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Home > Doing Business with China > Human Resources Overview

In terms of human resources, the current debate is focused on the continued need for multinational corporations in China to increase hiring of local staff, particularly for operations management, while decreasing or completely removing expatriate staff.  Reasons for this shift away from expatriate staff include the high cost of salary and benefit packages, questionable value (in terms of productivity and ability to drive the business), high failure rates and most recently, the large readily available talent pool of expatriates already based in China  (“halfpats”).

Many within China agree that there is a shortage of local talent in the middle management sector. In the past, this was a significant issue as companies had only two options – to hire and relocate expensive expatriate staff from overseas, or inexpensive, inexperienced local staff.  Previously, this H.R. decision was made all the more difficult by the fact that many companies had yet gain a solid foothold in China.  Without a solid track record behind them, these companies had to make the crucial hiring decision of placing their future in China in the hands of one manager, who would be responsible for directing the market entry strategy.

In the last 5-10 years however, a new breed of manager has emerged – the “local hire expatriate”, or halfpat.  Following the slowdown of the U.S. economy in 2000, western and Chinese professionals begun relocating overseas, to seek better employment and career opportunities.  In China this resulted in a new wave of halfpats, typically fresh graduates or professionals with less than 5 years work experience.  Many had already studied China’s language, culture and business environment for 1-3 years while in the U.S., and sought opportunities that leveraged these assets in China.

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