This is China! BLOG

The Replacement Expats

I recently asked an Austrian acquaintance his impressions of trends in the wide world of human resource management in China. Josef (not his real name) works in the industry in a multinational MNC with offices throughout China and Asia. We met for coffee in a Starbucks in one of the many innocuous luxury-brand malls that honeycomb Shanghai. Josef is a tall, soft-spoken fellow with cool Euro-style eye glasses and a self-deprecating humor. Of course, as every good Austrian likely is, he was most distressed by his national team’s showing in the Euro 2008 football competition, especially as a host country, he told me.

Josef noted a persistent trend in the interest Western companies have in hiring returning overseas Chinese. “Western executives seem to think that because these guys have a Chinese face they understand how to do business in China.”

I likened that misconception to believing placing an Italian in a North German factory would be right-minded because they’re all European, after all. Josef agreed. “I have my reservations about that thinking,” he acceded. “But there seems to be little to dissuade them [Western companies] otherwise.”

I asked Josef about the Western expats whose contracts have come to an end in China and who want to stay in the country longer to work. There must be quite a lot of them, and they must be a lot cheaper than hiring a Westerner from the home country on a full expat package. Josef shook his head, “Many of the companies that are new to China still want Chinese in place in management. Western expats can still be more expensive than the company is willing to pay for – especially after a few years of operation. “But I understand the local Chinese just don’t respect the returnees. And the returnees can be quite arrogant, too.”

I told Josef about a story I heard about the Hong Kong General Manager of French hotel in Shanghai. The Hong Kongese replaced an American General Manager that had led the expansion of the hotel spaces and increased sales. At the first meeting with staff the Hong Kong manager whipped his passport from his pocket and waved it in the air. “I am not Chinese!” he said loudly to the shocked staff, “I am British! This is a British passport!” Weeks on, after bullying staff and pinching pennies on things like flower arrangements in the lobby, employees began resigning, including a friend of mine who was a manager at the hotel. I recently learned that after less than a year in the position the Hong Kongese is resigning his post.

I asked Josef what the difference in remuneration was between a Western expat that wanted to stay on in China and one who was traveling from his home country with a wife and no children. Josef looked up at the ceiling of the Starbucks in which we were having coffee and performed some mental calculations. “Well, some expats that come over have all kinds of allowances, including a wife allowance.” I asked him what a wife allowance was. “The wife can receive an allotment from the company for classes or for travel.”

“Oh,” I answered mischievously, “whatever it takes to keep her out of her husband’s business while he works.”

Josef laughed, “Exactly,” he said. He continued, “If you don’t include children in the package, the new expat’s package can be as much as twice the local expat’s.” To my mind that figure seemed to me to be in the USD$200,000 range. I whistled at the prospect. No wonder Western companies were racing to replace their Western expats with less expensive substitutes. However rough or flawed the new setting.