Ruthger de Vries, a senior executive at Scania Group, a Swedish heavy vehicle manufacturer, is a busy man. He is helping about 100 expatriates from as far afield as Brazil and Sweden to relocate to China, where they will train a new team of locals in Rugao, a city in the eastern province of Jiangsu. The incoming staff at the Sodertalje-based company, including managers, engineers and designers, are tasked with training the local workforce to make lorries and buses of the same quality as Scania’s factories elsewhere. Most will settle in Rugao where a new plant is being built, while a few will head for cities such as Beijing, Shanghai and Nantong, home to some of the company’s existing staff. “You do not get the competence [to produce innovative vehicles] from school,” said de Vries, the company’s Asia industrial operations president. “ [China’s] reopening came at the perfect time, making it possible for us to have these ambitious plans of moving people to China.” To lure the staff from overseas, Scania is offering incentives such as paid-for flight tickets and, most importantly, schooling, housing and travel allowances for the employees and their families, according to de Vries. The efforts are part of Scania’s plan to expand in China. In Rugao, a couple of hours’ drive from Shanghai, it is planning the layout of new buildings and liaising with suppliers for its fourth global production base, where a zero-emissions factory that runs on clean energies such as biogas is due to start operating in late 2024. Scania is not alone in pulling out all the stops to attract talent from abroad. China’s reopening after abandoning its strict pandemic curbs has raised hopes of welcoming critical foreign staff back to the country and restoring confidence in the market. Business trips are already resuming, and some companies are willing to offer salaries above market rate and provide additional benefits to lure expats. However, some foreign businesspeople said China’s attractiveness to expats remains uncertain and the pandemic has accelerated a pre-existing trend of replacing overseas staff with locals. China’s famously harsh Covid-19 control measures in the past three years caused an exodus of expats. The American Chamber of Commerce in South China said the number of companies that employed less than five foreign staff jumped from 37 per cent to 70 per cent in 2020, while its German counterpart said companies have lost a quarter of their foreign employees. A senior executive with a British recruitment firm said just one in 10 vacancies aimed at expats was filled in 2022, leaving employers with no choice but to change their hiring plans or look for Chinese candidates. <!--//--><![CDATA[// ><!-- !function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); //--><!]]> “In the last three years, many more expatriates left China than entered, creating an imbalance between supply and demand, especially as few foreigners outside China were keen to come in,” said David Nagy, the managing partner for Asia-Pacific industrial practice at DHR International, a headhunting firm. Faytech, a German electronics developer with a base in Shenzhen, is looking to expand its workforce and resume business trips as early as this month. It is sending “German engineers and Korean project managers to fly to China” said founding manager Arne Weber. “In April, colleagues from America and India will come over.” The company is advertising a salary of double the market rate for an IT engineer in its Shenzhen office, and is trying to fill three more vacancies there. International schools are also keen to lure foreign staff back to China this year to fill key positions. Anthony Coles, head of college at Dulwich College Beijing, said the school has been offering competitive packages, additional bonuses, and benefits such as medical and tuition support to attract and retain talented educators from all over the world. “With the recent announcement of border reopening and the lifting of quarantine, we have seen an immediate bounce-back in international teachers’ interest in China,” he said. During the pandemic, Dulwich College strove to retain expat staff by stepping up the compensation it offered. The school offered to fully cover round-trip flights, costs associated with quarantine, and any other travel-related costs to encourage employees to return. Shanghai American School has taken on a recruitment coordinator outside China to attend job fairs overseas. “As we hire for the next [school] year, we are once more looking at a global pool of candidates,” said Ilaria Cortesi, the school’s human resources director. “The overwhelming majority of our teachers and administrators remain foreign passport holders.” <!--//--><![CDATA[// ><!-- !function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); //--><!]]> Companies have been putting together more attractive packages to lure foreign talent to fill gaps in China. Shortages of foreign staff are particularly acute in high-end manufacturing and the technology sector, with vacancies concentrated in the country’s financial centre, Shanghai, and the tech hub of Shenzhen. Extended lockdowns in both cities had driven many expats away, said Tim Ye, CEO of recruitment agency HiredChina. “To attract senior foreign employees, companies are willing to pay up to 30 per cent more in salary and provide additional benefits such as housing allowance and family insurance,” said Ye. A case in point is a Shanghai-based German industrial enclosures manufacturer, which is willing to offer a German engineer with a bachelor’s degree up to 1.2 million yuan (US$178,758) a year, at least 40 per cent higher than the average salary in Germany, to come and work in China. The company’s German vice-president of operations, who has stayed on in China for 12 years, receives an annual salary of 2.4 million yuan. This is considered the top of the salary range for senior professionals in Shanghai, according to Randstad, a human resources company. For its expat staff, the German company has been offering housing allowances of up to 20,000 yuan a month and tuition fees for international schools. But while certain positions still need to be filled by expats, the pandemic has accelerated a shift towards localising the workforce. The rising cost of attracting and keeping foreign staff poses a challenge and has led to a dwindling of demand and a change in expectations when hiring foreign staff. Indeed, the lavish expat remuneration package is probably a thing of the past, according to Kenneth Lam, China sourcing manager at Cockram Construction Australia and secretary of the China-Australia Chamber of Commerce South China “The skill set and the experience of local staff have improved quite a lot since five to 10 years ago,” he said. “The days of the ‘expat package,’ like education, healthcare, big allowances for travel and accommodation, a lot of those opportunities have gone.” He said only executive level or upper management roles retain such generous perks, while middle management staff have been increasingly replaced with local employees. The trend is evident in the finance industry, said Hong Lingyun, a senior executive with recruitment services firm Joinlink Consulting in Shanghai. The days of the ‘expat package,’ like education, healthcare, big allowances for travel and accommodation have gone Kenneth Lam, secretary of the China-Australia Chamber of Commerce South China The days of the ‘expat package,’ like education, healthcare, big allowances for travel and accommodation, a lot of those opportunities have gone “Some senior roles in the finance industry such as CFO, risk management or compliance officers do require candidates to have an overseas education background or work experience, but employers here now focus on those Chinese professionals who returned to China after they garnered experiences abroad,” he said. For Weber of Faytech, proficiency in the Chinese language is now a priority in his recruitment decisions. “When we now hire an expat, the demand is that he or she is fluent in Chinese as a basic start-off,” he said. “It is important to have at least one general manager who understands the Western culture when you are a Western company, but this person does not need to be an expat .” Some employers think offering career growth is more important than lucrative pay packages. One is Shenzhen-based biotech company XtalPi, which plans to recruit high-end talent for global expansion. “Whether the career path will be improved is another core factor that [potential candidates] pay attention to,” said chairman Wen Shuhao. Besides the increasingly intense competition with local professionals, China’s attractiveness as a workplace for foreigners faces the challenges of insufficient international flights, a lack of effective Covid-19 vaccines, visa policies and a slowing economy. All of these have left foreign businesspeople wondering when, if ever, is a good time to return. “Our member companies seek the rapid resumption of flights into and out of China, which will help bring ticket prices back to an affordable level, and facilitate the normalisation of travel,” said Colm Rafferty, chairman of AmCham China. In 2022, foreigners made 4.5 million trips into and out of China , a 95 per cent plunge from 2019, before the pandemic emerged, according to data from the National Immigration Administration. The European Chamber of Commerce in China said that in order to reassure businesses, China could further boost its vaccination efforts and ensure that future policy shifts are communicated to businesses and local governments well in advance of their implementation. It said current Covid-19 outbreaks and the headwinds faced by China’s economy make it unlikely European expats and businesses will return immediately. However, China will “regain its appeal in the midterm future” if it can manage the challenges. There have been calls for the loosening of visa restrictions on foreign talent. Zhan Yubo, a researcher with the Shanghai Academy of Social Sciences and an economic adviser to city officials, has heard multinational firms complain that staff who are critical to keeping their Chinese operations running smoothly still face “red tape” when applying for visa and residency permits. “We are fine-tuning our customs clearance procedure to facilitate cross-border flows of talent. Easier [visa and residency permit] rules will be issued,” he said. Hiring of expatriates will see slow growth in 2023 and the real jump will not come until next year, as China’s uncertain economic outlook weighs on the job market, said Zac Wang, a regional director for Guangzhou and Shenzhen at Randstad. Recruitment by multinational corporations dropped by 20 to 30 per cent in 2020 from the prior year. In 2021, it rebounded to pre-pandemic levels, but plummeted around 50 per cent in 2022. “What the three years of lockdowns did will not recover within one year,” Wang said. “People are not sure what’s happening in the economy, so they are conservative in hiring people.”