As more foreign companies expand into China, many are finding that locals are oftentimes a better match than expatriates for mid-level to senior-level management positions. With more positions being filled locally, studies show a consistent decrease in the number of expatriates working for foreign firms in China since 2005. In fact, research suggests that most companies do not plan on increasing the number expatriates in China in the coming years. Instead, they have begun to implement programs aimed at training locals to take on higher management positions.


This change is directly related to China's emergence as a key player in the world economy. Foreign companies see the advantages of local hires because they seem to outdo expatriates on most fronts, ranging from understanding the local culture and language to being willing to accept a local salary. Local employees may also be better able to boost morale since they can better relate to lower level workers. In addition, many mid-level and even senior-level jobs already have localized salary structures. Thus, local hires may be more convenient simply because they are more likely to accept lower pay, so that extra funds can be directed elsewhere.


Those companies that continue to hire expats in China are often cutting back on the lavish expat packages of the past. Top-level jobs are still likely to be saved for expatriates because of the need for understanding of western business values and clear channels for communication between local Chinese offices and international headquarters. However, returnees are another possibility. The number of Chinese returning from overseas has been increasing as well due to China's booming economy and steady improvements in the standard of living. Having grown up with the local culture, then studied, lived or worked abroad, these individuals could also possess the necessary qualities that foreign companies are seeking for their Chinese offices.