Companies in China are planning to hire more foreign employees in the next year, but a greater percentage of them already will be living in China, said a global human resources services company in a report released yesterday.

In the report, China Expatriate Compensation and Benefits Study 2006, Hewitt Associates said 53 percent of surveyed organizations plan to hire more foreigners within the next 12 months.

Foreigners that are recruited from outside Asia are no longer the largest foreigners group in China. They represent only one-fourth of all foreign employees this year, compared with 30.7 percent in 2005. Instead, companies are increasingly recruiting foreigners who already live in China, who represent almost half of all foreign employees today, compared with 26.4 percent in 2005.

However, the most senior hires, such as executive directors, non-China-based foreigners still make up the largest portion, the report says.

Michael Song, head of Hewitt's China Compensation and Benefits Consulting Practice, said, "China has experienced unprecedented growth in recent years. This has led to shortages within the talent market, most notably when it comes to senior management and technical staff. As a result, many organizations are turning to foreign talent to fill the gap. Despite this, companies are increasingly trying to minimize their costs by hiring foreigners already in China.

Companies also reported a shift in compensation structure for foreigners. Although the total compensation still remains steady, the data by Hewitt shows that from 2001 to 2006, there was an obvious decrease in foreign employees' premium and an increase in variable pay.

Diana Yang, also head of Hewitt's China Compensation and Benefits Consulting Practice, said, five years ago, premium pay was given as a reward to lure employees to China, considered a more remote place at that time. Now, though, "China is not that remote or tough anymore."

(Shanghai Daily December 15, 2006)