International Law

Foreign Talent and China?s Outward Investment

By Stan

As part of a movement to attract overseas Chinese professionals to fill jobs in various cities across China, a delegation of high-level officials from Jinan in East China’s Shandong province interviewed over 50 candidates in New York last week for 150 positions they aim to fill in stages over the next five years as part of the city’s “5-150″ jobs campaign.

A separate delegation of officials from Fujian province met earlier this month with candidates in San Francisco, New York, Boston and Washington DC.

In November 2009, a job fair organized by the Shanghai government in New Jersey attracted over 700 candidates, with fewer than 10 candidates being of foreign descent, organizers said. (China Daily)

As the U.S.-China economic relationship has deepened over the years, the bilateral flows of capital, equipment and intellectual property, originally quite one-sided, have begun the long shift back to balance.

Chinese companies have always been on the leading edge of this shift. Several years ago, outward investments made by State-owned Enterprises (“SOE”s) signaled that cash-rich China would venture outside the Middle Kingdom to secure supplies of natural resources. This was followed by deals made by private enterprises like Lenovo and, more recently, Geely.

Similarly, in the China intellectual property sphere, where cross-border IP flows used to be occupied solely by foreign companies, things began to change when Chinese enterprises with valuable brands, like Tsingtao Beer, Hai’er, and Bank of China, began to venture abroad and protect their trademarks. Later on, acquisitions made by Lenovo and others involved Chinese companies securing famous foreign brands and technology.

Labor does not flow as easily across international borders as does capital and IP, but even so, we are seeing a change in cross-border labor practices, with the shift again coming from Chinese companies. The job fairs noted above are organized by municipalities but involve private and State-owned enterprises, solidifying a trend that began several years ago.

Ever since China opened its doors for business in 1978, there have been foreign workers in Beijing, Shanghai, Shenzhen and other large Eastern coastal cities. Since that time, however, the vast majority of business people and professionals have been employed by foreign invested enterprises, diplomatic missions, and educational institutions.

In my own industry, legal services, there were only a handful of foreign lawyers working for Chinese law firms back when I arrived in China in 1998. These days, many well established Chinese law firms in the major cities have an international department that includes a foreign-credentialed lawyer.

Over the years, China has learned valuable business lessons from foreign invested enterprises, an education that helped to first build a solid export regime, and more recently to solidify Chinese firms’ dominance over the domestic market.

The knowledge spillover from foreign experts should not be underestimated, and the success of China’s move outward to overseas markets may ultimately rest on an enterprise’s ability to utilize foreign talent, employed in China and abroad, and integrate these individuals smoothly into the Chinese hierarchy. The track record of the Japanese in this regard in the 1970s and 1980s was uneven, an example that Chinese executives have no doubt studied closely.

As Chinese companies continue to move outward and, in addition to securing natural resources and infrastructure projects, acquire distribution networks, IP, and yes, even manufacturing facilities, their ability to draw upon a pool of global talent will be closely watched.

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Full post as published by China Hearsay on April 26, 2010 (boomark / email).