Clear objectives offer a better understanding of what organisational capabilities are required, and therefore what type of staff will be needed.

Enterprises should also take a close look at their corporate culture as this plays a key role in determining which way they should go. For instance, a company which treats China as a supply centre or production base for exports will differ from one which aims to boost sales revenues and expand its market presence.

Whatever the case, Mr Wan warned that decisions should not be solely based on labour costs.

'Average salaries in China are lower than in Hong Kong, but it is cost effectiveness that counts. You need to have people who perform at the level you want,' he said.

At present, mainlanders may not be as mature in business terms or as international in their outlook as the Hong Kong workforce, but many are well qualified to handle positions such as department manager and senior executive.

'Department heads must be doers who can also follow instructions from their bosses,' Mr Wan said.

'As long as they have good interpersonal skills, fit into the team and can gain others' respect, they are fine.'

At country manager level, most overseas companies still prefer to appoint expatriates because of the level of experience and sophistication these jobs require. Accountants, for instance, are usually recruited from Hong Kong in view of their familiarity with international standards and practices.

But employers are steadily adjusting their expectations, and keeping an eye on the minimum requirements they set for new staff hired in China.

When shifting towards a policy of localisation, companies need to strike a balance between practicality and the time needed for training. The process also involves creating the right role models and communicating a sense of mission and teamwork.

Companies which decide to relocate Hong Kong staff to the mainland face a different set of challenges. First and foremost, they must assess the attitude of their candidates.

'Many people here are still reluctant to work in the mainland because of preconceptions or misunderstandings,' Mr Wan said.

Companies should find out whether employees are willing to relocate, and make sure they know as much as possible about the mainland market before moving there.

The duration of the contract, terms and conditions, job duties and succession plan should be made clear in advance.

These details give a sense of confidence to the person being relocated, and show they are part of a long-term plan.

'Changes can still be made for the sake of sustainability, but then the key is to look for a common vision between the company and the relocated person,' Mr Wan said.

The cost of relocation is often a factor and diverts attention from the real issue of return on investment.

'If someone generates enough income to cover more than their salary and expenses, you can say they are earning their keep,' Mr Wan said.

STRATEGIES TO FOLLOW

Firms must examine their goals and culture before deciding on a policy of localisation or relocation.

Overall cost effectiveness and return on investment are more important than minimising labour costs.

Manage your expectations and recognise the comparative capabilities of mainland and Hong Kong employees.

Set minimum standards for all recruits as you cannot spend unlimited time on training.

Local Chinese often fit best into positions as department managers or executives just below the most senior level.

If relocating staff, look for people who are willing to move and discuss their contract terms and responsibilities.

Team building is vital in creating harmony between locals and expatriates