foreign executives, but there is one set of issues that you cannot ignore - cultural orientation," Fernandes added. "You need at least a two- to three-year time frame working within a culture to be able to overcome that constraint.

"But there is no doubt that senior managers are willing to invest time and effort to take advantage of this opportunity, and middle management in the US who aspire to be in top management in five to seven years' time would like to do a two to three year stint in China. They understand they have to have China on their CV to succeed in the global market."

And these potential expatriates may just find China waiting with open arms. Released last June, the country's National Medium and Long-term Talent Development Plan (2010-2020) includes 12 programmes to recruit local and foreign expertise in fields such as enterprise operation and management, healthcare, modern agriculture and culture. 

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