Who needs expatriates? | The Economist
IF EXECUTIVE DIRECTORS are the monarchs of the corporate world, the cadre of well-paid staff they deploy from head office to oversee operations across the planet are their ambassadors. In the golden age of globalization, sending an expatriate Western executive to a remote emerging market meant the place was taken seriously. This model was starting to feel outdated before covid-19 made traveling abroad a misery. While Zoom and remote working have become the norm, is the mixing of emissaries across the world still worth it?
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Some 280 million people live in a country other than their own, often because of their work. Many are struggling on construction sites in the Gulf or worrying about the kids in Manhattan. High-flying expatriates are the most fortunate of these migrants. Their exalted status, should it ever be pinned down, is guaranteed by a housing allowance, brood tuition, annual return flights, and a good pay raise. Some businessmen have become eternal business travelers, making a career flying from Mumbai to Abu Dhabi via Lagos.
The business case for expats had started to seem stretched in recent years. Moving staff to the ends of the earth made sense when it was difficult to find open-minded (and English-speaking) employees there. But globalization has worked its magic. If an American investment bank in Shanghai wants a good digitizer with a MBA, there are many local candidates to choose from. They will cost a fraction of what it would take to move a transplant and already speak the language.
Getting head office staff to mobilize for Jakarta has also become increasingly difficult. In recent decades, a compliant “lagging spouse” has taken on the responsibility of running a household in remote locations. Now she (as is even more often the case) is more likely to quibble over the impact on her own career. A survey by the Boston Consulting Group found that 57% of workers globally were willing to move to a foreign country for work in 2018, up from 64% four years earlier.
The figure fell further, to 50%, once the pandemic hit. Many expat haunts, such as Hong Kong, Singapore and Dubai, have suffered softer lockdowns than America or Europe. But that often meant limiting overseas travel or imposing multi-week quarantines on returnees. The prospect of a family trip for Christmas, or a weekend trip to Bali, is part of what makes life in Singapore appealing. Once that’s done, the trade-off between career and personal life begins to look uncomfortably different.
Many foreigners who had already received royal treatment felt treated like second-class citizens. Some have been reluctant to leave their country of assignment for fear of not being able to return. Others had to wait longer than locals to get vaccinated. Clubby communities no longer made room for strangers. As Hong Kong, once the spiritual homeland of expatriates, fell into China’s fold, Western imports began to look like a holdover from the colonial past.
This is a testament to a broader economic change that has reduced the need for expatriates. In the past, it was they who facilitated access to foreign capital and know-how, often from Western sources. Today, money is plentiful and the most attractive business opportunities are emerging markets doing business with other emerging markets, particularly in Asia. You don’t need a Westerner to show you how to do this. The world they understand is no longer so relevant.
Expats are not just expensive baggage handlers (as this replacement Bartleby, a foreign correspondent in his day job can attest). Companies have cultures and processes that are forged at headquarters and that emissaries can disseminate. In turn, they will soak up new ways of doing things that can be transferred to other parts of the business. Having a stranger somewhere in the org chart of a remote branch can be reassuring that no fun business is going on there. However, bosses looking for a dime might now wonder if regular Zoom calls won’t do about the same for a fraction of the cost, especially if employees around the world are working from home anyway. anyway.
The surest way to signal commitment to a market these days is not to import the best talent, but to nurture them locally. Many companies that have proudly deployed expats now boast of appointing local bosses to head each country. It is not so much a reversal of globalization as an affirmation of it.
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This article appeared in the Business section of the print edition under the title “End of the traveling circus”