Shanghai Free Trade Zone Service
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ATAHK reads from China Briefing that China’s expat makeup is evolving, not shrinking. For details, please refer to the following news from China Briefing on July 2nd:
There has been much commentary made over the state of China’s expatriate market recently, with suggestions that it is shrinking. The number of expats in China is a notoriously difficult subject to pin down, not in the least because it is often so subjective. Many blogs will only factor in “Western” expats, since the status of Hong Kong people and Taiwanese as “expats” doesn’t fit China’s own statistical modeling on the subject.
Meanwhile, expatriates from Japan and South Korea, especially, tend to have rather different social models when in China than, say, expats from the United States or Europe, with little interaction between the two. Schools also tend to be segregated along language lines, meaning many expat children will not be fully exposed to other expatriate nationalities. This means that trying to guess the number of expats in China is much harder than taking a count of how many of your friends left last Christmas, never to return.
At China Briefing, however, we have a significant and measurable number of subscribers, who sign-up to receive and access our complimentary monthly magazines, receive book discounts, and take advantage of first-come first-served status at events and so on. Changes to these subscriber profiles are indicative of movement within China’s expatriate population, and we have seen no unusual movement in this regard. Many expats simply come to the end of their China contract and return home. But what has happened over the past two years is that a higher percentage— not huge, but noticeable—of more senior level expatriates have been leaving China. These are typically at the CEO or CFO level, and have been living in China with their families.
Recently, while some executives have privately voiced concerns about the environment, especially as affecting their children, most have seen their positions localized—by returning Chinese nationals armed with foreign university degrees, a good command of the required language skills, and two-three years’ experience under their belt at their respective employer’s head office.
This doesn’t indicate a large trend of expatriate departures, but is the result of a long-term, corporate career strategy that has targeted talented Chinese managers and groomed them in their respective corporate cultures. Such executives are preferable to expats, and this development makes up for most of the movement we have seen in expatriate demographics over the past two years. The overall implication is that the Chinese management labor force in MNC’s in China is maturing.
Another aspect to look at is the nature of expatriate roles in China. This too is changing. WFOEs and JV’s in China are no longer content to just export—they now want to sell to the China market, whose middle-class population of 250 million is expected to reach 600 million by 2020. This means taking on smart young Chinese executives to help get the supply chain in place and extend this into China’s massive inland regions. Expats will tend to stay at the China Regional HQ— wherever that may be.
The business scopes required to compete in China are also changing—instead of pure manufacturing, MNC’s now need to have logistics, warehousing and delivery systems in place to service the new consumer market. This requires investment and supply-chain expertise—and China is thin on the ground in these areas. With China having signed a Free Trade Agreement with ASEAN, it is also apparent that ASEAN-made components integrated into Chinese final products is part of the new production normal.
Today’s manufacturing WFOE needs to be able to import and assemble products made elsewhere, for example in Vietnam, Indonesia or India, in addition to China production, in order to obtain the optimum consumer sales/margin price. Accordingly, expat demographics are also changing in nationality—there are more Indians working in China than ever before, in addition to plenty of ASEAN nationals coming on board the China-based management team.
Expatriates nowadays are just as likely to be supply-chain and distribution experts as they are production managers and engineers. They are more likely to be based in further flung locations as well—China’s middle-class consumer market cannot be reached by sitting in an office in Shanghai. The new breed of China expats are explorers, and less likely to be sitting in the same bar in Beijing every night than was the case in the past. They are more likely to be based in Changsha, Chongqing and Qingdao, and also more likely to be Asian. The expatriate makeup is evolving, and this trend will continue as China further internationalizes and receives more of the global supply chain.
If you are interested in China expat services, you can rely on ATAHK for help. You are welcome to contact ATAHK anytime, simply by calling us at 86-755-82143422 or emailing to tannet-solution@hotmail.com.