For years, China was a promised land for expanding multinationals and manufacturers, drawing hordes of expatriate employees eager to capitalize on the country’s billion-plus consumers. Could those days be over?
A new study by UniGroup Relocation, which moves over 260,000 families per year worldwide for work, suggests they might be.
According to the company’s customer data, twice as many people moved out of China than into the country in 2014.
The outflow could be pegged to expiring work contracts, which typically tie expats to China for two to three years, according to UniGroup. But there are other reasons as well: rising costs of living, a desire to reengage with the home office and the apocalyptic pollution, which even Beijing’s mayor has said makes the city “unlivable.”
The trend is also driven by a shift in global economic winds, the company says. China’s slowest growth since 2009 –which leaders have taken to calling the “new normal” –has cut into multinationals’ sales, forcing some to reconsider their operating strategies in China.
With manufacturing and labor costs rising in China, some corporations are skipping the Middle Kingdom altogether for cheaper pastures such as Malaysia and Vietnam, Steve Lewis, Managing Director of UniGroup Relocation Asia Pacific tells China Real Time. “We have done some mass moves into Malaysia from China as certain people choose to do research and development and manufacturing there,” he says.
The economic recovery in the U.S. and in some parts of Europe is another factor drawing expats out of China.
The vast majority — 93% — of UniGroup’s clientele are multinational employees, but there has been an increase in Chinese companies from online retailers to state-owned manufacturers asking about the company’s relocation services, according to Mr. Lewis.
Although the company’s report made no mention of China’s tightening political atmosphere or uncertainty and business disruptions stemming from President Xi Jinping’s vigorous anti-corruption campaign, some recently departed and soon-to-depart expats have told China Real Time that those were factors in their decision to leave.
For those moving out of China, Western locales still dominate. The U.S. was No. 1, followed by Germany, Singapore and France. Hong Kong and Malaysia, the only Asian regions in the top 10, ranked sixth and 10th, respectively.
The U.S., still the top supplier of expats to China, saw 22% fewer people move there in 2014 compared to a year earlier. For the second year in a row, more people moved out of China to the U.S. than vice versa, according to the company’s data, though that doesn’t necessarily mean the population of Americans in China is shrinking. While U.S. executives and other multinational employees may be leaving, the country has seen a recent influx of younger workers, many of whom move to China on their own and thus wouldn’t show up in UniGroup’s stats.
Besides the U.S., the top economies sending people to China were Hong Kong, the Netherlands and Singapore. The bulk of these moves were by employees in the service industry –including banking, hospitality and pharmaceuticals.
Hong Kong also saw more corporate employees leave than arrive. Foreign direct investment in the former British colony is still high, and finance, legal, hospitality industries are still sending executives to the region. But high rents and school fees can add up to be prohibitively expensive. And then, there’s “without a doubt, the pollution,” says Mr. Lewis.
The moves do not represent a mass exodus out of developed Asia, however. Twice as many people moved to Japan as left last year, and movements in and out of Singapore and Malaysia stayed the same compared to the year before.
Source: Wall Street Journal – Twice As Many Expatriates Leaving China Than Arriving, Moving Company Says
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