Expats head to greener pastures

Chengdu is a typical tier-1.5 city and more international corporations are developing their branches there.

As many as 173 of the world's top 500 corporations had branches in the city at the end of 2012. During the first nine months of last year, more than 20 global top 500 corporations established branches in Chengdu, according to the 2013 white paper from the American Chamber of Commerce in China.

"Although foreign direct investment in China fell by 3.4 percent from January to August 2012, Chengdu managed to achieve an impressive increase of $5.568 billion in realized foreign investment, a rise of 20.62 percent compared to 2011," the white paper says. Manufacturing and service industries attracted the most investment.

The rapid growth of these smaller cities has not only surprised the expats living there but has also given them confidence to continue working there.

"We could not imagine the speed of growth before we came to China," says Bukenberger, who had previously lived in Singapore for four years.

Many Chinese cities have tried to become more international by attracting global brands to their markets, and this has also attracted expats.

Kempinski Hotels, the European luxury hotel management group, opened its 18th hotel on the Chinese mainland in Yixing, Jiangsu province, which is a tier-three city.

Sebastien Mariette, general manager of Kempinski hotels in Wuxi and Yixing, Jiangsu province, was sent to set up the new hotel a year ago as part of the company's campaign to establish a presence in China's lesser-known cities.

Sebastien Mariette from Kempinski hotels was sent to cities he never knew before. Provided to China Daily

The local government's support helped the hotel chain establish itself in Yixing, although so far 99 percent of guests at the hotel have been Chinese.

"For the city's international image, the local government wants a high-end international hotel here," Mariette says.

But in Wuxi, Mariette has seen expats attracted to the city.

"Over 50 percent of my guests in Wuxi are laowai (expats)," he says, as there are many foreign companies and factories in the city.

The expat community in Wuxi, which is near Shanghai, is also growing, he says.

Before working in Jiangsu province, Mariette was assigned from Africa to set up a Kempinski hotel in Huizhou, Guangzhou province.

"My experience in building up new hotels may be a reason for my company sending me to cities in China," the 37-year old Frenchman says.

Mariette is the only foreigner working at the hotel in Wuxi, because the Chinese employees can quickly adapt to the group's European standards, he says.

"But we still need a general manager from Europe," Mariette says, as that person needs to ensure the hotel maintains the company's European style and standards.

Mariette says he prefers the smaller cities because they have more Chinese character than the big cities.

"Big cities like Shanghai and Beijing are pretty much the same as other international cities, like New York or Paris," he says. "But the smaller cities are very Chinese."

The bright future of local development is another main reason why foreign senior managers are moving to smaller cities.

"As the government and companies are exploring the markets in smaller cities, the booming second and third-tier markets promise better career development," says Robert Parkinson, CEO of RMG Selection, a British executive search company specializing in recruitment in Asia.

Expats are very concerned with their future development, Parkinson says. Therefore, they believe the developing markets in smaller cities provide better career development opportunities.

"Most expats that are relocated to these cities are promised a promotion or planned future development from the parent company," he adds.

Also, the smaller cities are good locations for expats who want to develop their own businesses.

Cheaper startup costs in lower-tier cities and subsidies offered by some city governments also attract foreigners planning to set up businesses, says Parkinson.

In September 2007, an ambitious business graduate from Grant MacEwan University in Edmonton, Canada, flew to China to look for work. Adam McWhirter went to Chongqing, a mountainous city in Southwest China.

McWhirter is now a well-connected Chongqing representative of the European Union Chamber of Commerce in China and the general manager of the China management team of Maxxelli Real Estate, a company that offers relocation services to expats who work in tier-two cities in China.

"I came here for the opportunities and the opportunities in second-tier cities in China never end," McWhirter says.

He believes that whatever can be done in tier-one cities such as Beijing, Shanghai, Shenzhen and Guangzhou, has already been done.

"No matter what you do, as long as you are ambitious, you can take off, because things are changing so fast here," he says.

McWhirter says opportunities and challenges are what he loves about tier-two cities in China.

Maxxelli Real Estate was set up in Chengdu in 2006 for a similar reason.

"There were hundreds of companies doing what we do in Shanghai and Beijing, but there was no competition in the smaller cities," he says.

The market in tier-two cities is smaller, but there is great opportunity, he says. His company now has 13 offices in China, including Changsha, Xi'an, Suzhou and Hangzhou.

According to McWhirter, his company has offices in megacities, such as Beijing or Guangzhou, because important policy decisions are often made there and the company needs a presence there.

But tier-two cities will remain the focus of Maxxelli Real Estate.

"The market in Beijing and Shanghai is huge, but the second-tier markets still have the most growth potential with more foreign multinationals and Chinese multinationals expanding their businesses to smaller cities," he says.

McWhirter also says his company plans to have 20 offices across China by the end of 2014.

Some expats say China's smaller cities are better to work in than similar cities in other countries.

Language and cultural differences do not pose problems for these expats, says Bukenberger.

"The younger generation in China speak good English," he says, "and I did not find any culture differences in my life here."

Bukenberger says at the start his family spent a little time looking for the right places to buy their daily goods. Now they know where to buy anything they need.

Mariette appreciates the safety and security in China's smaller cities, and says the only thing that annoys him is the difficulty in buying English books and newspapers there.

The lower living costs in smaller cities also allow expats to enjoy a better quality of life than they would in the big cities.

However, foreign companies do encounter some problems in sending executives to smaller cities.

In 2011 the Chinese government stipulated that foreign employees had to participate in China's social insurance program. Although at present, this rule is only enforced in Beijing and a few other municipalities, it will eventually be enforced nationally, AmCham China says.

The requirement will add to the costs companies face hiring more expats, and this might affect their employment policies.

AmCham suggests the Chinese government establish mechanisms for foreign employees to receive benefits under China's social insurance program or allow them to opt out altogether.

Meng Jing contributed to this story

wangwen@chinadaily.com.cn