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Asia/South Asia
There's more to China than just the biggest cities
Justine Lau

          Anyone thinking of working in China should pick up a map and look for Shangyang, Hangzhou and Qingdao.
These second-tier Chinese cities may not be familiar to foreigners who have not visited the mainland. They are, however, the sorts of places in which more and more multinational companies are setting up offices.
"Big cities are still the primary destinations for multinational companies but tier-two cities are clearly becoming very popular. The companies are saying 'We want more than just Shanghai and Beijing'," says Dan Shao, China chief representative for Cendant Mobility, a human resources consultancy.
Since China opened its door to foreign investment more than two decades ago, international companies have rushed into the country. Until recently their presence was generally confined to coastal areas and a few special economic zones in the south.
But, as the Chinese economy continues to grow, companies have been expanding into some less known cities for lower costs and more business opportunities. Some emerging cities also try to lure foreign companies to set up offices by offering tax and tariff incentives, cost-free periods for use of land and building large research and development parks.
Finding people to manage the offices in less developed cities can be a challenge, however.
According to a study by Jones Lang LaSalle, the property consultancy, about 80 per cent of, multinational companies operating in China are present in Beijing and Shanghai. More than half have offices in Guangzhou and one-third are in Shenzhen, both in the southern Guangdong province.
Only about 20 per cent operate in Chengdu, capital of the southwestern province Sichuan and even fewer are present in other second-tier cities such as Nanjing, near Shanghai, and Shenyang, in the north. Motorola, for example, is present in Chengdu, Tianjin and Nanjing. Siemens has operations in Hangzhou and Nanjing.
But when asked about future expansion plans, some unfamiliar names, such as Dalian, Chongqing and Tianjin, pop up.
A similar study by Cendant last year found that 36 per cent of multinational companies expected to have a presence in Chengdu in the next three years.
Information technology, telecommunications, transport and logistics are likely to be the first movers to emerging cities, according to Jones Lang LaSalle.
But while companies may be eager to conquer these new frontiers, their employees may be less so.
According to Cendant's Ms Shao, relocating expatriates to second-tier cities is not easy because of lower living standards and poorer infrastructure.
For example, although many secondary cities are developing rapidly, the provision of schools and hospitals is still a prime concern for many foreign workers.
Some expats also have problems in adapting to local cultures in such cities, which are usually much less international than Shanghai, Beijing and even Shenzhen.
The lack of a local expatriate community, western restaurants and entertainment outlets may be small problems initially, but could become a major turn-off in the long run.
Even for Mandarin-speaking foreigners, language could be an issue because many locals favour their own dialects.
"Some companies offer higher rest and refreshment allowances for postings in out of the way cities so that their staff could escape to Shanghai or Hong Kong once in a while," says Ms Shao.
In spite of that, she says there are still people who volunteer to be based in smaller cities.
"Career-wise, usually when companies send you to a second or third tier city, you get more responsibilities. People with a bit more ambition usually appreciate this," she says.
DTZ, a UK-based property consultancy, is one such company. Since establishing its first offices in Shanghai and Shenzhen in 1993, it has been expanding and now has 11 offices nationwide, including in cities such as Dalian, Hangzhou, Wuhan and Xian. Most are managed by Hong Kong people.
KK Chiu, executive director for DTZ in Hong Kong, says although human resources is the biggest challenge in China, the business has not experienced many problems in filling top management jobs because of bigger opportunities in developing cities.
"In big cities there is a lot of competition already. But in second-tier cities, we have an edge because fewer of our international rivals are there," says Mr Chin.
Since remuneration for many of the jobs is based on a basic allowance plus profit sharing, "returns are usually higher" in less important cities, he says.
But bosses can face another thorny human resources issue that of managing their local staff.
Jessie Lim moved to Chengdu from Singapore in 2003 to set up an advertising company and "it's when the nightmare began".
Motivating seven local staff was her biggest challenge. She now hires only people who have worked in bigger cities even though many demand salary premiums of at least 30 per cent.
"Chengdu people are very different from people in bigger cities. Chengdu is a very relaxed a place. It is a place where people come on holiday. The people here are very laid back. If you go around the city, you could see that most teahouses are full, even on weekdays," says Ms Lim.
"So if you want to get things done, you need to guide them and tell them what to do."
But companies also say they like to hire locals precisely for their local expertise.
"In bigger cities it is global experience that counts. But in small cities, global experience has to give way to local expertise," says Winnie Leung, a senior manager at Ketchum Newscan, a public relations company with an office in Chengdu.
Under syndication arrangement with FE


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