John Cremer reports on the growing contest between foreign bosses and local talent for top mainland posts

Many senior executives based in Hong Kong and abroad have come to regard a job in the mainland as a plum posting. Such roles generally offer new challenges, extra responsibility and the chance to work in one of the world’s most dynamic economies – plus a good salary package and decent perks.

This is exactly what most career-minded professionals are looking for, and largely explains why so many non-local executives in China end up extending their stay. In fact, in a recent survey of 50 high-level expat executives working in China – all general managers and above – by executive career-management service BlueSteps, 70 per cent said they planned to be there for more than three years.

The times – and terms – are changing, however. Competition is increasing on two fronts. Greater numbers of foreign executives are seeing the opportunities and attractions in China, and are keen to try their luck – especially when, in certain parts of the world, good jobs in various sectors are harder to come by.

Chinese companies are also now finding it easier to recruit local talent with extensive overseas experience who are capable of adding similar value to their expat counterparts, but at a lower overall cost.

Several trends are emerging as a result. One of the biggest is that the gap is shrinking between remuneration packages offered to expat and local executives. This is also caused by the fact that tier-one mainland cities, such as Shanghai and Beijing, provide a very comfortable standard of living, and the idea that an expat somehow experiences hardship is now a thing of the past. With costs always a consideration, companies are re-examining previously generous allowances and trimming where possible.

They are also increasingly viewing all staff and job candidates as part of the same talent pool and, in principle, on a single scale of pay and benefits.

Even so, more than half of the expat executives surveyed said they are actively looking for other opportunities in China as a possible hedge against being asked to relocate out of China. This, together with growing numbers of potential candidates representing a wide demographic range, is causing the mainland’s expat job scene to be more active than ever.

“For many people who have made a commitment in coming to China and whose families have put down roots, going ‘back home’ is not the attractive option you might think,” says Shanghai-based Peter Felix, president of the Association of Executive Search Consultants, an affiliate of BlueSteps. “If, for example, their children’s education is all sorted out, they may be looking to build a career in China. So if they’re asked to go back home, they then come to executive search firms saying, ‘Help, I want to stay’.”

For search firms, this has created a distinct subsection of the job market: expats in China. These individuals are prepared to move within the mainland, will often consider joining local firms, and may even take a cut in overall pay for the chance to keep using hard-won China experience at the sharp end.

“A combination of experience and cultural adjustment does give you an advantage,” Felix says. “But executives are pretty pragmatic these days. They know all about supply and demand and they know that the competition [from well-qualified mainlanders] is always increasing.”

Optimism about openings in China for job-seeking international bankers, engineers and the like must therefore be tempered by a large dose of realism.

“There is a definite shift in China to more local hiring,” Felix says. “It would be a mistake to think there are lots of new opportunities for foreigners in financial centres like Shanghai and Beijing. Don’t rule out the possibility, but there may be more chance in second- or third-tier cities doing real frontier work. It is a bit of a risk as you are outside the realm of conventional careers, but if you’re flexible, you really can add value by transferring management experience and expertise.”

Offering similar advice, Francis Mok, president of the Hong Kong Institute of Human Resource Management, reminds professionals across the board that a flexible outlook is the key to remaining competitive.

Contrary to most perceptions, he says, the number of Hongkongers working primarily in the mainland has decreased, from 240,000 in 2004 to 180,000 in 2010. Two factors explain this: the restructuring of manufacturing industries and the ascent of mainland-based personnel equipped to fill senior operational and executive roles. As the mainland’s pool of talent grows, he says, further adjustments should be expected.

The underlying competition for jobs and livelihoods can sometimes cause even senior executives to lose sight of the bigger picture.

“In our survey, 60 per cent of expat respondents thought [mainland] employers would prefer to use less-skilled local talent to avoid paying an expatriate compensation package,” Felix says. “There is a perception that local talent is satisfied with less, even though they have a better understanding of the local market.”