The Return of the Overseas Chinese Leader: Strategies for Success

Introduction

The demand for senior Chinese leadership talent with global experience has never been higher. As China’s economy becomes larger, more mature and increasingly open, so too have its enterprises. Chinese companies now form the biggest portion of the global Fortune 5001, and foreign multinationals are setting up more regional headquarters in China. As a result, experienced executives who understand both China and international business are becoming a crucial element of continued growth and success. 

China-born leaders who are currently working overseas represent a promising group of candidates to fill this demand. They know the complexities and nuances of the Chinese market, and they also understand the strategies and structures necessary to succeed in foreign markets. A number of leaders who fit this profile have already returned to the mainland, thanks to the growth of highly innovative Chinese enterprises, such as Toutiao, Meituan, and Didi. In the past three years, nearly two million overseas Chinese have followed this path, with an increasing number each year.2 Among them, around a third were senior leaders who left China for college or graduate school, then stayed abroad during their professional career. 

However, attracting overseas Chinese leaders back to China does not come without challenges. Both corporate and cultural differences can pose impediments to successful leadership appointments and transitions. 

To better understand the career paths and motivations of overseas Chinese leaders, as well as how China-based firms can attract and retain this talent pool, Russell Reynolds Associates analyzed the profiles of over 400 Chinese leaders who are currently residing outside of China. We also surveyed and interviewed 50 overseas Chinese executives to get a broader perspective on their career preferences. 

This research revealed that nearly 90 percent of senior overseas Chinese leaders would consider returning to China to work. But based on our research, we also identify three common challenges: 

• Nearly 50 percent of senior overseas Chinese leaders are concerned about the differences between Western and Chinese corporate cultures
• Perceptions of the living conditions in China are also a concern for about 50 percent of leaders surveyed
• More practically, around 30 percent of overseas Chinese leaders we surveyed had taken up citizenship of the country in which they have been residing – and others are hesitant to move back because of their children’s education or other family

To help companies address these challenges, we offer a set of steps to navigate common obstacles to attracting and retaining high potential Chinese talent: 

• Start early: Chinese firms should consider creating better opportunities for recent graduates
• Build internal pipelines: Invest in the development of current high potential employees and proactively offer international exposure as part of their career path
• Assess culture fit: It is important to surface corporate experiences and expectations of overseas Chinese leaders, and to understand how adaptable both they and the company can be
• Develop transition plans and organizational structures to promote success: Plan onboarding early and invest in a transition program to help retain talent and increase their success within the company

The career path and profile of the overseas Chinese leader

More than 60 million China-born professionals now live and work overseas, making them the largest migrant group in the world. The number continues to rise, as more Chinese are studying or building their careers abroad. Russell Reynolds Associates’ analysis of LinkedIn data reveals that there are currently more than 18,000 Chinese professionals who studied at top institutions in China but who now hold manager-level or above positions in enterprises abroad. Russell Reynolds Associates’ analyzed a sample of over 18,000 LinkedIn profiles of Chinese professionals who studied at top institutions in China but now hold manager-level or above positions in enterprises abroad.   

The paths for Chinese talent to move abroad 
A random sample of 400 LinkedIn profiles of overseas Chinese leaders based in the US, UK, Germany, and Southeast Asia sheds new light on these leaders’ career paths. From this analysis, we can see that there are three common reasons that Chinese leaders move abroad:

• Pursue a degree abroad: Two-thirds (66 percent) of overseas Chinese leaders moved abroad to pursue a graduate
  • Before starting a career in China: Among those who move abroad to pursue a degree, the majority (72 percent) leave before starting a career in They subsequently continue to stay abroad for career opportunities.
  • After working in China: The balance begin their careers in China, with an average five years of working experience, before moving abroad to pursue a graduate degree.
• Move abroad as part of an overseas assignment: A smaller number of Chinese leaders – 21 percent – move abroad as part of an overseas assignment. They tend to have longer tenures with their current employers. Many of them (68 percent) work for a subsidiary of a Western MNC and move out of China to advance their careers at company headquarters. The balance have been sent on an overseas assignment by their current Chinese employers.
• Move abroad for career opportunities on their own: The smallest group is those who pursue job opportunities abroad on their own (13 percent). The majority start their career in China, or in other parts in Asia, where cultural differences tend to be smaller.

Paths for overseas Chinese leaders to move abroad

Source: Russell Reynolds Associates, 2020 analysis of 400 LinkedIn profiles of overseas Chinese leaders             

Employers of overseas Chinese talent

Our in-depth analysis of 400 overseas Chinese leaders also showed that most overseas Chinese leaders — more than 80 percent — currently work for foreign entities. Most of these foreign entities have a presence in China, though relatively few Chinese leaders working for foreign entities hold a role that is focused on China or Asia specifically. Those roles are found either in smaller scale private organizations which do not have a physical presence in China (and therefore operate their China business from overseas) or are focused on sourcing products in Asia or building partnerships with Asian entities. 

A relatively small group work for a subsidiary of a Chinese entity. The majority were recruited while living overseas and were not part of an overseas assignment. It appears that Chinese enterprises abroad value the international experience of Chinese talent, and they tend to see work experience in China as less critical: Nearly half — 47 percent — of all overseas Chinese professionals recruited by Chinese entities abroad do not have any work experience in China. 

The profile of the overseas Chinese leader

Source: Russell Reynolds Associates, 2020 analysis of 400 LinkedIn profiles of overseas Chinese leaders

Chinese leaders tend to cluster in a handful of overseas talent hubs

Our analysis of 18,000 LinkedIn profiles showed that overseas Chinese leaders tend to cluster in a handful of talent hubs. Among them, more than half (53 percent) of this pool are working in the US. Singapore, Canada, United Kingdom, Australia, and Germany are other popular destinations for these Chinese leaders.

Where are Chinese leaders overseas now?

Source: Russell Reynolds Associates, 2020 analysis of 400 LinkedIn profiles of overseas Chinese leaders

Looking more closely at the expertise areas of those executives, we can see certain “industry clusters” across the US, United Kingdom, and Germany. 

Talent hubs: Top destinations for overseas Chinese leaders 

In the US, the greater New York area is a hub for financial services talent, as well as pharma and biotech to a lesser extent. California is a hub for talent in technology and biotech. Another key area where biotech and healthcare have a huge presence is the Boston area. Texas and Michigan have a pool of more industrial focused talent. 

In Germany, Frankfurt is a financial hub, and Stuttgart is an industrial hub. Munich, Berlin, and Cologne tend to have more diversified Chinese professional communities. 

In the United Kingdom, London is the absolute talent hub of all sectors, with financial services and professional services as the two key industries.  

Overseas Chinese leaders are willing to return, but face several challenges 

Overseas Chinese leaders indicate an openness to return to China, as many still have connections to the mainland. We surveyed more than 50 overseas Chinese leaders in senior executive roles and found that nearly 90 percent would, for the right opportunity, consider taking a role in China in the future. In fact, numbers of overseas Chinese professionals returning to China increased by 195 percent year over year during the second quarter of 2020, when the COVID situation was relatively stable in China compared to the rest of the world, according to a study conducted by Zhaopin.3 

Would you consider taking a job based in China in the future?  

Source: Russell Reynolds Associates, survey of more than 50 overseas Chinese leaders, 2020

Despite this overwhelmingly positive sentiment about returning to China, a number of challenges stand in 
the way of it becoming a reality. Top concerns for overseas Chinese leaders are living conditions in China, working culture, and their children’s education. Family ties in their current country and the relatively weak social welfare benefits in China could also hold some back. And while Chinese executives do not see this as a barrier, employers need to consider that some overseas Chinese leaders have taken on citizenship in their current country of residence - which means they would require sponsorship.

What are the barriers to taking a job opportunity in China?

Source: Russell Reynolds Associates, survey of more than 50 overseas Chinese leaders, 2020

Perceptions of living conditions in China refer to a number of factors, including varied and affordable housing, accessibility and quality of healthcare, and a high-quality natural environment. These are real challenges: In the past 10 years, housing prices in China’s tier-1 cities have risen dramatically.4 These prices surpass averages for the world’s most developed regions, while income has not caught up yet. Living expenses in tier-1 cities forms another major problem. Tier-1 cities have seen overseas Chinese leaders leave for lower-tier cities or for their hometowns, where the living cost is often much lower. And while hubs like Beijing, Shanghai and Shenzhen have high living standards, these are not always the places where companies are recruiting leaders. 

“If you’re a seasoned professional, there’s no reason why you shouldn’t have opportunities in China. The question is, are you willing to move to Hangzhou, Chengdu or Xi’an to manage an Alibaba business unit, or do you only want to live in Shanghai?” 

Richard Brubaker, founder of Collective Responsibility, a sustainability advisory firm based in Shanghai6                          

A second challenge to overcome: concerns around the corporate culture in China. Senior overseas Chinese executives mentioned the following differences which may cause challenges: 

• More hierarchy: In general, Chinese culture is seen as more hierarchical than overseas working environments, which tend to be flatter. Criticizing a manager may be accepted in Western countries but is less accepted in traditional Chinese organizations. Sociological studies back up this idea that Chinese culture is more collectivist and displays greater respect for authority than others.6
• Heavy reliance on informal channels: Chinese company leaders tend to focus more on informal, interpersonal relationships within organizations, instead of creating formal communications structures and defined roles. This raises concerns of whether team members are fairly evaluated for their contributions and creates more uncertainty about role scopes.
• Work-life balance (or lack thereof): Overseas Chinese leaders worry about the intensive working hours they hear are expected in Chinese enterprises. Working long hours seems to be a way of expressing group solidarity in Chinese companies, but does not always take family or mental health needs into account.
• Constant change: The fast pace of business in China requires constant recalibration. Rewards go to leaders who make quick decisions and have the agility to grab opportunities before the competition. Overseas companies are perceived to abide by business plans and projections, and are therefore slower to adjust and change.

While Chinese enterprises are actively looking for better solutions to hire and retain overseas Chinese leaders, it is essential for the leaders to keep an open mind about the corporate culture in China, and to prepare for expectations that they will be “hands-on” and “down-to-earth.”

“Leaders in China need to find the balance between traditional Chinese work cultures and more Western styles, especially when part of their workforce is educated abroad.” Ulrike Wieduwilt, consultant at Russell Reynolds Associates 

Overcoming challenges and creating a win-win situation

The number of Chinese returnees has continued to grow in previous years, which is a positive trend for Chinese enterprises looking to capitalize on the international exposure of this talent pool. For example, there were 800,000 Chinese returnees in 2020, a 38 percent increase from 2019 when 580,300 Chinese returned.7 Chinese cities have jumped into a fierce “war” for overseas Chinese leaders with attractive financial support, favorable hukou (household registration) policies and other subsidies. Chinese enterprises are actively recruiting on campuses in the US and UK. But attracting talent is only the first step to developing a larger pipeline of international Chinese leaders, and the effort is only effective if employers are able to retain this talent pool. 

Advice for overseas Chinese leaders aspiring to move back: 

Returning to China to join a local company with global ambitions is a step that requires not just passion and determination, but sound judgment and a strong internal compass. Those taking this step must remember that before their goals can be achieved, they themselves must survive in their new environment. This can be a difficult and trying process, but it can be successfully navigated by those willing to learn and adapt. Some guidelines which can help: 

• Mental preparation: Keep an open mind and prepare to “relearn”
• Ensure the role is properly aligned, and use the language of the organization
• Execution: Start small, establish building blocks, and trust your professionalism
• Know how to play politics but don’t pick sides

To create more sustainable recruitment and development strategies, China-based companies could focus on the following four areas: 

1. Start early: Starting with entry-level opportunities, companies can leverage overseas campus recruitment events to attract Chinese students who have been abroad for graduate degree studies, as well as partner with those universities to offer internships. 

At campuses within China, employers can focus on marketing global management trainee programs for Chinese talent. Our analysis showed that a significant pool of talent decides to move abroad after having worked for a couple of years in China. By offering global exposure to management trainees earlier on in their careers, companies may be able to retain such professionals instead of losing them to overseas MBA programs or overseas opportunities with multinational firms. 

2. Build internal pipelines: It is important for companies to ensure there are opportunities for high potential employees at each level to gain international exposure. Proactively offering this opportunity means a higher likelihood of retaining talent. It also gives the company a more robust group of leaders with international exposure. 

3. Assess culture fit: Assessing overseas talent for the right “culture fit” and the ability to adapt to a different working environment is critical. In our experience, newly-recruited executives often enter a Chinese company with an air of superiority. They have enjoyed rapid career development and the benefits of a world-class education and frequently begin their new position with ambitions of single-handedly transforming the organization. However, this attitude alienates potential allies and hastens a fall from grace. While it is important to remain confident in one’s value and potential contribution to the company, perspective and humility are essential. 

4. Develop transition plans and organizational structures: The experience of working for a multinational firm in a foreign country is very different to the experience of working for a Chinese firm in China. Senior executives who have transitioned from overseas firms to Chinese companies agree that it can take nearly a year to fully adjust to the new setting.8 Understanding the challenges which may arise during a transition and putting measures in place to smooth onboarding are important steps to ensure the new hire’s success. Companies should allow for a set transition period, while continuing to provide professional and cultural support as needed beyond this. Connecting newly-recruited hires with mentors who have similar overseas experience is one particularly effective support strategy. A strong transition plan also includes the right reporting lines and organizational structure – all of which are essential to help newly-recruited executives succeed in their roles. 

Methodology

To better understand the career paths and motivations of overseas Chinese leaders, Russell Reynolds Associates analyzed the profiles of 400 Chinese leaders who are currently residing outside of China with the following geographic distribution: 

Our analysis of overseas talent hubs involved an analysis of approximately 18,000 LinkedIn profiles, using sector-specific search terms across finance, professional services, tech, consumer, industrial and biotech and healthcare. 

We also surveyed and interviewed 50 overseas Chinese executives working in the US, UK and Germany to get a broader perspective on their career preferences and willingness to return to China. 

Appendix

Figure 1. Work experience in China (in years)

Source: Russell Reynolds Associates, 2020 analysis of 400 LinkedIn profiles of overseas Chinese leaders

 Figure 2. Many overseas Chinese leaders pursue higher education abroad

Source: Russell Reynolds Associates, 2020 analysis of 400 LinkedIn profiles of overseas Chinese leaders                        

Figure 3. Experience of overseas Chinese leaders who moved as part of an overseas assignment with their employer versus those who did not (averages in years)

Source: Russell Reynolds Associates, 2020 analysis of 400 LinkedIn profiles of overseas Chinese leaders

Figure 4. Popular fields of study for overseas Chinese leaders are engineering, business and humanities

Source: Russell Reynolds Associates, 2020 analysis of 400 LinkedIn profiles of overseas Chinese leaders

Authors

• Jeffrey Cheng is a member of Russell Reynolds Associates’ Corporate Officers, Tech-Industrial and Fintech Practices. He is based in Shanghai.
• Marieke van der Drift is a member of Russell Reynolds Associates’ Board & CEO Advisory Partners Knowledge team. She is based in Singapore.
• Justine Qin is a member of Russell Reynolds Associates’ China Accounts Knowledge team. She is based in Beijing.

1. Fortune (2020) “The Fortune Global 500 is now more Chinese than American” 
2. China Ministry of Education (2020) 
3. Zhaopin.com “2020 Overseas Chinese Employment Report” 
4. China Banking News (2019) “China’s Average Commercial Housing Price Doubles in the Space of a Decade” 
5. SCMP (2019) “China’s crowded labour market is making life tough for foreign workers and new graduate ‘sea turtles’” 
6. The Economist (2020) “A guide for foreign workers at Chinese firms” 
7. ChinaDaily (2019) “More overseas Chinese returning” 
8. Russell Reynolds Associates “Making the Leap: Guidelines for Senior Executives Transitioning to Chinese Companies”