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Salary Trends for Expatriates in China.
By René J.M. Schillings
Wednesday, 13th January 2010
 
Expatriate salaries and packages in Mainland China have been more or less stagnant in the past 10 years, but are today still higher than in most South-East Asian countries, or other typical countries where expatriates are needed. - René J.M. Schillings, Managing Director of TOP Hoteliers - Hospitality Executive Search.

As the first hospitality recruitment company with offices in the PR China (since 2004), and recruiting for nearly all hotel brands in all cities in China, from Harbin to Hainan, Schillings can clearly see trends over the past 5 years, and give some historical context to this development, and how expatriate salaries are dedicated by on one hand the fast development of China as major power, and on the other hand  influenced by global events, as well as international currency fluctuations.

‘If I look at GM and Department Head candidates' who worked in China in the 1990's, they were making the same salary then, in US Dollar amounts, as our clients are willing to pay today, but gone are the extra benefits and privileges such as schooling fees, R&R, and even the willingness of employers to sponsor a spouse and/or children".

Schillings explains that at the end of the 1980's and during the 1990's, China was considered to be a hardship posting, and experienced hotel managers working as expatriates, mainly in South-East Asia but practically from all over the world were lured to come and work in China for very good packages. In those days, a General Manager of a 5* international hotel would earn on average 10.000 USD a month plus all the perks.

A Department Head could earn between 3000 – 4000 USD a month. In those days, most HOD's in 5* hotel would be expatriates. A local General Manager at a local hotel in say, 1997, would perhaps earn 5000 RMB, (less than 1000 USD back then), and a local F&B Manager 3000 RMB (about 400 USD then, versus an expatriate; 3000 USD).

In the 1990's, Asian expatriates were considered to be a ‘cheaper' solution, as they were willing to go to China, often with opportunities for career advancement, for the first time experiencing ‘expatriate benefits' and a higher salary than they were used to in their countries of origin. These Asian expatriates would be either Mandarin speakers, from for example Malaysia, Singapore, Hong Kong and Taiwan, or from countries that had already seen development of 5* international hotels a good decade and a half earlier, like India, Pakistan, Philippines and Indonesia. Their salaries would be half that of ‘Western' expatriates and they were more willing to work on single packages, leaving their families back home.

What has changed however since the 1990's is that China has become a magnet for expatriates. China is now ‘popular' especially after the year 2000 when the world saw China as a place to be, and as China modernized, living in China isn't that hard anymore. Today, foreigners can easily find international schools, groceries in modern supermarket, decent housing and a thriving expatriate community and life style.

Certainly the event of mediums like Skype, e-mail, and more frequent and cheaper flights have made them feel less disconnected from their home base. The coming of the 2008 Olympics to Beijing and the growing importance of Shanghai as one of the most ‘happening places' in the world, plus reports in the media stating the number of hotels opening in China surely made a lot of hoteliers worldwide realize that in China there maybe opportunities for them.

Today, the average salary of a General Manager in China is still around the 10.000 USD mark, and Department Heads can expect something in between 4000 and 6000 USD a month, depending on the level of their job, and the city they are in. But for most cities in China there are no longer R&R trips, hotels are increasingly less willing to pay for schooling fees for expatriates with children, and would overall preferably hire an expatriate who comes single, or if with a spouse, then without schoolgoing children.

‘Due to the popularity of China as a destination for expatriates, hotel companies can afford to be a bit more picky in their selection', says Schillings. This popularity of China for expatriates was partially also fed by the enormeous opportunities still available in China, thanks to it's fast growth, but also because of sluggish development in South East Asia after 1997, and some political instability in other regions, for example the Middle East. Whilst GM salaries remained very stable, there was a slight hike in salaries for expatriate HOD's though in the period 2006 – 2008, due to the fast pace of new hotels opening, demand for a higher level of expertise before the Olympics, where all major hotel corporations wanted to show case their flagship hotels in cities like Beijing & Shanghai.

In that period, the weaking of the US Dollar, the high Euro and strong RMB also took some effect. Whereas 4000 USD was a lot of money in the 1990's for Europeans, from 2005 onwards that wasn't the case anymore. ‘We had lot's of clients in China asking, for example for Italian Chefs', says Schillings, ‘And they all seemed to hang on to long established common salaries of 2500 – 3500 USD'. But already in 2004 it was hard to get a really good Italian Chef, with good overseas experience in top 5* hotels under 4000 USD a month.

And that quickly became 4000 Euro, which was at the time 6000 USD. In the meantime, Executive Chefs were still on those salaries. Then it was really a matter of P&L if a hotel can really afford a real Italian Chef for their signature Italian restaurant. The recent crisis has brought down the ‘average going-rate' for a good Italian Chef towards the 4000 USD again. ‘But those hotels who ask is for a top Italian Chef, and come with ‘1990's salaries of 2500 – 3500 USD and single package only, will have slim pickings', according to Schillings.

A lot has chanced in China in the past 5 years, not only because of the fast ascent of China as a leading nation, the boom period up to 2008, and the weaking of the US Dollar, that influences current expatriate salaries and packages. Already since 2004, when we started in China, the salaries for the afore-mentioned Asian expatriates are no longer half that of Western expatriates.

These Asian expatriates are still very much in demand, albeit 90% for Mandarin speakers, and no longer the non-Mandarin speaking Other Asian nationals such as Filipino's and hoteliers from the Indian Subcontinent, and they command salaries equal to Western expatriates. Mandarin speaking expatriate Sales & Marketing Directors are in such demand that they have now become the highest paid Department Head in a hotel often, a position that was traditionally reserved for the (European) Executive Chef. More and more expatriates are willing to accept single status packages, choosing to leave their families elsewhere in Asia, in order to secure a good job in any of the booming secondary cities in China.

‘China experience is still an asset for an expatriate', according to Schillings, who seldom places expatriates in jobs in China for a first time. He continues; ‘There is currently a certain oversupply of expatriate General Managers in China. These were the people who came to China in the past 10 – 20 years, often as Department Head, and are still around, clearly liking it, but seeing the demand for expensive expatriates diminishing. This puts a cap on where expatriate salaries can go, or keeps them at the same level as 10 years ago.

However, looking at the growing need in secondary cities, where expatriate department heads are needed more and more, as more hotels open in these cities, it is becoming increasingly hard to find China experienced expatriates willing to go to cities that are sometimes 5-10 years behind Shanghai & Beijing, and where the salaries are also lower.

Because in those cities the pricing levels for rooms and F&B are also lower, hotels often claim to be forced to pay salaries that reflect that.

Despite the ongoing push to localize GM and HOD positions in China, there are still a large number of positions available for expatriates in China, says Schillings. Half the placements that TOP Hoteliers does in China are for local PRC nationals, but the sheer shortage of locally available hoteliers in China is so dire, and their salaries rising so fast, due to competition among hotels to have these local talents, that expatriates are still needed and wanted in China.

It's just that the classical assumption of an expatriate being somebody who is paid 10 times the salary of a local and enjoys a life full of privileges is fast disappearing, as China develops into a modern country, with world-class hotels.

About the Author:
René J.M. Schillings, a Dutch National, is the owner, founder and Managing Director of TOP Hoteliers, the first specialized hospitality recruitment agency to open offices in the People's Republic of China (in 2004). Based in Hong Kong he devotes most of his time managing the 2 offices in Shenzhen and Beijing, where his team of consultants recruit hotel managers for all major international and some local hotel companies in China. His company was very early to recognize the need for local talent, Mandarin speaking expatriates and China experienced expatriates. His knowledge of the China Hotel Industry stems from his career as Hotelier in China that began in 1997. He has a BA in Hotel Management from Stenden University, a.k.a Hotel Management School Leeuwarden, The Netherlands and an MA in International Tourism & Leisure Studies from Metropolitan University in London, England. He is a keen observer of industry trends and has published numerous articles on HR issues in hospitality in China.

Company website: www.tophoteliers.com
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