Expats head to greener pastures

Foreign companies are sending more of their senior managers to China's smaller cities where markets are thriving

Above: As Beijing, Shanghai and Guangzhou get saturated with foreign companies, more mutinationals are sending their staff to lesser-known cities in an effort to expand. Below: Foreigners in a Chengdu tea house. Provided to China Daily

As foreign companies search for new markets in China's tier-two and tier-three cities, more expat senior managers are being asked to leave the bright lights of Beijing and Shanghai to work in places they are not fully familiar with.

Foreign companies are keen to assign experienced expats to new branches in the smaller cities to help in building foreign-standard management structures, some human resources consultants say.

Andreas Bukenberger, a 43-year old German, was sent to Chengdu, Sichuan province, to be the general manager of Siemens Electronics Works Chengdu. He moved there with his family in June 2012.

Siemens signed an investment agreement with Chengdu High-Tech Development Zone in October 2011 to establish a manufacturing and research and development center for industrial automation products in the city.

"It is Siemens' first such factory in China and we needed to send core people from Germany (to set it up)," Bukenberger says.

The factory, which will start operating in September, is the sister factory to one in Amberg, Germany. The new factory will ensure that its three main activities - enterprise management, product R&D and manufacturing -will be closely integrated, Siemens says.

According to Bukenberger, nine other Germans work in the factory as either managers or experts.

He says the company wants to hire more local people, but the new factory will still need experienced employees to ensure it follows the company's globally standardized working procedures.

International companies will always need to keep key foreign experts in the major cities where they are based, but sending foreigners to smaller cities will become more common, he says.

Some human resources consultants have noticed a correlation between international companies localizing their managers and increasing demand for foreign staff in China.

Over the past five years, the trend for foreign companies to localize their expats in China's smaller cities has increased as more businesses have realized that China offers them the best opportunity to make good profits on their investments, says James Darlington, head of Asia at Antal International, a British recruitment and training consultancy.

"International companies have invested more capital and human resources in China in the past few years because they realize that the market there is still growing while markets in other countries are stagnating," he says.

This trend has occurred in almost every industry, but it is more obvious in some sectors.

"Industries in which there is less local experience are going to see more expats; for example: chemical, tech, healthcare and green technologies," says Jonathan Edwards, a partner at Antal International (Shanghai).

He says the trend will be that industries that have factories in smaller cities will send their executives there.

To better meet their clients' requirements to deal directly with senior executives all over the country, Antal has already placed 25 percent of its expats in smaller cities, although it still needs most of its foreigners in tier-one cities, where its main offices are located, Edwards says.

Generally, every percentage point of GDP growth will add 1.2 million job vacancies to a particular region. As a result, the increasing economic vitality of China's smaller cities is adding to the demand for foreign executives.

"China's top 50 cities will account for 12 percent of global economic growth in the next 10 years, since they are already huge economic entities with total GDP of $2.9 trillion," says Kin Keung Fung, managing director of greater China for Jones Lang LaSalle Inc, a Chicago-based real estate investment services company.

In the past three years, China's main tier-two cities built almost 10 million square meters of new real estate for sale and 2.5 million square meters of A-grade office space, Jones Lang LaSalle said in its top 50 cities report, which was released in March.

The firm listed the top 50 cities in China based on their economic development, especially real estate construction data, and it described some cities as tier 1.5; that is, smaller cities that are developing into major cities.