Cross border transfer of labour: Go Glocal? By William Buck on 01/01/14 - Mins to read: 3 minutes China is a country with a wealth of opportunities for business and entrepreneurship. The signing of the Free Trade Agreement (FTA) in 2008 marked a milestone and has intensified the level of economic integration between China and New Zealand. China has recently become New Zealand’s largest trading partner in terms of both imports and exports. Similarly, there lies an opportunity for cross-border transfer of labour to boost economic growth and fulfil skill shortages in both countries. Cross-border transfer of labour benefits both individual workers and the recipient country’s overall economy. In theory, if an economy experiences high unemployment, there are increased chances that work opportunities be sought in other parts of the world, and hence labour migration. Often, migration across borders allows workers to attain skills and education that may only be available in particular countries. This will also be a good opportunity for individual workers to travel overseas and enhance their global experience and vision. For New Zealand, it has been noted that skilled labour flows are an integral part in achieving the Department of Labour’s strategic goal of building New Zealand’s workforce and attracting international talent to contribute to the country’s economic transformation and growth. At present, China is faced with a shortage of skilled workers across a number of sectors. Along with China’s former one child policy, it is expected the aging workforce will put additional pressure on the pool of skilled labour in the Chinese economy – which is believed to be one of the main rationales behind Beijing’s recent decision to loosen the policy. As China evolves from an investment-led economy to a consumption-oriented one, from being the world’s workshop to, perhaps, being a services powerhouse, it will need more high-skilled workers, in particular those with global – or perhaps “glocal”, as a matter of fact – expertise and capabilities as in China. The profile and attributes of China’s labour force are not likely to fully meet the needs of the economy. There is definitely an opportunity for expats to fulfil the skill shortages in China. The vast majority of expats in China are employed by international companies, mostly in the marketing and sales sectors. It is generally agreed that work ethics in China are strong, and the expats’ understanding of Chinese etiquette and business customs are the fundamentals of working in China. One specific benefit of working abroad is that it allows long lasting relationships and connections to be built on an international level. This is particularly valuable as the world is increasingly interconnected and having connections in different parts of the world will contribute to a unique pool of resources and capital which is hard to duplicate. This is especially in a guanxi based society like China; having or knowing the right connection will save a lot of time and energy, with possibly more favorable terms in return when seeking business deals. Therefore, considerations should be given to hiring expats as they may hold valuable connections and add value to their employers. William Buck has a number of Chinese expats working in its Auckland office and undoubtedly their connections in China has allowed them to assist many NZ companies to conclude business deals in China. In reality, the difference in culture and language may be seen by some as deterrents to work in China. For those young Kiwis thinking of going on an OE, China will be worthy of consideration especially when they want first-hand experience in one of the world’s fastest growing nations with unleashed opportunities. The experience and skill sets obtained in China will be seen favourably by their future New Zealand employers as more and more New Zealand businesses have some form of business connection with the Chinese market. The ability to operate in both a China and New Zealand business context is something few people have and it’s becoming a highly sought-after valuable commodity. As we observe, more and more New Zealand businesses are expanding their operations into China with some establishing a wholly owned foreign enterprise, and others partnering with local businesses. Should a New Zealand company decide to send a New Zealand employee to China for longer than three months, care must be taken on how the assignment is structured as it will have immigration, tax and governing law implications. Depending on the complexity of the assignment, professional advice may be required. There is strong evidence that pre-assignment consultation and training is a necessity to successfully ease expats into their China assignment. As one would have guessed, New Zealand, too, faces skill shortages in a number of sectors which is partly due to outbound skilled labour migration. To overcome the loss of skilled labour, the FTA between New Zealand and China has enhanced the ease of temporary skilled workers from China to fulfill the labour shortages in a range of sectors. One area in New Zealand where skilled migrants are a very important part of the workforce is the Health sector. It has been estimated that almost half of the medical practitioners working in New Zealand hospitals were trained overseas, with a significant number coming from Asia. This again, emphasises the importance of the flow of labour from the rest of the world to support the New Zealand workforce which contribute to the country’s economic transformation and growth.