Expats won't rush back to China but that's not the end of its foreign firms
Every time I predict that China will not recover its expat population in the coming decade or two, I see the morale sinking in the room. As I tour Chinese cities with my book Dragon Suit, local expats and Chinese people involved in international business do not even ask whether expats will soon return: they ask "When will they return?" As foreigners who had spent anything from a few years to a few decades in the PRC start visiting again after China's near-complete isolation in 2020-22, I witness puzzled looks on their faces as local associates casually ask, "So, when are you coming back to China?"
During the incredible decade of double-digit GDP growth and bold, enthusiastic opening to global investment, ideas, trade and people-to-people exchange, China's foreign population didn't even double: see this table by Statista, or this one by Macrotrends, which turned out to be very optimistic: the 2020 national census found only 850,000 foreign residents in the country, many of them only there on paper as they stayed away from the early pandemic.
That economic boom was the main reason why expats wanted to be in China, and it isn't there anymore. If people (Chamber leaders and researchers) on the ground are right and about half of the expats left the PRC, expecting their numbers to "grow back" and then grow on top of that is pathologically hopeful. Instead, in my latest video I advise leaders of international firms doing business in or with China to craft their strategies based on a new reality that is likely to last.
In fact, there are working models for global firms to do great business in a country without expecting the kind of open, cosmopolitan environment they experience in Singapore, London, lately Portugal and Thailand, but even in carved-out expat hubs in places like India and the UAE. there are many ways to bring investment, business and talent to a country. Chinese people still want diverse employment options, especially young and educated ones who suffer from a 20-plus percent unemployment rate. Despite their recent decisions to shrink the tech, education and business intelligence spaces, Beijing still looks committed to high value-added sectors where young people try to work, and where global firms often have an advantage.
Let us know what this means for your industry, how you manage to overcome it and of course, if you need support, you know where to find me.
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