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back to index backASIAtalk February,  2006

The China Connection

The world's third hottest expat assignee destination (after the UK and US), China's economic turnaround post-1978 has been nothing short of impressive. With average real growth of more than 9% per year (and 13% during peak years), it has become the world's fastest-growing economy - and hence naturally caught the eyes of global businesses.

'Since China has achieved sustainable development after entering the WTO and continues to serve as an important production centre and market for foreign investment, more and more foreign companies are speeding up their plans to explore the market. Also, those companies which have already established their presence in China are currently expanding their business,' Cedric Wong, deputy marketing director, Kerry Properties Development Management, Shanghai, shares. And with a recent Cendant Mobility survey revealing that 66-81% of companies are planning to increase their relocation activities into China, the outlook is even more optimistic, especially in the automotive, engineering, manufacturing, FMCG, and high tech industries.

However, its population may not be up to the challenge. Although those who had started working for MNCs back in the 1990s are now experienced enough for mid-level positions, the talent gap is still noticeable, especially in view of the popular perception that they lack the training to manage and grow large operations. As a result, 'the demand for relocation of experienced workers to China from all over the world continues to rise, largely for senior management positions within organisations,' Alice Cheong, HR director - China, UPS, observes.

Culture shock - not

'There is a continued dependence on expertise from Europe, Australia and Europe,' Tan Eng Leong, group director of HR, Shangri La Hotels and Resorts, concurs, although at a 'micro business level, we try to fill vacancies with those who have work experience in Asia, rather than hire directly from Europe.' Currently, expats hail predominantly from the US, UK, European nations, Japan, Malaysia and Singapore.

'For Asians and Westerners moving to China, it is difficult. The first issue they face is culture conflict and shock,' he continues. On the workfront, cultural challenges are multifaceted. 'Considerable adjustments' need to be made when it comes to one's understanding of 'job responsibilities, the idea of supervision in Chinese context, and performance expectations,' Tan cautions. This is especially crucial, he adds, given the traditional hierarchical Chinese system of authority. 'There is still this feeling that people want to be awarded as a group, not as individuals,' he observes.

On an individual note, besides the obvious language barriers, the lack of international schools, residential houses as well as medical services are major challenges. Take housing for example: 'Personal space is a premium in China and the usual 'comfort zone' that people in many Western countries are accustomed to does not exist,' James Gooding, general manager, Santa Fe Relocation Services, Shanghai, shares.

John Newington, manager - Greater China & North East Asia Region, SvitzerWijsmuller, experienced this personally when he moved to China early this year. 'Relocation is a big issue. Real things you take for granted - schools, banks, etc, are all very different. Finding Western food is a problem,' he laughs.

The silver lining

However, the silver lining is that as the number of expats increases, so does the number of international schools. 'One of the main challenges that has surfaced is the limited education facilities available for dependents of our relocated employees. However, we see this situation improving to a degree in the future as more international schools enter China's main cities such as Beijing and Shanghai,' UPS' Cheong comments.

In secondary cities like Shenzen and Suzhou, however, it is a different story. To Natalie Haslam, China country manager, Orientations, 'communication, getting around, loss of independence, changes in the dynamics of a relationship, lack of personal space, less outdoor activities and lifestyle' are the major problems faced by expats in secondary cities.

To minimise these, Dan Shao, chief representative, Cendant Mobility, China, recommends culture training, and suggests, 'Get as much information as possible.' She also feels that HR and management should select assignees who are open and willing to accept the local culture. Prior experience is also a major plus point. 'Often for roles in China's second or third tier cities, the preference is for previous work experience in China. Many companies offer language and cultural training to their assignees and actively promote 'local' talent,' Santa Fe's Gooding adds.

In fact, 'lots of Chinese returnees are being recruited. It's one of the resources companies want to take advantage of,' Cendant Mobility's Dan, tells us. These are especially attractive, given the fact that they understand the local culture and can be easily assimilated into their workforce as they have the requisite skills and experience.

Law & order

However, regardless of who's being hired, China's labour laws have to be taken into account. 'The labour laws have not developed at the same rate as the international growth. There are many grey areas in terms of rights and obligations of both parties,' Orientation's Haslam tells us.

Shangri La's Tan agrees, highlighting accessibility as the first problem, with 'different provinces interpreting the same law differently' coming in a close second. 'Many regulations need revising according to the current situation,' he adds.

Taking disputes for example, Kerry Properties' Wong tells us, 'One of the critical issues regarding labour laws for foreign companies is that when disputes arise between local employees and foreign companies, such disputes shall go through labour arbitration with local labour arbitration commissions, which often balance towards the local employees in their awards.' The way to avoid such a situation is, he suggests, 'A well drafted employment contract in compliance with local laws. This is important for foreign companies.' Besides this, he mentions, a 'well established system/working procedures/guidelines can be of help when it comes to managing local talent.'

Large companies too, can make use of HR expertise to manage the situation. 'UPS overcomes this challenge with the placement of highly experienced human resources staff to ensure consistency and transparency in local labour laws that adhere to government standards and benefit its employees,' Cheong shares.

Where the road goes

Going by current analyses, the future of relocation to China looks upbeat. 'It will continue to grow at a rapid rate as the economy booms. However, at a later date you will start to see more localisation as the skills of the local talent improves,' Orientation's Haslam says. As a result, 'packages to assignees may be refined, though this will be less attractive to assignees. But there will be less disparity between foreigners and locals.'

Despite its 1.3 billion population, China's strength in the future will not be its low cost labour. Recent reports suggest that in Dongguan, a main manufacturing centre and FDI recipient in Guangdong province, there is a shortage of nearly two million migrant workers in the Pearl River Delta region (the large manufacturing hub in southeastern China, directly north of Hong Kong) alone. And this shortage has been lying dormant there for some years.

What makes China the 'hub of the world' is its market potential. As Cendant Mobility's Wong concludes, 'It is foreseen that the economic growth of China will continue to be strong in the future.' In other words, it's only going to get better and better.

Source: Human Capital Asia - GAI
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