Expats Shun China Over Covid Policies, Forcing Foreign Firms to Scale Back

China’s borders have been closed to most foreigners since March 2020. Flights to the country remain scarce and expensive, and a minimum seven-day hotel quarantine is required. Covid-19 restrictions remain tight, with some international schools closing or shrinking as students and teachers leave. Geopolitical tensions have become an ongoing concern.

With little sign of a major shift in policy after 2.5 years, many Western companies and embassies have concluded that the challenges they face in the country are no longer temporary.Goldman Sachs,

In a report this week, China is not expected to begin reopening to the world until mid-2023. The European Union Chamber of Commerce in China does not expect a full reopening until at least the second half of next year.

As restrictions have dragged on, many organizations have suffered a brain drain in China, the world’s most populous country and second-largest economy. Many departures have occurred early and there is no backfill to replace those who left. In response, some units in China are petitioning headquarters for extraordinary measures, while some companies are overhauling their org charts.

In some cases, “companies have even questioned their responsibility to deploy foreign employees to China when numerous restrictions mean they cannot guarantee basic duty of care for them and their families,” said the European business lobby in China. in its annual report on the state of business in the country on Wednesday.

As the number of Europeans and Britons living in China has reportedly halved from pre-pandemic levels to around 60,000 in recent months, many of the chamber’s member companies (multinationals with a long-standing presence in the country) It is downsizing, localizing and separating its operations in China. Estimates for the conference room.

China’s own census (the latest version was released last year) shows that the number of Chinese citizens from the United States, Germany, France, South Korea, Japan and India has fallen by double digits over the past decade, even as China comes from poorer neighbors such as Myanmar Immigration to the country has increased dramatically.

For some organizations, the inability to bring in fresh blood has left them struggling to maintain what used to be a growth driver for many of them, either as a key market or as a manufacturing base.

While China has made it difficult for businessmen and their families to obtain new visas to relocate to the country, even foreign embassies that are exempt from such restrictions are struggling to staff their operations.

Quarantines, an increase in the frequency of sudden lockdowns and the prospect of extended school closures have made Chinese posts daunting for many, especially those with children.

Business executives say Beijing’s deteriorating relations with many Western countries in recent years have also damaged China’s image, as well as its hostility to foreigners. The chief epidemiologist at the Chinese Center for Disease Control and Prevention this week warned the Chinese public to avoid skin-to-skin contact with foreigners to avoid contracting monkeypox, a statement that sparked allegations of xenophobia among Chinese expats.

Jörg Wuttke, president of the European Chamber of Commerce, said that China’s strict Covid-19 control measures have inhibited the exchange of people between China and the rest of the world, warning that this “will inevitably lead to Understanding Reduction”.

The Brazilian consulate in Shanghai, for example, will be downsized to two diplomats next year, compared to its normal staffing of five, due to scheduled departures and a lack of diplomats willing to move to China. Meanwhile, the number of Brazilian support staff, usually non-diplomatic staff from local expatriates, is expected to drop to zero from the usual seven, according to Brazilian diplomatic cables seen by The Wall Street Journal.

The head of Brazil’s consulate in Shanghai sent a cable to Brazil’s foreign minister in July calling for special measures to address staffing shortages, including promising diplomats their preferred locations once they are posted to China. Otherwise, the cable warned, “the operation of the consulate is not feasible.” Brazil’s foreign ministry did not immediately respond to a request for comment.

The U.S. diplomatic community has also been hit by China’s anti-epidemic policies. In April, the U.S. State Department ordered non-emergency U.S. government employees and family members at the U.S. consulate in Shanghai to leave as coronavirus cases surged in Shanghai. It is unclear whether staffing levels have returned to normal. The U.S. embassy in Beijing did not respond to a request for comment.

Job vacancies often take longer to fill than in the past. A European country has been hosting online job fairs in recent months to explain what it’s like to work in China, hoping to attract more new employees, diplomats from the country said.

Many multinational corporations doing business in China are having fewer foreign employees.German carmaker Volkswagen joint stock company

Volkswagen’s then-China chief said in January that the company, which has a large presence in China, plans to cut 30 percent of its Chinese expatriate workforce to about 1,000 people in the next two to three years, adding that China’s travel restrictions have already made it difficult. The country is an unattractive place to work.Other large multinational companies including Apple company,

The company makes many of its devices in China, localizes more features, and hires Chinese nationals to fill positions once held by expatriates.

The exodus of foreign talent also includes international school teachers. For this academic year, the British Chamber of Commerce in China predicts that the turnover rate of Chinese international school teachers holding foreign passports will be at least 40%. Since the start of the pandemic, some international schools have closed or adjusted their operations as student numbers have fallen.

The British Chambers of Commerce said in its April report that if the number of new teachers was insufficient to replace outgoing teachers, “international families will be forced to relocate to ensure their children continue their education”. “Those who are considering moving to China will look elsewhere. This will further exacerbate the flow of talent from China.”

Some organizations have to be creative to retain talent in China. The Asian Infrastructure Investment Bank, a Beijing-based multinational bank, began allowing Chinese employees to work abroad for weeks or even months, The Wall Street Journal reported.

Yueling Zhao contributed to this article.

Write to Yoko Kubota at yoko.kubota@wsj.com