Asia Pacific Mobility Challenges

Local and intercultural challenges in this region are intertwined, with a keen focus on cost and the global war for talent. To resolve these tensions, global mobility leaders are formulating new approaches, as Ruth Holmes reveals.

While the Asia Pacific (APAC) region is vast, it is also shorthand for emerging markets experiencing rapid growth and the promise of a new economic era. The International Monetary Fund’s (IMF) latest analysis of the region says that its momentum is set to continue. Thanks to stronger growth in advanced economies, healthy labour markets, and robust credit growth, the latest IMF growth forecast for the region is 5.5 per cent.

Home to some of the world’s fastest-growing (China and India), largest (China), most developed (Japan, Australia, New Zealand and South Korea) and rapidly emerging economies (for example, the Philippines, Malaysia, Indonesia, Thailand and Taiwan), APAC could also be regarded as a crucible for developing mobility practices for the future. Not surprisingly in a globalised economy where the balance of economic power is gravitating southwards and eastwards, the region is a key international mobility destination, with intra-regional mobility also very much on the rise.

China calling?

China, the world’s largest economy, perhaps exemplifies these developments. Cartus’s latest Best Practices for Effective Relocation to China paper notes that it is the second-most-important country for respondent companies’ future business goals. Data from the Chinese research Social Sciences Academic Press (SSAP), released in April, backs this up, suggesting that China has become a more popular destination for global talent and employers.

More than 848,500 foreigners were living in China in 2013, says the SSAP, with the average growth rate over the decade boosted to 3.9 per cent – up from 3 per cent between 1990 and 2000. The net outflow of talent, in particular to the US, has slowed slightly in recent years.

These findings are somewhat positive news for China’s policymakers as they grapple with the social, political and ideological ramifications of an ageing population, the effect of China’s one-child policy, and a dwindling supply of rural migrant workers. In May, the London Financial Times ran a series of special reports on China reaching its ‘Lewis Turning Point’ – the point at which the pool of surplus rural labour that has supplied the industrial and manufacturing sector without wage inflation for the past few decades dries up and pay rises rapidly.

From a global mobility perspective, this refocusing on the new normal of lower growth, increasing wages, and skills shortages suggests commensurate new opportunities, and challenges, for global and local companies in the region.

A region on the move

On one level, China’s lower growth and higher costs, and the business uncertainty surrounding them, are some of the reasons given for corporations recalling relocated employees from within its borders. Earlier this year, Steve Lewis, managing director of UniGroup Relocation APAC, reported in the Wall Street Journal that the company was moving from China twice as many expats as it moved to China during 2014, with Malaysia and Vietnam gaining appeal as companies look to rebase their costs, particularly for manufacturing, and research and development.

On another level, mobility from China into the wider APAC region is gaining ground. Data cited at Worldwide ERC’s (WERC) Global Workforce Summit for Talent Mobility in APAC in March this year hinted that China was set to be massively on the move.

Over 40 per cent of the companies studied said that they expected the number of assignees to increase; by contrast, for Singapore, the country second on this list, the figure was 11.5 per cent. UniGroup Relocation also noted an upswing in Chinese companies enquiring about relocation services.

So while there is, for some organisations, a shift out of China, this appears to represent not a mass exodus from developed Asia but an increase in intra-regional moves. UniGroup Relocation’s data shows that twice as many people moved to Japan as left it last year (perhaps an effect of ‘Abenomics’), while movements in and out of Singapore and Malaysia remained stable.

Data for 2011/2013, cited at the WERC APAC summit, also suggest a significant increase in the percentage of companies investing in mobility across the region. Short-term assignments (70 per cent, up from 59 per cent), rotational assignments (41 per cent, up from 25 per cent) and developmental assignments (38 per cent, up from 22 per cent) saw the greatest gains. Typical long-term assignments (51 per cent, down from 54 per cent) and locally hired foreigners (51 per cent, up from 45 per cent) saw more-modest changes.

Mobility’s role in managing and retaining talent

Diane Douiyssi, director of consulting services at Brookfield Global Relocation Services and author of 2015 Trends & Insights: Asia Pacific Mobility, published earlier this year, has been examining the trends and realities of deploying talent to APAC’s fast-growing economies.

According to Brookfield’s report, five key trends characterise mobility in the region. Chief among these is talent management coming to the fore, followed by a continued push to manage mobility spend, greater use of alternative regional hiring strategies, more diverse and flexible policies driven by business need, and the rising importance of big data and predictive analytics.

“While many of the mobility practices in APAC are similar to those found in other regions, there are some that are distinctive,” Ms Douiyssi explains. “Two trends, in particular, come to mind: the need to embrace ties between mobility and talent management, and the increased use of alternative regional hiring strategies.

“While the region has an abundance of human resources, and the availability of talent is not an issue per se, the employability of talent at a local level sometimes is. It is common for businesses to report rapid turnover in certain segments; as soon as key individuals are up and trained, they are being lured away to competitors. Integrating the movement of talent into the wider people management strategy will be critical to combat this.”

In data from the Worldwide ERC APAC summit, career development was, by a significant margin, the number-one reason, observed by HR in a sample of 250–350 former employees across executives (27 per cent), management (53 per cent) and professionals (74 per cent) taken at exit interviews. This, perhaps, explains why mobility is featuring increasingly on the region’s talent management agenda. For example, professional development in the high-tech sector relies heavily on international assignments and job rotation – 84 per cent, compared with 61 per cent overall.

Reflecting the wider trend for Millennials to be motivated by overseas experience, the under-30 age group in an employee survey of 820 appeared to be the most interested in a two- to three-year contract-bound assignment, followed by the 30–39 age group.

“Many younger employees in truly global organisations understand that their ability to enhance their career trajectory may be significantly aided by international experience,’ says Diane Douiyssi. “In addition, it has become accepted knowledge that experiential learning and the opportunity to live overseas are valued by many in the millennial generation.”

Perhaps an additional benefit of this approach and the willingness of Millennials to experience and engage with different cultures is that, with the right support, intercultural issues become less of a challenge.

Aligning mobility policies with talent practices

Responding to this diversity, and in the context of cost, regional hiring strategies are becoming more common. The latest Santa Fe-commissioned Global Mobility Survey finds mobility being delegated out of Europe and North America and into regional management.

The WERC APAC data also suggests that policies are under widespread review in the region, with the focus for 40 per cent of respondents being on assignment-related benefits (housing, education, home), for 39 per cent on allowances and premiums (COLA and hardship), for 38 per cent on tax, and for 37 per cent on compensation. Tellingly, 58 per cent are concerned about the attractiveness of their package.

“Because cost continues to play such a critical role in most companies, there is a pressing need in this region to look for alternatives to traditional assignment types to meet those talent needs,” says Diane Douiyssi.

“This has resulted in more local-plus packages for certain, but has also driven an increased use of permanent transfers, where individuals are being hired within the region on a permanent basis, even if the unspoken intention is not that they will be there permanently.

“There is also an increasing focus on hiring foreign nationals who may already be in country. These hires, again because of talent shortages, may well be able to command special packages or treatment to support their unique needs.”

Local-plus to local hires?

With the APAC region a pioneer of the local-plus package, the direction of travel now looks for some to be permanent local hire of foreign nationals, as well as the continued evolution of the local-plus package, with at least some transitional element to cover education or accommodation costs and medical insurance.

What is also clear is that mobility is on the move in the region, with practitioners at the forefront of responding to, leading, and supporting business needs. Companies are increasingly seeing mobility as a retention and staff development tool, emphasising the need to both manage talent and ensure the mobility aspect is aligned with this.