China also has workforce frictions

Sometimes we fly across meridians without thinking about the medians. Median income in Beijing is 20,000 RMB ($3,125 U.S.). A half-pat/returnee would expect to start at 36,000 RMB ($5,625 U.S.) without any particular skills or degrees.

On one hand, it would not even meet U.S. minimum wage. On the other, it represents the average salary of a Chinese mid-level manager. It is not as bad as the tensions which were faced by CITIC Bank and Morgan Stanley, where the president of CITIC earned less than a new investment banker hire at Morgan, but it’s a reality you have to consider as you plot or execute your China strategy.

When you cross meridians in the pursuit of power, commerce and/or cultural curiosity, you take on more than just language customs and compliance. Foreigners who venture to China in search of one or more of the above also bring sets of assumptions and expectations which are sometimes at odds with the local people and conditions.

One chafing point is the differences in pay and status, which, although often based on skills and experience, makes many Chinese workers feel like third-class citizens.

As discussed previously, running your business in China means trying to transfer your organization, experience and skill sets to a country that, although it has a huge workforce, often does not have a ready supply of the human resources you may need.

Businesses in China spend a lot of their time responding to the local human resource issues. Often it means going to extraordinary lengths to find the right combination of skills, experience and costs. Nothing unusual, you might think. Unfortunately, the combination of large lower paid Chinese workers toiling day-by-day next to their higher-paid half-pats and returnee colleagues is becoming an issue. It is driving negative feelings towards some foreigners and hampering recruitment and retention efforts.

Foreign companies have always used expats but the growing use of half-pats and returnees is creating a new kind of friction. While often less than half the cost of a “full-boat-expat” they represent a special management challenge.

Younger Chinese workers seem to feel that while some expats, half-pats and returnees with valuable skills and/or experience are worth more, they are not as accepting of lower level half-pats , anyone who knows little and cares less about China’s language, culture or business practices, or returnees.

The issue of expats, half-pats, returnees and natives has been discussed before, but time is dynamic, and so is China. Recently I interviewed three half-pats from the U.S. about their experiences with their Chinese colleagues. The first, an English language teacher, teaches at one of the thousands of English language programs, set up to help students pass their exams and prepare for overseas study. The second works in a large corporate multinational that provides professional services to mostly foreign multinational companies in Asia. The third is a junior partner with a recently created professional services firm.

The English teacher

The English teacher indicated that his colleagues barely speak to him. He is acutely aware that they resent the fact he is paid three times more than they are. Social interactions are basically nil. He is well aware that he does not have the educational or professional qualifications of many of his Chinese co-workers, except when it comes to spoken English. His response to the situation is that without foreign English teachers, the school would not be able to attract students, so in his mind he is in part being paid for his advertising value. Recruiting and retention is an ongoing battle with Chinese instructors only staying marginally longer than their foreign counterparts.

The multinational corporation employee

The person who works at the multinational corporation said that expats get a 5 to 10 times and half pats/returnees get a 3 to 5 times earnings premium over their Chinese colleagues. When I asked why, the answer was, “We bring skill sets and experience our Chinese colleagues do not have.” On the other side, many half-pats do not speak or read Chinese. In the company, lower level expats polish English translations, while the middle and upper level expats/half-pats/returnees occupy the key management slots in strategy, operations and marketing. The person I interviewed had a bachelor’s and came to China after graduation.

Differences in pay and status have created sharp divisions among employees. In daily business interactions people tend to reply on their groups for support. Take, for example, lunch. Expats eat lunch in nice places, generally with other expats. Half-pats tend to eat in groups, mostly at foreign themed restaurants. Chinese workers will generally eat at their desks or at cheap canteens. Socially, outside of work, which involves longer hours for Chinese staff than their American counterparts, apart from a few company occasions, they keep separate. The exceptions are office romances, which seem to be fairly common, but that is a different topic. Recruitment and retention tends to be a merry-go-round, where HR is constantly hiring to fill vacancies for all areas, regardless of background. There is little sense of team feeling or real organizational loyalty.

The junior partner

His firm, which was just opened this year by two foreigners and a Chinese citizen, bases pay solely on performance and function. The junior exec is fluent in spoken and written Chinese and has a degree in Asian studies. The business is aimed at offering complex services to established Chinese corporations who are trying to come to the grips with the foreign business, culture and compliance issues they face outside China. The workplace is collegial and focused. Human resources are a big issue, as often paper qualifications do not translate into real world output, but it is not the game of daily human resource roulette which most firms face. The main issue seems to find people who can think and anticipate. In many ways apart from being a multinational, multi lingual work environment, the issues are the same ones faced by businesses everywhere.

The three interviews make it clear, at least anecdotally, that there are significant social and economic tensions within companies that employ foreigners and returning Chinese. In the past, the situation was simpler, just expats and natives. In the future, the one thing that is clear is, Chinese workers will not be happy being treated as third class citizens in their own country. Figuring out your HR strategy in China is part of the game. Just remember that being aware of latitudes and attitudes, meridians and medians are part of the equation.

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