China goes global: The impact on mobility

As new data suggests a turning point for mobility in China and the wider region, Ruth Holmes asks where to, and what next, for mobility in Asia-Pacific.

Chinese businesswoman
Testament to the scale of opportunity in China is that we can talk simultaneously about the danger of potential economic crisis and the country’s enduring impact on the global stage. With the latter particularly in mind, three recent surveys paint a thought-provoking picture of the opportunities presented by China’s presence on the mobility scene.Lexicon Relocation’s groundbreaking China Global Mobility 360 Survey offers new insights into Chinese companies’ mobility practices. It also reveals the extent of the moves these organisations anticipate in the next three to five years.Representatives of 156 companies operating in China, including 40 China-headquartered companies, were surveyed in association with China HR meeting organisation Enfovia. For Chinese-headquartered companies, 44 per cent projected their outbound relocations would increase, with 50 per cent already relocating employees outbound.For non-Chinese-headquartered companies also, China outbound assignments were well established, with 81 per cent already relocating employees abroad from China and 94 per cent expecting these numbers to increase or stay the same in the coming three to five years. Of these, 42 per cent predicted an increase.Speaking to Re:locate about the survey’s big themes, Avrom Goldberg, senior vice-president, global solutions, at Lexicon Relocation, commented, “For most of this time, the focus has been on Western expats in China. For me now, that’s no longer China’s story. Mobility is now well established and going global from China. It is also accelerating domestically within China.”These sentiments are echoed in the Worldwide ERC study Talent Mobility in China, produced in association with SIRVA and published earlier this year. In 2015, the majority of the 163 companies responding said moves for Chinese nationals outside China had increased or stayed the same.

China on top

Confirming outbound mobility from China as a significant trend, both studies preceded the announcement this April by the Global Business Travel Association (GBTA) Foundation that China, at 2015’s year end, had overtaken the United States as the world’s top spender on business travel.The research body forecasts that business travel spend in China will grow by 10.1 per cent to $320.7 billion, compared with 1.9 per cent growth in the United States and $295.7 billion in total business travel spend.“Despite a relative slowdown, China’s business travel market remains one of the fastest growing in the world,” said Michael W McCormick, GBTA executive director and COO. “China surpassing the United States in business travel spending marks a major inflection point, and truly demonstrates the global nature of today’s economy.”

Smoothing the Silk Route?

The key beneficiaries of China’s mobility expansion are the APAC region, with North America and Northern Europe benefitting to a lesser extent – for the time being, at least.These locations in part reflect the country’s strategic investments in infrastructure, manufacturing and services through its renewed Silk Routes, which sees China linking with its ASEAN neighbours, Russia and Europe (via the Baltic) and the Persian Gulf through Central Asia under the ‘Belt and Road’ initiative. The initiative aims to promote "orderly and free flow of economic factors, highly efficient allocation of resources, and deep integration of markets by enhancing connectivity of Asian, European and African continents and their adjacent seas”, according to the Chinese government.

Laying the foundations

Chinese company UnionPay International could be said to exemplify China’s purposeful approach to outbound investment. Cai Jianbo, CEO of the bankcard and financial payment service provider, spoke in April about how the company was supporting the Belt and Road plans. This is being done both by deepening its payment service delivery network to cater for Chinese inbound and outbound travellers, businesses and investors, and through knowledge transfer.“The implementation of the Belt and Road initiative has facilitated UnionPay’s rapid development in the markets involved,” Cai Jianbo explained. “We hope to give full play to our advantage to bi-directionally support the trade and personnel exchanges between China and these markets.”

Regional impact

Asia is the most frequently cited destination for China outbound mobility for both national and international companies. The reasons are complex, but reflect the reach of China’s investments and joint ventures.China is officially a top-ten investor in Indonesia, for example. However, some analysts believe it to be the number-one backer, because of indirect Chinese investment from companies based in other countries, such as Singapore or Hong Kong.For Gene Sugandy, division manager for residential tenant representation at Colliers International, based in Jakarta, the dominance of China chimes with her experience in recent years.“Right now, we are seeing expatriates from China as one of the biggest groups coming into Indonesia,” she notes. “In the past two to three years, Indonesia has bought lots of machinery and products from China, and Chinese technicians are coming in on three-to-six-month contracts.“By contrast, three to five years ago, the assignee profile was very European and North American. I would say our intake now is more international, with 50 per cent Asian expatriates, with the demographic dominated by China, then Korea and India.”

The domestic scene

Domestic and inbound moves also remain high on the agenda. Lexicon Relocation’s China Global Mobility 360 Survey shows that 96 per cent of the non-China-headquartered companies surveyed relocate people inbound into Tier 1 cities. What is more, 24 per cent expect relocations inbound from abroad to increase, with 61 per cent anticipating no change, according to the report.The WERC/SIRVA study also shows that inbound moves to China are still a key trend, with over three-quarters of respondents saying moves will increase or stay the same in 2016 compared with 2015. Within this data, balancing projected increases against projected decreases, short-term assignments are expected to see most growth (for 25 per cent of the sample), followed by permanent moves (8 per cent) then long-term assignments (6 per cent).Investment is headed deeper in the country, as well as continuing to flow into the Tier 1 boom cities like Shanghai, Shenzhen and Guangzhou, and to Beijing following the relaxation of restrictions on foreign entities investing in the capital. Manufacturers, in particular, are moving out of Tier 1 locations, either overseas to countries such as Vietnam or Ethiopia, or into Tier 2 China destinations like Suzhou, Chengdu and Dalian, and the Tier 3 and Tier 4 hinterlands beyond.The move is driven in part by China’s race to robotisation, with investment in brand-new facilities under the Made in China aegis. According to the International Federation of Robotics, China is now the biggest market worldwide for industrial robots, and the fastest growing. However, it still has some way to go to match South Korea, the world leader, for robot density in manufacturing.Already, 45 per cent of foreign respondent firms relocate employees inbound to China from abroad to Tier 2 cities, and over 90 per cent expect this figure to stay the same (51.22 per cent) or increase (41.46 per cent), according to the Lexicon Relocation study.By contrast, the figure for Chinese firms relocating inbound to these destinations is 31 per cent, underlining a trend for Chinese firms to seek overseas talent as well as Chinese nationals.“This trend to move into developing Tier 2 cities is happening in particular in the automotive and manufacturing sectors,” notes Gabba Schwencke, business development manager at JRE Mobility in Shanghai, explaining also how the nationwide destination services provider has mirrored the development of mobility in China.“Our first office was established in Beijing in 1993,” he says. “Since then, we have grown – first with our largest office, in Shanghai, and now we have eight offices in total, from which we can cover 25 to 30 cities across China.”

A tale of two headquarters? Chinese and overseas

The Lexicon study also suggests that inbound relocation from overseas to Tier 3 and Tier 4 cities, “less-developed county-level capitals” that include Foshan, Jiangmen, Hefei and Quanzhou, is a marginal trend at the moment, but one that is set to become more common for both sets of companies, especially foreign-headquartered firms.Just 10 per cent of foreign companies relocate inbound employees to Tier 3 and Tier 4 cities, but two-thirds of this group anticipates that the number of such relocations will increase in the next three to five years.Among China-headquartered companies, a quarter expect inbound mobility to increase from a 12.5 per cent base today, a finding backed by the data from the WERC/SIRVA study for expectations for 2016.While not for the majority, it is nevertheless clear that, at the margins, assignments to these relatively less-well-known destinations are taking place alongside assignments to the traditional relocation hotspots, and that this trend is likely to increase, together with outbound assignments.For HR, talent and mobility professionals, the key will be keeping up with the unique demands of these new destinations, as well as the pace and volume of assignments into and out of China.

 

APAC global mobility magazine
Read more about China and the Asia-Pacific region in our APAC Summer 2016 digital magazine.
 
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