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A majority of the foreign-owned companies operating in China have expressed no intention of increasing the percentage of expatriate employees in the next five years, vowing instead to recruit more local professionals in a long-term commitment to the Chinese market.
The message was delivered yesterday by PricewaterhouseCoopers in a survey on localization of 39 foreign-owned companies and one State-owned multinational firm in major cities such as Shanghai, Beijing and Guangzhou.
The surveyed organizations are mainly among the world's top 500 engaged in the fields of manufacturing, financial services, chemical and information technology.
They usually have foreign top executives and technical leaders working in China. Their names, however, remain unknown for confidential purposes, according to the survey taker.
"With an increasing number of foreign enterprises making their way into the Chinese market, the 'people issues,' especially the management of local and foreign staff, have been brought to the forefront more than ever before," said Nora Wu, China Partner on Human Resources Services at PricewaterhouseCoopers, who is in charge of the survey.
In China, three kinds of expatriate localization are in operation.
One is hiring foreign professionals on a local contract and providing them with a premium on local compensation. As many as 58 percent of the interviewed organizations adopt this practice.
Another is moving expatriates from full expatriate status to local or local plus status, which means the Chinese subsidiary rather than the parent company outside China contracts the foreigner.
Only 30 percent of the studied companies adopt this approach as the Chinese healthcare, education and social security systems remain hurdles to foreign employees.
The third way is replacing foreigners with local staff. Now only 12 per cent of the interviewees are doing so and commonly offering positions such as accounting, human resources and manufacturing posts.
"More and more multinationals have become aware that the only way to achieve maximum returns is to adopt programs that will enable local professionals to assume key positions," Wu said.
"Local professionals are quick to learn and working hard. The only disadvantage is the lack of experience with multinationals," Wu said. "Things will be better along with economic development."
(China Daily November 10, 2004)
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