Raising the bar

American expatriates in China seemed an endangered species around 2005, when multinational companies began localizing top talent.

But this creature has continually evolved to survive in a changing business environment since the first wave of US expats came to China three decades ago.

American expatriation to China has fluctuated since the opening of relations between the two countries, but it is expats that came earlier and stayed later who are best suited for today's job market.

Demand for foreign professionals is increasing with foreign direct investment, but at the same time multinational companies (MNCs) continue to localize operations by replacing expats with qualified Chinese.

"We see all kinds of conflicting trends," says US-China Business Council's business advisory services manager Ian Billard.

"There's more demand and more competition at the same time," he adds.

Jill Malila, director of client management-China for leading HR firm Mercer, says expat assignments increasingly focus on knowledge transfer and durations of stay in China are shortening to about two years on average.

But clearly the "demand for foreigners without China experience is going down in the long run", according to Billard.

The declining need for inexperienced expats may be because companies now see "the key to future growth" in selling to China's domestic market, rather than in using the country as an export platform, he explains.

"You don't want someone like me from Florida to come and tell you how to sell things to people in Nanjing," he says.

The trend may also generate opportunities for Chinese who repatriate from the US.

"Chinese returnees play an important role for US businesses operating in China, as they are often more able to effectively bridge the Western and Eastern cultures and business styles," Malila says.

"Their ability to communicate effectively with both headquarters and the local affiliate often makes them ideal candidates for leadership and management positions," she says.

Billard points out a growing demand for foreign talent in small and medium-sized enterprises (SMEs), which creates a new job market for American expats.

An increasing number of professionals from MNCs are shifting to SMEs after completing their China assignments, often accepting slimmer expat compensation packages, says Fiducia Management Consultants business development manager Thaddaeus Mueller.

Going from an MNC to a SME often entails a 10- to 50-percent salary reduction, says Billard.

Even expats who stick with MNCs often find their compensation packages trimmed.

But those who leave MNCs for SMEs may have to fight hard to get a job.

"If you're an American in China, demands for getting a job other than English teaching are now much higher," Billard says.

Billard explained that previously Mandarin skills were enough to land an American a job at an MNC. The company then provided professional training. Now viable candidates need both before applying.

How the financial crisis affects American expatriation to China "is anyone's guess," says Billard.

"It really depends on if China's GDP increases if the Chinese economy doesn't slow too much and the US economy continues to tank, a lot more people will be looking toward China," he says.

The expenses associated with hiring an expat could be a disadvantage for Americans wanting to escape tough economic times at home, according to Mueller.

"Looking at the current economic climate, naturally, companies try to cut costs wherever they can, and the easiest way is to cut the costly expatriate packages," he says.

"But the value of expertise sent from headquarters cannot be underestimated," he says.

Research such as the GMAC Global Relocation Trends surveys shows both China and the US as challenging expat assignment locations.

China topped the list since the surveys began in 1994, except 1997 when it was second to Japan. This year 30 percent of respondents identified it as the most challenging destination.

The US has been in the top five since 2003.

The main challenges in China, according to the survey, are language, culture and administrative procedures, while administrative procedures are the biggest difficulty in the US.

Even though China is still ranked the most difficult expat location, American expats in China are seeing hardship allowances cut.

"Hardship allowances are being reduced or eliminated for assignments in China's first-tier cities, as the infrastructure for a Western lifestyle is generally available and the ability to maintain quality of life is quite achievable," says Malila.

"But language barriers are real and so create stress on an ongoing basis, unless an expatriate is linguistically competent," she adds.

(China Daily 12/29/2008 page7)