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China: World’s 2nd LargestEconomy Still Seeks Expat Talent

As China’s growth remains sluggish many of those who emigrated to the middle

kingdom for career advancement have moved on to find better positions in less costly

destinations such as Malaysia. Citing the weak yuan, lower compensation packages,

May 24th, 2016 Author: Simon Birch RSS-Feed

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rapidly rising education rates and pollution, pessimists recently concluded that the

top expat workers were leaving in droves. In 2014, UniGroup Relocation reported

that their data indicated twice as many people were moving out of China than

coming in, adding fuel to those anticipating that China’s slowest growth since 2009

would turn the tide of foreign workers. It now appears that the volume of the expat

outflow was- for the most part, a cyclical phenomenon, caused in large part by work

contracts expiring after a two or three-year period. Although there are some

adjustments, due to China’s economic contractions, there is ample evidence that

China welcomes foreign workers and is taking steps to retain them.

China isn’t offering the same luxurious expat packages seen twenty years ago when

employees received full compensation and benefits that included housing, school

fees, cars, tax equalisation and even cold climate clothing allowances. Those heady

days of heading to China for nearly instant wealth are over. Localisation packages

have become the new norm for seasoned expats. In response to rising labour costs

Chinese firms have trimmed the majority of the incentives offered to foreign workers

so that they are somewhat closer to the benefits and salaries local employees

receive. Where they still exist (at top management positions), expat compensation

packages are rising as many Chinese firms must more actively recruit foreign talent

against the rising cost of living and increased global competition. In a ranking of

expatriate packages in the Asia-Pacific region a survey by consulting form ECA

International revealed that a typical total annual package for a Shanghai middle

manager position was presently over $276,000 or £190,694. In Hong Kong, the

typical package is around $272,000 per year or £187,907, slightly lower than in

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Shanghai and Beijing.

Numbers of foreign residents are contracting, but only by an average of below 5%

annually and those coming for employment are arriving independently where they

aren’t being factored in the figures released by relocation firms. Those applying for

jobs from within China, experts suggest, are able to negotiate better salaries,

especially those who have even the most rudimentary Mandarin language skills.

Chinese Government Creating Expat Skills Database

One of the strongest indicators that Chinese companies are still keen to hire foreign

workers is the Chinese government’s plan to launch a historically unprecedented

database that pairs expat skills with Chinese companies seeking international

employees. The Chinese government is currently creating an expat talent database

with the aim to match foreign experts currently in China with Chinese employers that

may allow expats (thanks to the localised packages giving employees more flexibility)

the ability to be approached by other Chinese companies more willing to offer higher

compensation for their valuable skills

Also, after years of not having visas for many workers, China has crafted a simplified

visa system as part of the country's efforts to increase its attractiveness in the eyes of

expat employees. The joint efforts of the database which is the country’s premier

large data project and the streamlined visa is in response to a growing number of

firms and government departments in China who wish to hire more foreign

employees and are struggling to do so. China has lately acknowledged that thePDFmyURL converts any url to pdf!

country isn’t seen as the most attractive competitor (with high air pollution cited as a

strong deterrent) amongst the global marketplace and the government is determined

to do what it can to attract foreign expertise for critical future projects.

The new database will tally the numbers of all foreign workers living in China,

highlighting the industries in which they specialise and the areas of their expertise.

Details such as their city of residence as well as their employer will be available,

although the government has not stated how specific details, such as salaries, may

be.

Wide Range of Salaries will see 8% increases in 2016

The 30% growth in expat workers coming to China in the boom years between 2006

and 2010 has slowed in part to salaries struggling against the rising cost of living and

the depreciating yuan. In order to meet the demand for talent this year, companies

are offering inflation-busting salary increases averaging 8%, at 6.2% above inflation,

in spite of the economic slowdown, according to the latest salary trends survey by

ECA International.

For those seeking employment opportunities, China, according to the 2014 HSBC

survey is the third most desirable expat destination, behind Switzerland and

Singapore. For expats looking to make money and make money go further, China

holds the lure of some of the highest annual salaries, although only ¼ of expats will

make more than $300,000 annually. When expat packages are compared, China

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doesn’t have the highest of any financial hub country, though. The UK recruits foreign

talent with packages amongst the highest worldwide at around $430,000 which,

with today’s 1 GBP=1.448 USD rate comes to £296,928 a year.

According to Expat Arrivals, the jobs that are especially in demand in China are

banking and financial services; teachers, especially ESL educators are always sought

after. Teachers hired through companies like English First that recruit internationally,

offer monthly salaries starting at 15,000 RMB which would exchange for about £1,571.

These are markedly lower salaries than the many positions advertised on Chinese job

listings offer and given the cost of living, ones that would be very difficult to live on in

popular cities like Shanghai.

Shanghai rated the Most Popular Chinese City

Packed with skyscrapers and luxury malls, 23 million people live in China’s financial

capital, Shanghai. Called the “Paris of Asia’’; Shanghai is teeming with immigrants

that make it the least Chinese of any of the country’s big cities. Immigrants from all

over the world have flocked to Shanghai for job opportunities, and government

statics show the number of expatriates living in Shanghai rose by 70 per cent in the

decade between 2005 and 2015, from 100,000 to nearly 170,000.

International Talent Magazine recently surveyed more than 40,000 expats living in

China; querying them on a range of topics from work and living conditions as well as

government policies for foreign professionals. For the fourth time in six years,

Shanghai was rated as the best Chinese city by expats. Beijing came in second place,PDFmyURL converts any url to pdf!

Hangzhou in third and Shenzhen was rated in fourth place by popularity. One in six of

all expats in China reside in Shanghai, which isn’t ranked very highly, however, when

compared to the world’s most liveable cities of which Shanghai was listed as number

101 (Vienna scored first place).

Shanghai One of the Top Ten Most Expensive World Cities

For those expats who have experienced the rapid growth that has seen Shanghai

rapidly expand in a mere decade, changes such as increased traffic and pollution are

the downside of living in a vibrant metropolis. As the city has grown, the once highly

affordable lifestyle for expats has shifted as Shanghai is now listed in the top 10 of the

world’s most expensive cities.

With plenty of Westernized restaurants and pubs in Shanghai, many foreigners find

the city easier to adapt to than those where culture shock is a more profound

challenge, however this improved ease can come with some sticker shock. A beer in a

local pub in Shanghai costs about 37 RMB or around £3.90 and a small flat costs

around 15,031 RMB which exchanges to around £1,584.

The Chinese currency renminbi, or the yuan, has been weakening against U.S. dollar

since the beginning of 2016, a factor that decreases the profits for American expats

(who make up 22% of China’s foreign workforce) and it is another factor driving up

prices for expats and the Chinese population alike. China has limited its annual

foreign exchange purchase limit for individuals to 50,000 U.S. dollars per person in an

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effort to limit the yuan’s further depreciation. Chinese economists encourage Chinese

to invest in foreign currencies to safeguard further yuan losses, in spite of the fact

that if a large share of the population does so, the yuan will only fall more.

Is China’s weakened Currency curtailing spending abroad?

As China increasingly becomes a consumer society, and the yuan slips back to 2011

exchange rates near 1 Chinese yuan=.15 USD, there is a global hope that the country

will continue to spend money abroad despite the currency’s depreciation because the

sheer volume of consumers has an enormous worldwide effect. For Chinese students

studying internationally, education costs such as tuition and housing are higher as the

yuan’s value slumps, but as of yet figures aren't showing a decrease in Chinese

students abroad.

Record numbers of Chinese tourists had been seen in recent years, boosting markets

like Australia where more direct flights were added to welcome the influx. None of

these routes have seen major decreases.

China’s online shopping however, has seen the effect of the weakened currency as

those who exchange with foreign currencies are seeing the costs of goods increase.

As popular as foreign apparel and perfumes are in China, they all have to be paid in

foreign currencies, making them less tempting to Chinese consumers, in spite of the

8% salary increases, at least for the time being and Chinese eCommerce importers

are noting sales are declining.

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About the Author

Simon BirchHead of Online Marketing

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