As China Becomes Less Attractive to Foreigners, Can Taiwan Win Them Over?

For demographic reasons, both China and Taiwan need foreign workers. While China is becoming a less attractive environment for foreign professionals, Taiwan should seize the opportunity and encourage them to move here.

 

Internet censorship, air pollution, traffic jams, food security, lack of personal freedoms, rising cost of living and an increasingly assertive nationalism. Those are only some of the problems I encountered during my nine years living in Beijing. China desperately needs to expand its foreign workforce, but in the past two years the country has clearly become less attractive for foreigners.

I should state from the outset that my exodus from China was part of a wider trend. It is hard to come by accurate statistics on the matter, but during the early 1980s there were less than 10,000 foreign workers in China. Last year, the same figure exceeded 900,000.

While a staggering increase, China has never been a popular expat destination in relative numbers, its economic rise notwithstanding. The above-mentioned figure still only amounts to less than 1 percent of the total population. Japan boasts double that number despite only having a tenth of China’s population. The share of foreign-born residents living in Beijing is 0.5 percent, compared to 25 percent in Paris or 37 percent in London and New York.

Demographic details are, naturally, even harder to come by than the basic statistics. Towards the end of my time in Beijing, not only were several expat contracts terminated due to high costs, but foreign companies still had a hard time finding managers as foreigners with family were reluctant to make the move due to air pollution and education woes. In 2015, the Swedish School had to shut down due to a dramatic drop in the number of elementary school students. According to teachers, the same trend was seen in other international schools.

One long-time China resident who decided to leave for good this summer is Johannes Gideon Davidsson, who moved to Shanghai in 2009 to study Chinese. In 2012 he started to work as an entrepreneur and managing director in branding. But when the Swedish entrepreneur and his girlfriend last year started to talk about where to settle down, China “did not even make the list.”

The reason was not only the smog or large crowds: Chinese cities have become so expensive it is difficult to start a family. Indeed, as late as 2011, the Economist Intelligence Unit ranked Shanghai 102nd in the world for living costs. Last year, the city made 11th place on the same list. No wonder that the number of foreign residents in Shanghai started to decrease in early 2015.

 

Closed off and racist

Davidsson was also worried about his integrity and personal security due to the “last two years of raids and constant police presence in areas where foreigners mingle, shutting down bars and performing random drug checks out in the open targeted solely against foreigners.”

I can testify myself how chants like “fucking foreigner” or “go back to your country” had become increasingly common in bar streets and football pitches. This, of course, is related to the stepped up anti-foreign rhetoric that has become part of the national narrative. In one of countless examples, the party-affiliated newspaper Global Times last week declared that “foreigners who choose to come to China are at the lower end of the society in their home countries.” Foreigners are bound to be less successful on the dating market, the paper explained, as Chinese people are now “removing foreigners from the pedestals they once held them on.”

But Davidsson’s decision to leave China for Canada was also a career-related one: “From a professional standpoint, what drove the nail in the coffin for me was the constant uncertainties and regulatory changes regarding work visas. As an entrepreneur in need of foreign specialists, it made it hard for me to hire people in a legal way,” Davidsson says. He adds that the situation is “vastly different” from 2012, when companies could hire staff more freely as working visas were obtained more easily.

A sudden VPN ban announced last month is the latest move to send a chill through China’s foreign community. A VPN (Virtual Private Network) is paid software used by just about every foreigner living in China to circumvent the country’s firewall to access global news and services like Google or Facebook. But according to regulations issued in July, China’s state-owned telecommunications companies are required to block access to personal VPN services starting in February 2018. Davidsson says the new rules will not only risk cutting off contact to family and friends, but also harm businesses’ communications: “All foreign companies that I know of are in constant need of being connected to a VPN.”

As managers, entrepreneurs and workers in the creative field leave China, the statistics are kept up by an increase in students or trainees on Chinese scholarships, often from countries in Africa or Central Asia that the Chinese regime is working hard to befriend. This trend is not statistically verified, but nonetheless obvious for many of my “foreign friends” in several Chinese cities that I have been talking to while conducting research for this article.

There are also several other indicators confirming this trend. The moving company UniGroup Relocation said in 2015 that business for expats looking for a way out of China is booming. According to its data, twice as many people moved out out China than into the country in 2014. Steve Lewis, the managing director of UniGroup Relocation, told the Wall Street Journal how the company was experiencing “mass moves” to Malaysia and other South Asian countries by expats who used to call China home.

 

Alluring Taiwan

This is a massive opportunity for Taiwan, which just like China direly needs foreign workers. In 2010, Taiwan had the lowest birth rate in the world with 0.9 children per woman. After a slight increase to 1.1 last year, it was “only” 222nd out of 224 countries and territories, according to the CIA Factbook.

The birth rate declined slightly again in the first six months of 2017. Even by its most optimistic predictions, the new administration cannot engineer a reproduction rate of around two children per women, which is needed to sustain the population in a developed economy. The current aim is to increase the birth rate to 1.6, possibly with a series of birth stipends and childcare subsidies.

Instead of trying to force its citizens to have more children, Taiwan should use some of those resources to encourage foreigners to work and settle down in Taiwan. Already, about 800,000 foreigners live in Taiwan, a statistic that excludes Chinese nationals. Most likely the number of foreigners who live on this relatively small island is already about the same as that of continental-sized China.

About 70 percent of foreign workers in Taiwan are Southeast Asian migrant workers. This shows the difficulty in using the term “expat.” Is a manager at a multinational corporation any more of an expat than a domestic helper from the Philippines wiring back her salary to Manila? And if so, where to draw the distinction? That will have to be discussed somewhere else. Despite the inaccuracy of the term, the Internations Expat Insider Survey is nevertheless useful in showing Taiwan’s potential to attract foreign professionals who are now leaving China.

In this yearly survey, some 14,000 “expats” are asked about their lives abroad. Taiwan only joined this survey last year, but at once soared to the very top among the 67 countries on the list. Taiwan was the only country to score in the top 10 in all five individual indexes, and ranked 1st for the categories “quality of life” an “personal finance indices,” largely thanks to quality and affordability of its healthcare. Thanks to a healthy work-life-balance, over one third of the surveyed foreigners were completely satisfied with their jobs, more than double the global average (16 percent).

More importantly, 93 percent expressed overall satisfaction with living in Taiwan, a figure beaten only by Spain. A big reason for this is the population itself, as Taiwan was at the very top of the list in the “friendliness” category. Even though the language barrier still was bothersome for many, nine out of 10 respondents gave a positive rating for the local’s attitudes toward foreigners, compared to 65 percent worldwide. Also, the attitude toward families with children was considerably higher than the global average.

 

China and Hong Kong plummet

China, meanwhile, is moving in the opposite direction. In last year’s survey it fell 10 positions to 48 out of 67 countries. Only 9 percent of respondents thought children’s education was affordable, that children had plenty of leisure options or that their children had a “very good” health in China. This is obviously tied to the naughty air pollution that continues to plague Chinese cities. A staggering 84 percent rated the environment as bad or very bad, compared with 20 percent globally. The cost of living has also been increasing faster than wages, putting China 34th in the “cost of living” index.

A similar survey by the bank HSBC had China falling from third place to 34th out of 45 countries in “attractiveness to expats” last year. Interestingly, Hong Kong has followed China in the slide, dropping to 44th in the Internations Expat Insider Survey last year, from 10th in 2014. This phenomenon has also been reflected in local media coverage of a large exodus of professionals from the U.S., the U.K. and Australia.

Given the good living conditions, the Internations survey also shows that 64 percent of surveyed foreigners plan to stay in Taiwan for more than three years, and 36 percent even consider settling down for good. But to take advantage of this, Taiwan has to become better at marketing itself. Elias Ek, a Swedish entrepreneur who has lived in Taiwan since 2000 and founder of the telemarketing company Enspyre, notes that the island-nation is often confused with Thailand. “Few people search for information about Taiwan,” says Ek, whose firm has 40 employees. He says the authorities should work closer with foreign organizations and chambers of commerce in Taiwan, as “every foreign resident is a potential marketing channel.”

Due to the fact that many international companies have their regional offices in China or Hong Kong, the real potential for Taiwan lies in attracting self-employed foreigners and entrepreneurs. Indeed, people in those groups are also more likely to settle down forever in their chosen destination, according to Internations — more than 40 percent said they considered doing so, against 31 percent of overall expatriates.

Taiwan has already relaxed several regulations in recent years to attract more foreign professionals. I obtained my Alien Residential Certificate (ARC) with an ease and a service that would be unthinkable in China. But I have also heard stories of bureaucratic problems, and according to Ek much more could be done. “It’s not hard to get a work permit for the first year if you start your won company. But as an entrepreneur it gets harder the second year,” he says.

Ek says the government started to offer an “entrepreneur visa” about two years ago to solve this issue. But he notes that only 29 entrepreneur visas had been issued as of late 2016, despite a government ceiling of 2,000 visas. This, Ek says, is due to poor communication and promotion.

Having authored the book How to Start a Business in Taiwan (2013), Ek is familiar with the many basic problems entrepreneurs and small companies can encounter in Taiwan. Even simple things like banking can be a big headache: “Work is needed to make the banks more foreign friendly. When Enspyre did a survey together with the Taipei City Government, it showed that 62 percent of foreign entrepreneurs can’t obtain the banking services they need.”

 

The importance of citizenship

Citizenship constitutes a “huge issue” according to Ek, and an outright “painful” one for long-time residents like him. “Foreigners are required to give up their original passport before becoming Taiwanese, while dual citizenship is legal for Taiwanese,” he says. Changes in the law to remove this requirement have been discussed, but Ek says progress has been slow. (Earlier this year, the government stipulated new regulations making it possible for foreigners with certain professional skills to obtain citizenship without having to renounce their original citizenship. Thus far, a handful of foreign missionaries have benefited from this new rule.)

As an alternative to citizenship, foreigners who have worked in Taiwan for five consecutive years can obtain an Alien Permanent Residency Certificate (APRC). Still, an APRC has a range of shortcomings compared to citizenship. One is not being allowed to take part in politics or to vote. And children of foreign parents will not be given any legal right to reside in Taiwan once they turn 18, even if they were born and lived here their entire life.

Across the Strait, getting Chinese citizenship is virtually impossible, and seldom is desirable as dual citizenship is not even up for discussion and few foreigners would give up their original passports for a Chinese one. But even if China has tightened its regulations for foreign workers as a whole, it remains committed to attracting the most highly skilled and well-salaried segment of the foreign workforce, something that Taiwan continues to struggle with. Late last year, China introduced a system grading foreign workers from A (“top talent”) to C (“unskilled workers or those working in the service industry”). The top talents will enjoy preferential treatment and ease of obtaining permanent residency.

A green card scheme was introduced in China in 2004. As of last year, only 7,356 foreigners had been granted permanent citizenship in China through this scheme. But the number has been rising, with about 2,000 green cards issued in the past two years. Moreover, this spring Chinese authorities announced plans to replace the green card with a “smart card” as part of the push to improve its so-called “imported talent scheme.” Also starting this year, foreign students without work experience are allowed to stay in China to look for jobs or internships as long as they have at least a Master’s degree. Prior to this regulation, foreign graduates needed two years of working experience before taking a job in China.

Taiwan therefore continues to face stiff competition from China and other countries in the region, and must step up its game if it is to take advantage of this golden opportunity to solve a part of its population problem and give its economy new energy in the process. Authorities need to change their mindset on foreigners moving here from something that is problematic and requiring new regulations, and instead recognize an opportunity to create a mutually beneficial relationship.

The same goes for dual citizenships. The possibility of citizenship, says Ek, would improve the prospects of Taiwan as a permanent home for foreigners and thereby make them more willing to invest here. This could also create a virtuous circle effect. “Once we have a few more foreign-born politicians, more assumptions would get challenged,” he says, adding that a growing number of foreigners could help reshape banking regulations and company rules.

You might also like

---

More from China

---

Editor Picks

---