Expatriates Come Home to West--in China

The air in the homes here at Shanghai Links, an American-style “executive community” on the outskirts of one of China’s biggest cities, is rarefied indeed--carefully filtered until it reaches hospital standards. The specially treated water, unlike in nearly any other place in China, is pure enough to drink from the tap. Even the garbage is going to be sterilized.

As a growing number of multinational executives are being brought to China because of their companies’ commitment to globalization, more and more are moving to places like Shanghai Links, a re-created American suburbia with rolling lawns, two-car garages, ranch-style homes--and its own school, shopping mall and golf course, all only six minutes away from the new international airport.

Living here, you don’t even have to admit that you’re in China--and for some families, that’s the best thing about it. Relocation surveys, such as one by consultants Towers Perrin, show that one in six Americans placed overseas returns home within a year because of adjustment and family problems.

Even the ones who stay can spend more than half their day dealing with personal matters such as soothing an unhappy spouse or getting a foreign driver’s license. Companies insist that the $18,000-a-month rents, $20,000-a-year school fees and $60,000 cost to join the American Club are worth it to keep their expats happy and turnover low.

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Meet the Lomasons. Keith Lomason’s company manufactures seat frames for Shanghai Volkswagen. His father started the business in Detroit, and Keith, who learned Chinese in the Marines, brought it to Shanghai. He needs to be here, and, most important, he wants to be here. But his wife, Chris, who followed him here in 1996 with their baby son and without any Chinese-language ability, isn’t so sure about living in China.

“Put it this way: The first year, we went back to Michigan for Thanksgiving, and I didn’t come back until March,” she said. “I couldn’t face it.”

The Lomasons were the first family to move into Shanghai Links when the initial phase opened in July. Their house is on the edge of the Jack Nicklaus-designed golf course and has a view of where the Yangtze River empties into the South China Sea. Billy, now 3, rampages through the spacious house and races around the neighborhood on his training-wheeled bicycle.

“You could say we really moved here for Billy,” who had been getting bronchial infections about every six weeks from the pollution in the city center, Chris said. “He’s never had a lawn before except for a strip of grass that was so small the workers cut it with scissors.

“But in this place,” she said, looking out the window at what could be a cul-de-sac in Irvine, “you go out to the road, and it’s the West on one side and China on the other.”

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Critics worry that exclusive enclaves like this one only emphasize the division between expatriates and the Chinese community and markets they are supposed to be learning to understand. In the first half of the century, Shanghai was divided into foreign districts with their own police forces and immunity from local laws.

The houses at Shanghai Links, with names such as “the Montgomery” and “the Rosecliffe,” are imported Canadian models built by imported North American construction workers and only reinforce the sense of old-style separation. In a combination of awe, jest and contempt, others living in Shanghai--foreign and Chinese--refer to Shanghai Links as “the American Concession,” a modern reincarnation of the Ugly American.

But the Sealand Development Group believes that such “executive communities” are the wave of the future.

“This is a prototype,” Chief Executive Barry Hansen said as he stretched across a couch in a model home filled with furniture from California companies.

The $500-million development is 40% owned by Bankers Trust, New York Life and six North American pension funds. The construction is financed by bonds backed by the five-figure rents from multinationals. The company projects annualized returns to be 30% and hopes to list on the New York Stock Exchange in five years.

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“We’re planning communities like this in 15 other emerging markets,” Hansen said. “This is what it takes to attract senior management to an unfamiliar country and to keep people happy. In the long run, the environment provides continuity and helps avoid the onerous cost of repatriating people to the U.S.”

For a manager moving overseas, uprooting a family and leaving the power center of home office can take a toll. But in an emerging market like China, where there are few internationally trained managers, the costs and drawbacks of sending out a home-grown executive are still worth it to the companies and the employees.

“It’s not like we have a waiting list for people to come out here,” Ford Motor Co.’s China spokeswoman Stephanie Hallford said from Beijing. Ford has about 60 expatriates working in China supervising a staff of about 10,000 factory and office workers. “But it is a great opportunity to make a mark and have some access and independence and decision-making capability that’s not possible in headquarters. That possibility tends to outweigh the complications.”

But for how long? If the transplanted executives do their job well, passing on the corporate culture and home office know-how to locals, the high-priced managers will certainly become less important as the emerging markets mature.

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Already, multinationals in China are trying to bring in more internationally minded local managers who don’t demand the budget-busting benefits. S.C. Johnson Wax, for example, reduced the number of its houses at Shanghai Links from 10 to six after scaling back expatriate jobs.

“Every company is talking about localization now, but it’s exactly when markets are tough that you need expats in the office who have experience,” said Helen Tantau, the chief representative in Shanghai for Los Angeles-based Korn/Ferry International, a headhunting firm.

But demands on performance are getting tougher. “There’s not much point in having an expat in China if they’re only doing their own job,” Tantau said. “They must be able to pass skills down.”

Hansen concedes that China is changing quickly and that his now-captive expat market is likely to be transformed over time.

“In 20 or 30 years, we may have to re-target this development to successful Shanghai executives instead of expats,” Hansen said as he walked out of “the Heritage” and a straw-hatted worker buzzed by on the grass with a lawn mower--not a pair of scissors. “But it will still be the best address in town.”