The end of the expat era

Via Remy Cimadomo on LinkedIn, a decent update on the career landscape for expats in China:

What no one tells you is that these great opportunities are now for locals much more than they are for foreigners.

Most foreign companies are now well established and their years of tax free benefits and favorable labor costs are now over. Margins have reduced, Western economies have slowed (China’s clients), and we have seen a dramatic shift toward relieving the payroll of all those expensive expats.

On the other side, local talents have learned and grown, trained under countless foreign companies and JVs. The education level is catching up, and the knowledge base is transferring. They are ready to take over.

This is correct. Local Chinese employees are of a way higher caliber than 10+ (5+?) years ago. Multinational companies are often flooded with applications from Chinese who have studied/worked abroad, speak and write English fluently, and are well-educated with technical skills. There is simply no reason for most companies to hire an expat Westerner.

The situation is a bit different with senior-level management positions, where I understand there is often a talent shortage and Western expertise is more in demand, but that’s changing too as a new generation of sophisticated Chinese managers take the reins.

Unless you are at a director level or higher, chances are your nice expat package from home will come to an end after a few years. After your good years of service and the growing attachment to your lifestyle in China, you may be “rewarded” with a step down to a local package. Even if on the paper the salary is sometimes matched, numerous advantages will disappear or seriously diminish: housing/travel allowances, education benefits, retirement plans and health insurance are all often lost in these transitions.

To be honest, I didn’t know “expat packages” were even a thing anymore. I think that era is pretty much over. No company is going to reward you financially for the hardship of working in China, unless maybe you’re a senior executive in the West who needs to get sent over for some reason.

Despite these challenges, who is still getting a nice expat or even arranged local package?

People with either a great technical expertise or consequent managing experience in China. These openings are infrequently found. Often if you are headhunted for a position, or if you have a strong relationship with a potential employer in China, the opportunity is rarely at the right place at the right time.

Our current view of these opportunities shows that the package for a 10-15 year veteran with expert credentials ranges from RMB 700k to RMB 1.3M [Ed: $103,000-$191,000] adding both Salary and benefits together. Packages that are significantly more lucrative are increasingly rare. […]

[UPDATE: “According to a May survey by consultancy firm Employment Conditions Abroad, the average package for expats who are managers at multinational companies, and with at least eight years of experience, is about US$276,384.

“This includes an average US$82,537 in cash compensation, US$96,012 in tax allowances and US$97,834 in other benefits like education, accommodation and transport.” (SCMP) – International school, practically a necessity for expats with kids, is a huge expense in China.]

Internship ranges from 0 to RMB 5K, first jobs from RMB 5K to 12K. A best case scenario for someone with 2-5 years’ experience is typically around 20K RMB [Ed: about $3,000/month].

If you look at the increasing cost of life of a matching ‘foreign’ life style in cities like Shanghai or Beijing, you quickly realize that this is no heaven on earth.

That last figure is a bit low, you can probably do better than that, at least in Shanghai.

Even though the picture seems bleak, there are still many opportunities for foreign talent in China.

  • Central China has developed in the recent ‘conquest of the West’, offering much less glamorous cities to live in but a lot of opportunities for expats of all experience levels at a more affordable cost of living.

This is a good point. There are a lot of interesting cities to explore outside the first-tier conurbations of Shanghai, Beijing, Shenzhen and Guangzhou, which have already been colonized by expats. (Although Shenzhen isn’t so bad. I’m not a fan of Guangzhou.) If you can find work in a place like Chengdu or Kunming or even a smaller city out west, or frankly just any lower-tier city in China, you won’t have to stress too much about money and the experience could be very worthwhile. Shanghai is expensive and somewhat of a cultural bubble.

Over the last years, Chinese authorities have made it much easier for foreigners to invest and launch businesses. If entrepreneurship is in your blood then China is a now a rather good place for it. (more articles about this topic to come)

Well, I’m curious to read those upcoming articles. My understanding is the exact opposite. It’s getting harder for foreigners to start and run a business in China and I don’t recommend it at all. You will fail, and you will lose a lot of money in the process. Not every time, but your odds of success these days are pretty freakin’ low. Sorry.

Speaking Chinese will not improve your odds of success as much as you would hope

If the job is Chinese speaking then in about 95% of cases, it means a Chinese person can do it and the job will pay according to local market price. In our experience if a Chinese person is speaking with you as the face of a foreign brand they expect the full foreign experience.

An excellent point, and I agree. It can be hard for native English speakers to accept this, but “learning a foreign language” is basically worthless unless you become fluent in said language, which in the case of Chinese takes years of hard work. Ask yourself honestly whether you could conduct a business meeting entirely in the target language without any help from an interpreter. If the answer is no, then you don’t speak the language. (An oversimplification, but a good rule of thumb.)

And the thing is, even if you do speak Mandarin fluently, there are only a few niche occupations where that would really help you. Outside of those specialties, your language skills don’t count for much because there are over a billion Chinese people who can speak their own language much better than you can – and many of them also speak English fluently. And many of them have overseas experience, and professional skills and qualifications that you don’t have. So… whaddaya got? Why would any company choose to hire you, a foreigner with a BA in International Relations who speaks Chinese like an average Chinese middle schooler, over any well-qualified Chinese person?

Of course, you should by all means study a foreign language if you genuinely enjoy it.

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