The expat job model is one that has an expiration date to begin with, but some expats are finding that their milk is curdling sooner than they expected. Especially those expats perched on the higher rungs of the career ladder. The Association of Executive Search Consultants (http://www.aesc.org/eweb) estimates that the number of expats in senior executive positions in China, India, Brazil and Russia has declined from 56% ten years ago to 12% now. However, it should also be noted that while many companies announced their intention to hire fewer expats in China this year, there were also many other foreign companies less established in China who planned to hire more expatriate workers, keeping the numbers for 2009 and 2010 relatively stable. Why is there an expiration date on these expat jobs? Put simply, because from day one they are training their replacements, and their replacements cost far, far, far less.

For example, let's take a manufacturing site manager from an American corporation. To start with, he's already making an American salary in American dollars. Let's call it an even $100K. Now, because living in China is so difficult and traumatic for this poor yankee, he gets a percentage increase for hardship and living abroad. In many cases, that can be around 45%. He gets business class plane tickets back to the states twice a year, plus two periods of R&R (in addition to paid vacations) which include hotel fare. The tickets to the U.S. will run about $4000 each, so for him and his wife that's $16K. $200/night might be conservative for the hotel rate on R&R, but we'll round up to $10K. That's without kids. Now we need to talk about moving. Jack Expat can't be expected to live without the maximum number of accumulated material possessions possible, so we're going to have to fork out for relocation. That's not cheap. Estimate $75K to $100K. Where is Mr. Expat going to live? It has to be the nicest and biggest possible house, with as many additional renovations as possible to bring it up to “Western” standards. We're going to give our friend Jack the Expat a nice flat for 28000RMB/month, which is probably on the low end for Shanghai, but would certainly fly in most other cities. We'll round it off to $48K/year with utilities and a maid. We still haven't talked about transportation. Jack can't be expected to walk anywhere, even to a subway stop, he might lose some of his famous American weight, and then where would we be? But we can't let him drive either, it's far too dangerous and uncertain on these Chinese roads, our insurance company would never allow it. I know, more and more expats are getting drivers licenses, but Jack and his superiors still don't feel good about that, so we'll get him his own car and driver. The driver is cheap, but the car costs double what it would in the U.S. of A. We'll put down $150K for our bland, black, luxury sedan. Does Jack have kids? It will have to be the best and most outrageously expensive international private schools for Jack Jr. and little Jill. You know, the kind that don't allow any local students at all, lest the expat kids become infected; or worse, learn Chinese. That's going to cost $20K/kid each year.

That's not even all the costs. Suffice it to say that an average expatriate will cost $250,000 to $500,000 per year. A local manager would probably cost 250,000 to 500,000 RMB. That's why every company that has a successful long-term plan for China ends up scaling back on the number of expats. A source at Carrefour notes that when the supermarket giant first came to China, virtually all of the management level roles were filled by expats. Now, only the higher level expat positions remain, and everything else has been filled by locals working their way up the corporate ladder.

So why do these expat positions even exist? There are several reasons for expat jobs, and these reasons are dwindling as well.

The first major reason is usually technical expertise. Whether it is in the retail, manufacturing, IT, or financial sectors; the expat will have been trained according to Western business or engineering practices and have a wealth of knowledge that the company simply could not find in the new frontier. However, once enough people have been trained and have proven themselves to be competent, the expats will find that their tickets home are one-way.

The second reason is usually more of a cultural barrier. The home office often feels better knowing that their boy Jack is handling things. They only ever have to communicate with Jack, and there is no language barrier with him. The corporations also know that he has been trained in the Foreign Corrupt Practices Act and so he won't be hurting the company's interests by accepting kickbacks or giving red envelopes at weddings. (That worked really well for Apple.) Still, as more and more locals climb up the chain, their English does tend to improve and they certainly learn how to conduct themselves in the Western corporate setting. It is becoming more common to see Chinese hires rising to senior management positions in Western companies. This is also important for the motivation of the local hires. According to AESC President, Peter Felix, “If a U.S. company, for example, is seen as reserving top executive slots for Americans, it will affect the company's success. Global corporations are recognizing that they have to organize themselves in a way that will allow multicultural executives to come up through the system and reach top jobs.”

So if the reasons for retaining expats are disappearing, why has the number of expats in China held steady for the past two years? I see it as more of a changing of the guard. China's economy is still steamrolling ahead, and while several companies, like Carrefour and Coca-Cola, are well-established and phasing in more and more of their well-trained local executives, other companies are still new and trying to break into and benefit from the lucrative Chinese experience.  So while many companies are cutting back, there are still plenty that are just getting started. This is especially true in the retail market, as the buying power of the Chinese consumer continues to grow.

There will eventually be a larger decrease in the pure expat population, as there has been in Malaysia, Singapore and Hong Kong, but as that happens there will also be an increase in the number of local-hire expats, otherwise knows as half-pats. People who see greater opportunities for themselves in China than they could find in their home countries will continue to immigrate and open businesses and get regular jobs (orirregular ones) so they can all have their piece of the Chinese Dream.
 

Related Links
5 Tips on Finding the Perfect Teaching Job in China
Forget English Teaching: Other Jobs for Expats
5 Ways for Expats to Find New Jobs in China

Warning：The use of any news and articles published on eChinacities.com without written permission from eChinacities.com constitutes copyright infringement, and legal action can be taken.

Keywords: china ceo jobs china less expat jobs executive job decline china Expat job decline china