China experience is important, but it is becoming harder for foreigners to get it

"China experience" has been regaining the significance it once commanded centuries ago when the country was at its zenith. This is because China's ever growing economy is drawing extensive global attention. The demand for China experience is an inevitable outcome. Having China-related expertise and knowledge is no longer just a box to tick on a CV, but a necessity for promotion to upper-middle or senior corporate positions, or a ticket to more attractive jobs.

Unsurprisingly, what comes with this flourishing temptation is the increasing competition among expatriates in China. This was not the case 10, or even five, years ago. Then, it was less competitive - fewer promising candidates vying for salary packages that came with perks coupled with lower cost of living. Today, the perceived expat's superiority in China's labor market, especially among multinational enterprises in its first-tier cities, is beginning to wear thin. This is because as domestic markets grow in importance, companies and institutions move quickly to localize expat staff and withdraw lucrative welfare items such as children's education and transport allowances, as well as housing and meal subsidies.

Why? There are several factors at play: expats failing to deliver expected results, the increasing density of the expatriate population and growing competitiveness from local Chinese professionals. There is, without a doubt, a noticeable trend toward achieving equity in the workplace by localizing expats.

In China, expats have long been given preferential treatment: their salary packages are significantly more attractive than what has been offered to locals, the key reason being to maintain their home-country lifestyles by removing unnecessarily worrisome factors so they can deliver stellar performances. With these measures in place, some have questioned why some of these foreign brains, despite having better professional knowledge and experience, are failing to deliver desirable outcomes. We have found that the biggest hurdle is the gap between the ideal and reality - foreign experience means very little in a domestic context without situational adaptation and timely adjustments. The lack of language skills, failure to understand the local business culture and an inability to grasp social etiquette are blocking these expats from successfully incorporating their home-country experience and knowledge into a Chinese context.

All the points above make it very clear: expats can hardly go merrily on as they have before. With the increasingly heated competition, they are confronted with an urgent need to update their skill set. There are about 300,000 foreigners live in Shanghai alone. Twenty years ago, people could be easily astounded by a simple "ni hao" and "dui bu qi" from a foreigner. Today, it is not unusual to see Caucasian children running around howling with laughter, prattling in native-level Mandarin or even local dialect in deep alleys near Shanghai's French Concession. Also, the number of international students studying in China has been climbing steadily. For example, at CEIBS, 34 percent of the students from the 2014 MBA intake came from abroad. These international students step foot in China at a relatively young age compared with expats, and are keen to soak up anything related to China-specific knowledge. Their international background, formidable language skills and social knowledge herald even tougher future competition within the expat community.

Budding Chinese professionals have also recently risen to prominence in competing with expats. A new generation of overseas Chinese returnees generally shares evenly matched skill sets as expatriates: international tertiary, or even secondary education (many study at elite institutions and rub shoulders with the rich and famous' off-spring); years of experience working and living overseas; and, most importantly, they can surmount language barriers and are relatively more familiar with the Chinese context, while their remuneration package is usually lower compared with those of expats. And even those who suffer from reverse culture shock typically have a shorter assimilation period, compared to expats.

According to the data, there are three main reasons why overseas Chinese return home: family reunion (90.9 percent), seeking more career opportunities (78.4 percent), familiar cultural life (66.7 percent). And the Chinese government is luring them home with policies on things such as medical care, along with tax and welfare benefits for returnees.

There is no doubt that China experience is becoming increasingly vital. A globalizing world economy brings inevitable demands for a stint in its second largest - and growing - economy. At the same time, China's emerging economy is constantly reallocating its resources to yield better and faster results, indicating that the traditionally perceived advantage provided by expats is gradually being eroded from all directions. Multinational enterprises in China should make every effort, as soon as possible, to push for effective localization of their foreign professionals.

Terence Tsai is associate professor of Management and Siluan Simone Wang is a research assistant at China Europe International Business School.

(China Daily European Weekly 03/13/2015 page9)