Parking on the Door Step

Transcription

1 Parking on the Door Step By Dr. David Zweig, Director, Center on China s Transnational Relations, HKUST Center on China s Transnational Relations 1 Working Paper No. 3 The Hong Kong University of Science and Technology 1 Corporate Sponsor : Mr. Andre S. Chouraqui, Chairman DARTON Ltd - SMERWICK GROUP OF COMPANIES

2 1 Introduction As the world became more internationalized, the flow of goods, services and capital across national borders increased dramatically. 2 Internationalization has also afforded individuals the opportunity to move to localities where they can maximize their human capital. 3 According to The Economist, it is impossible to separate the globalization of trade and capital from the global movement of people. 4 The Uruguay Round of trade negotiations, and particularly the creation of the World Trade Organization, should increase the flow of individuals engaged in the service sector. According to the OECD, international migration of the highly skilled is on the rise and has emerged as an issue of increased relevance, not just to immigration ministries, but also to higher education and research ministries, as well as economic ministries. 5 The increased flow of the highly skilled enhances national power and competitiveness, as an expanded base of talent in spheres such as technology, management, production, finance and services, moves resources from one country to the next. A larger pool of human capital strengthens a country s technological capabilities, promotes innovation, helps it move up the product cycle or, by gaining clusters of technology, develops an indigenous technological capability. 6 The highly skilled also create capital markets and improve economic efficiency, thereby facilitating economic development. 7 Perhaps, then, we should be surprised to find that efforts by the Chinese state to control the flow of human talent have largely been ignored by analysts of China s foreign policy. 2 See Helen V. Milner and Robert O. Keohane, "Internationalization and Domestic Politics: An Introduction," in Robert O. Keohane and Helen V. Milner, eds., Internationalization and Domestic Politics (Cambridge University Press, 1996), pp. 3-24, and Barbara Stallings, "International Influence on Economic Policy: Debt, Stabilization, and Structural Reform," in Stephan Haggard and Robert R. Kaufman, eds., The Politics of Economic Adjustment (Princeton University Press, 1992), pp Outward Bound: Do developing countries gain or lose when their brightest talent go abroad? The Economist, September 28, 2002, pp The Longest Journey: A Survey of Migration, The Economist, November 2 nd, 2002, p Policy Brief, International Mobility of the Highly Skilled, OECD Observer, July p Michael E. Porter, The Comparative Advantage of Nations (New York: The Free Press, 1990). 7 Chinese returnees from the U.S. started the stock markets in Shenzhen and Shanghai.

3 2 According to Nettl, the classic locus of state power is the regulation of relations with the external world, while for Karl Deutsch, one key measure of state power is the ability to affect the rate of change in transnational flows. 8 Thus China s ability to generate a reverse brain drain i.e., to increase the flow of high value-added, human capital back to China in an increasingly globalized and competitive world economy, should form a key component of any new directions in Chinese foreign policy. 9 According to official reports, in the past five years, the increase in the rate of return of highly skilled workers with post-graduate training has been approximately 13 percent per annum. Data from the China Statistical Yearbook, 2000, show that whereas only 1600 students returned to China in 1990, in 1999, almost 7,750 students came back. According to my calculations, approximately 15 percent of all new job applicants in China with a graduate degree earned that degree overseas. 10 And in 2002, the number or returnees reached 18,000, more than doubling the previous few years average See J. P. Nettl, The State as a Conceptual Variable, World Politics, 20 (1968): , and Karl W. Deutsch, "External Influences on the Internal Behavior of States," in Barry Farrell, ed., Approaches to Comparative and International Politics (Evanston, IL: Northwestern University Press, 1966), pp For an overview of the brain drain problem, see Gutta Lakshmana Rao, Brain Drain and Foreign Students: A study of the attitudes and intentions of foreign students in Australia, the USA, Canada and France (Queensland, Australia: Queensland University Press, 1979), and William Glaser, The Brain Drain: Emigration and Return (New York: Pergamon Press, 1978), and David Zweig and Chen Changgui, China s Brain Drain to the United States: Views of Overseas Chinese Students and Scholars in the 1990s (Berkeley: Institute of East Asian Studies, 1995). On the reverse brain drain, see Chen Changgui, Stanley Rosen and David Zweig, Globalization and Transnational Human Capital: Overseas and Returnee Scholars to China, paper prepared for the Conference on Globalization and China s Reforms: An IPE Approach, sponsored by the Department of Political Studies, Queen s University and the School of International Politics and Public Administration, Fudan University, May 2002, Fudan University, Shanghai, China. Taiwan and South Korea have also witnessed a reverse brain drain of major proportions, and today India is also reaping benefits from overseas Indians who are either returning or bringing technology back to India. 10 David Zweig, Internationalizing China: Domestic Interests and Global Linkages (Ithaca, NY: Cornell University Press, 2002), pp China Has Sent 580 Thousand Students Studying Abroad, Tuesday, January 28, 2003,

4 3 Returnees are playing an increasingly important role in China s emerging educational industry, the development of technology parks in China s coastal cities, and even its legal infrastructure. Former Prime Minister Zhu Rongji called on returnees to bring back new technology to strengthen the domestic economy, not its export potential. And, as in the case of Taiwan, government ministers are more and more likely to have some overseas experience. For example, the previous minister of education, Madame Chen Zhili, spent two years in the U.S. as a Visiting Scholar in the early 1980s, while her replacement, Dr. Zhou Ji, received an American Ph.D. in Similarly, Lu Fuyan, the new Minister of Commerce, spent two years as a visiting scholar at the Ecole Polytechnic at Montreal University. The movement of skilled workers is driven by numerous forces. The migration literature sees such movement as part of an optimal residential location plan over the life cycle, 12 involving a two-step strategy where individuals first migrate to gain knowledge or skill overseas, but then return home with that knowledge, ensuring a better life in their home country. As Borjas and Bratsberg assert, some workers consciously decide to immigrate to the United States for a few years, and then return to their home countries after accumulating sufficiently large levels of capital or wealth. 13 Similarly, Anderson and Konrad see highly skilled immigrants as temporary movers with a strategic plan, under the concept of brain exchange. 14 According to Zhang, these immigrants first moved to a developed country, which often supplied subsidized education, before returning to their country of origin. 15 Similarly, most studies of the brain drain focus on 12 George J. Borjas and Bernt Bratsberg, Who Leaves: The Outmigration of the Foreign-born, Review of Economics and Statistics, vol. 78, no. 1 (1996): Borjas and Bratsberg, Who Leaves, p F. Anderson and K. Konrad, Globalization and human capital formation, IZA Discussion Paper, no. 245 (2001). 15 K. Zhang, Human Capital Investment and Flows: A Multi-period Model for China, Paper prepared for the 6 th International Metropolis Conference, Rotterdam, The Netherlands. November, 2001.

5 4 individual choice, 16 where individuals are pulled into the more advanced industrial world by higher salaries, better working conditions, better chances to advance their careers, and by the fact that much of what they learn is better rewarded in the industrial world where they received their education. But individual choice is deeply affected by changes at other levels of the international system, including the global, national, transnational, as well as by decisions of domestic firms and organizations. Tectonic shifts in global or regional economies trigger significant structural changes within a country s economy. In fact, the rise of East Asia since the 1970s has triggered three reverse flows of human talent to Taiwan, South Korea, and Hong Kong while today, China s position in that regional economy, and its overall economic rise, are an important force attracting people of talent back to China. National policies can have some influence, though the power of the nation state to control such flows may have declined. 17 While Taiwan s high tech zones, and the democratic opening may have encouraged many to return to Taiwan, 18 South Korea s effort to attract returnees in the 1970s and 1980s was relatively unsuccessful. In China, beginning the late 1980s, instituted a series of policies aimed at increasing the return rate of overseas students, with the overall goal of using their increased human capital to serve the national goal of self-strengthening. The central government experimented with high tech zones, granting them preferential policies that would encourage scientific synergy and export promotion. The Third Plenum of the Fourteenth Party Congress in 1993 put out a 12-character slogan to direct overseas study: support overseas study, 16 One reason for this emphasis on individual choice may be the research methodology used, which has often involved surveys of individuals. In researching this paper, I have also tried to interview firms and collect information about firm-level decisions. 17 Keniche Ohmae, The end of the nation state: the rise of regional economies (New York: Free Press, 1995). 18 Shirley L. Chang, "Causes of Brain Drain and Solutions: The Taiwan Experience," Studies in Comparative International Development, vol. 7, no. 1 (Spring 1992):

6 5 encourage people to return, and give people the freedom to come and go (lai qu ziyou). 19 In the late 1990s, the strategy of building the country through science and education (kejiao xingguo zhanlue), 20 enhanced the role of returnees. China links its educational and scientific exchanges to its national security, elevating the importance of sending people abroad and bringing them home. The state sees returnees as a key component of its strategic battle for economic and technological development, arguing that other states try to attract and keep China s own intellectual talent in order to advance their national power. One article accused the U.S. of grabbing the best undergrads from China s key universities, which it says is undoubtedly a strategic measure in the contention for first-rate S&T talent, which carries far reaching significance for the country they go to. 21 Then president Jiang Zemin, who stressed the role of technology in China s economy, believes that global competition in S&T is fundamentally a competition for human talent; so China must create a new environment for skilled workers if it is to attract returnees from overseas. 22 Thus, the central government uses its institutions of public diplomacy to encourage reverse migration or at least the transfer of technology and information back to China. Education, trade, and S&T officials in consulates across the industrial world actively pursue links with the talented Chinese who remain overseas, and beginning in the mid-1990s, introduced the chun hui ji hua program, under which it paid a one-way ticket for mainlanders overseas to return for visits to China. Finally, multinational corporations (MNCs) and domestic organizations play an important role in bringing people back to China. Between 5 and 10 percent of the movement of skilled 19 Jiao Guozheng, Pengbo fazhan de chuguo liuxue gongzuo (Flourishing Development of the Work of Sending Out Overseas Students), Zhongguo gaodeng jiaoyu (Higher Education in China, Beijing) no. 12 (1998): 6-8, in Higher Education in China, Research Materials from People s University, no. 2 (1999): Falling water: What stops overseas students from returning? Duowei News Service. [have to look for this when I am back in Hong Kong DZ] 21 Zhang Shuzhen, Dui Beijing diqu yuyou dazhuan yishang xueli renyuan zifei chuguo liuxue taishe xitan (A discussion about Beijingers with technical college level education and above who finance their own overseas studies), Chuguo liuxue gongzuo yanjiu (Research on Overseas Study), no. 2 (1999): Falling water: What stops overseas students from returning? Duowei News Service.

7 6 workers between the U.S. and Canada occurs through intra-firm transfers. 23 In China, a dramatic upsurge in the flow of MNCs into China since 1993 contributes to the reverse brain drain, as many overseas scholars have returned with rewarding expatriate packets. In particular, North American firms who want to localize their management, see mainlanders who have been trained overseas as key players in this corporate strategy. Equally important are the policies of nation states. Particularly for developing countries, such as China, can the government create a conducive environment, or even create special incentives that will convince people who are overseas to return home where their increased human capital can benefit themselves as well as serve the national goal of self-strengthening. A key argument of this paper, then, is that individual decisions by mainlanders trained overseas about returning are deeply affected by factors external to their own household s situation by the political economy of the world around them, by the policies of the Chinese state, and by the companies for which they work. Parking on the Doorstep? While the number of mainlanders leaving the West and returning to China has increased, many have chosen to settle in Hong Kong, rather than return directly to the mainland. This paper looks specifically at Chinese mainlanders, particularly academics and lawyers, as well as a few financial analysts and business consultants, who received training overseas and then relocated to Hong Kong. 24 It tries to understand why this very talented group of individuals first moved to Hong Kong in the mid- and later part of the 1990s (figure 1), and then tries to assess the extent to which they are being pulled back into the mainland as the 21 st century unfolds. I use the term 23 Policy Brief, International Mobility of the Highly Skilled, OECD Observer, July p This paper is part of a larger research project funded by the Research Grants Council of Hong Kong, called Transnational Capital: Returnee Scholars under Globalization. While the co-pis are Chen Changgui, Stan Rosen and myself, the work for this particular paper, which will form a chapter in our book, was written by me, alone. The research assistance for this paper was provided by Domio Chow, Gavin Kwok, Donis Chan, Stephanie Kent, and Dr. Chung Siu Fung.

8 7 parking on the doorstep? as a metaphor, but also as a hypothesis, to help us focus our attention on whether Hong Kong is just a stopping off spot on the way back to the mainland hence the parking concept or a new home for this group of talented individuals. Figure 1: Year of Coming to Hong Kong *Total no. of respondents=98, of whom 1 gave no response. Question: When did you get your first job or position in Hong Kong? Overall, I argue that the enormous economic boom in Hong Kong in the late 1980s and into the 1990s, expanded Hong Kong s educational institutions, while the overall growth in China and East Asia in this same period triggered a major increase in Hong Kong s financial and legal services sector. 25 Expatriate mainlanders, many who had been residing in the United States, Canada, England and Australia, were affected by these shifts and responded to the increased opportunities created by Hong Kong s economic growth. However, in the professional sphere they were moved to Hong Kong by their international law and investment firm, or joined MNC firms there, but did not join local Hong Kong firms. According to one observer, Hong Kong firms are not looking 25 Interesting, because of the hollowing out of Hong Kong s industrial sector, there was little movement of mainland-trained scientists into Hong Kong s high tech sector which to a large extent is non-existent anyway. But scientists have gone into universities.

9 8 for returnees, as there is a cultural blind spot. They don t know what these people are thinking or how they think. Therefore, mainlanders are vulnerable to the decisions of international law and financial service firms in terms of their migratory decisions. Academics are vulnerable, too, if the educational sector shrinks or changes its hiring norms. Recent signs portend a significant movement of overseas-trained mainlanders out of Hong Kong back to the mainland. This is particularly true for lawyers, business consultants, while less true for academics and those in the financial services. Hong Kong remains very attractive to mainland academics trained overseas, who are often free to make individual choices. Salaries, job opportunities, cultural comfort, and family ties brought them to Hong Kong in the first place. Today, those factors, which keep Hong Kong attractive, Hong Kong s relatively free society, as well as the natural inertia of human life, are keeping them here. No doubt, they are being affected by the expansion of academic institutions on the mainland and the increased efforts of the central government and universities to draw them back. But in the legal and consulting professions, a significant amount of the movement of human talent back to the mainland is due primarily to policies of various multi-national firms who have decided to move their China activities into the mainland, thereby greatly influencing individual calculations. While my view may reflect a slight overstatement, it is not inappropriate to talk of a future hollowing out of the service sector in Hong Kong. Methodology This study presents both quantitative and qualitative data, drawing on a sample of 32 interviews primarily with academics and lawyers, as well as some business leaders who came to Hong Kong with overseas degrees. I selected my interview sample in the following way. For university professors, my assistants went onto the website of each university in Hong Kong and printed out the faculty list. Then, assuming that pinyin names implied a mainlander, we selected the candidates randomly from the list of each university. Similarly, we got the list of mainland

10 9 lawyers from the Hong Kong Law Society website and again selected pinyin names at random. 26 In this case, however, some names actually turned out to be Korean or American born Chinese. Finally, for the business community, we approached the Hong Kong Chamber of Commerce, whose staff supplied me with a list of members who fit our profile of being a mainlander who had studied overseas before resettling in Hong Kong. Most of these people were also working for investment companies. We do not know the basis on which the Hong Kong Chamber of Commerce selected these people, but they were relatively high ranking people: partners, vicepresidents, deputy managers or even CEOs of trading and investment companies. We then sent them all a letter introducing the project, and in each case, I followed up with a personal phone call to request their support for the project. As a result, the rejection rate was relatively small, perhaps as low as 10 percent, though some academics I phoned had moved and could not be found. Also, while several lawyers had left their firms with no forwarding address, about 30 percent of the lawyers we called had already moved back to the mainland. In several cases, I contacted them in the mainland and met them there to understand why they had left Hong Kong. Finally, I also carried out a series of detailed interviews to build and pre-test the questionnaire, and while these respondents answers are not part of the quantitative data, I refer to their comments in the general discussion. Structural and Organizational Forces Bring Overseas-Educated Mainlanders to Hong Kong Beginning in the late 1980s, and into the 1990s, structural changes in the global and regional economies brought foreign-educated mainlanders to Hong Kong. The economic recession in the West in the early 1990s made finding jobs overseas rather difficult. Hong Kong s tertiary education system expanded significantly in the late 1980s and early 1990s, along with Hong Kong s overall economy, precisely at the time when many mainlanders were completing 26 This method excludes all mainland lawyers who changed their names, a group, which is mostly female. It may therefore bias the sample towards men, and towards people who are less Westernized by their overseas experience. However, the list we drew did include many women.

11 10 their Ph.D.s overseas. As figure 2 shows, the number of students in Hong Kong tertiary institutions expanded dramatically in this period, increasing by 50 percent between 1990/91 and 1996/97, on the eve of the reversal of sovereignty. The numbers also grew significantly between 1994/95 and 1996/97, after which many of our interviewees arrived in Hong Kong. Finally, Hong Kong University of Science and Technology, itself a new institution, began hiring in the early 1990s; as of December 2000, its faculty comprised 612 academic staff, or 11 percent of the academic staff in the territory. 27 Academic salaries, which are pegged to salaries in the civil service, have risen dramatically over the past decade, generating a strong pull factor into Hong Kong. Figure 2. Enrolment in Tertiary Institutions in Hong Kong, No. of Students / / / / / / / / / / / /02 Source: University Grants Committee: Facts and Figures, 1996 and 2001 Notes: Numbers exclude the Hong Kong Institute of Education. The data refer to institutions funded by the University Grants Committee. 27 The UGC Facts and Figures, 2001, p. 37. This number includes the Hong Kong Institute of Education.

12 11 Growth in the service sector brought mainlanders from the West to Hong Kong. One lawyer argued that their customers forced them to set up shop in Hong Kong. A remarkable boom in FDI in China in brought many multi-national firms into the mainland. They wanted their lawyers nearby, making it neither convenient nor cost effective for law firms to run their China practice from New York. But while they waited for the approval of their license to open an office on the mainland, they opened practices in Hong Kong. These shifts moved Western-trained mainland lawyers to Hong Kong. Thus one lawyer who was hired by a law firm in New York, was surprised when they moved him to Hong Kong. While his personal preference had been to stay longer in New York and gain more overseas work experience, 28 the firm played the key role in his migration to Hong Kong. The movement of mainlanders to Hong Kong was also influenced by local policies, which ironically tried to prevent direct movement of professionals from the mainland to Hong Kong. One law required any mainlander moving to the territory through job search to have worked or lived out of China for two years before he/she could move to Hong Kong. 29 This policy insured that many of the highly skilled mainlanders flowing into Hong Kong were educated overseas. Two years ago, realizing that Hong Kong lacked people with technological and financial skills, the Hong Kong government relaxed that policy, so people in these sectors, who were supported by a Hong Kong firm, could work in the territory after only one year abroad. However, in early 2003, the Hong Kong government joined the global competition for skilled labourers and introduced new policies that make it much easier for skilled mainlanders to move to Hong Kong. 28 Domio, Interview Top mainland enterprises, called red chip companies, could bring people to Hong Kong directly, as internal transfers, so their people have not spent time overseas. Also, red chip companies may harbour some doubts about the loyalty of mainlanders trained overseas.

13 12 Selecting Hong Kong: Individual Motivations Our interviews suggest that the main motivations for moving to Hong Kong were salary, job opportunity, business opportunity and career prospects, and cultural comfort (table 1). Living near one s parents was also an important motivation for leaving the West. The gap between salaries in Canada and Hong Kong were enough to get several mainlanders with permanent jobs in Canada to give up their post and move to the territory. 30 Interestingly, mainland academics who relocated to Hong Kong in the early and mid-1990s, often knew little about it. According to one informant, I did not know much about the way of life here in Hong Kong, but the Chinese Consulate in London constantly gave out the message that returning to Hong Kong was equal to returning to China. This person had a fellowship at Oxford and could have stayed on, but the message from the Chinese Consulate certainly played a great part in my decision to return to Hong Kong. 31 Table 1. The Three Most Important Reasons for Coming to Hong Kong Reason one Reason two Reason three The Reasons N % N % N % Job opportunity % 3 3.1% 4 4.1% Salary % % % Standard of living (including housing) 0 0.0% 3 3.1% 4 4.1% Children Education 0 0.0% 4 4.1% 2 2.0% Freedom of speech 1 1.0% 0 0.0% 3 3.1% Living near parents 7 7.1% % % Business opportunities and career prospect 6 6.1% % 8 8.2% Cultural comfort 6 6.1% 8 8.2% % Desire to have a contribution to the mainland development 2 2.0% 5 5.1% 9 9.2% Others 6 6.1% 0 0.0% 0 0.0% No response 1 1.0% 7 7.1% % % % % 30 Stephanie, Interview C1. 31 Domio, Interview No. 4.

14 13 Professional Factors Nine of 32 interviewees came to Hong Kong because it was the first, or only, job they could find. The early 1990s was not a good time for finding work in North America, and while many people were able to get post-doctoral fellowships overseas, a job in Hong Kong was far more attractive than soft money, such as a post-doctoral fellowship. 32 In responding to the question: Why did you come to Hong Kong? one informant remarked: job opportunity; it is simple. For a political scientist like me, job opportunities are very rare. When you find a job, you hold onto it and don t let it pass. This position, for a fresh Ph.D. graduate, is very attractive indeed. Relatively high salary, and you have so much research opportunity. You simply do not want to let it slip through. 33 According to an economist, 1993, [when he was hired] was the worst time in the North American market for economists. There were almost no jobs, only a postdoctoral fellowship from the Social Science and Humanities Research Council (of Canada). But because he knew nothing about Hong Kong, if there had been a job even at a small school in a more isolated city like Saskatoon, I would have taken it then. But now I am glad that I did not take any job like that I would have been sorry. 34 Hong Kong is an excellent place to study the mainland and engage in policy debates there without having to live there. According to one China scholar who writes actively about mainland affairs, This is the best of both worlds as close as any other city in China, only a few hours from China, but also very distant, in that were I working in the mainland, I would have so many meetings to attend, so many social activities, and therefore, get little work done. Another scholar for whom field research is a core part of his work felt that Hong Kong is a great place to conduct research in China. Geographically it is attached to the mainland, so it is easier to travel to the mainland or to hire a mainlander to do the research for me up there. And 32 Interestingly, people who had post-docs would have preferred that to a position on the mainland. 33 Domio, Interview No Mainlander in Hong Kong, Zweig interview No. 1.

15 14 Hong Kong is relatively more liberal than the mainland. Not to mention that Hong Kong has a very generous government, which is very supportive of research about China. 35 Thus the previous academic saw a continuing and strong trend among mainlanders to come to Hong Kong: even people with very good positions in the U.S. want to come here. In the early 1990s, mainlanders did not know Hong Kong, how attractive a place this really is. I knew a Yale graduate student who was unwilling to come here, thinking that he would get a good job in the U.S. But he didn t get a good job, and now he is in Singapore. But he really wants to come here now. Increasing One s Human Capital Some financial analysts moved to Hong Kong because they strongly believed that the value of their human capital would increase in an Asian environment, where their comparative advantage of being Chinese could be realized. One interviewee referred to the value-added of being a mainlander in Hong Kong who was doing China-related business. These investment analysts, though not unsuccessful on Wall Street, still found it very competitive in New York. But in Hong Kong they can become what one person called a relationship banker, whereby they can use their personal ties to do business. In North America, this was not an option. In fact, one fellow who moved to Hong Kong from Wall Street, became the first mainland partner in a prestigious investment company. For many years, he lived in a townhouse on the Peak, though recently his wife and child have relocated to Shanghai. On the other hand, another mainlander challenged this argument, asserting that there was a glut of China-related lawyers in Hong Kong, which lowered his own value, while such talent remained in short supply in New York. 36 Finally, one lawyer, married to a Hong Kong woman, moved from the U.S. largely because he could make so much more money in Hong Kong than in the U.S. Yet, while he felt that many 35 Domio, Interview No Zweig interview in Hong Kong, No. 5, February, 2003.

16 15 mainlanders were returning now, he was in no rush. Many have returned to look for better opportunities and a better life. But I have found it here already. 37 Similarly, one lawyer remarked that as successful as she was in the U.S., she could not create the personal network that her American classmates in law school had, so they were more successful than her in attracting new business to the firm. 38 To this extent, she felt that the glass ceiling she had experienced in that law firm was legitimate. However, Shanghai, where she now works, is her home city, so does not face that type of constraint. And while lawyers may have wanted to move to Asia and work on China business, moving to the mainland in the early-1990s was not possible. Their firms could not open offices in the mainland, and the cost of opening one s own law firm was too high; so, if they wanted to move to Asia, it had to be Hong Kong. Family and Culture Family factors were important for some interviewees. Ten of 32 interviewees said that one of the three reasons they moved to Hong Kong was to be close to their parents (table 2). Academics in their forties may have aging parents; living in Hong Kong affords the chance to visit them on the mainland regularly without having to move there. According to one professor, One reason I am here is because of my parents. I want to live near them. I got them residence permits for Canada, and they lived for a year in Edmonton, but they didn t like it, so they returned to Shanghai. Now I wouldn t consider moving back to North America because of my parents. I m an only child and I have a responsibility to take care of my parents. Only after they pass away would I consider moving back to North America, but by that time I will be much older and it will be much harder to move. 39 Younger academics with toddlers can bring their parents to live in Hong Kong for 3 months every year. Also, for mainlanders who have married foreigners or Hong Kong Chinese, Hong Kong is a 37 Domio, Interview No One senior Western lawyer in Hong Kong strongly rejected this argument, saying that after a few years, mainland lawyers, if they were good, should be able to bill as many hours as their American colleagues. 39 Mainlander in Hong Kong, Zweig interview No. 3.

17 16 nice middle ground, and as one mainlander commented, a good place for her husband to make an overall transition to moving to Asia. 40 Some people said that they had never really planned to stay overseas, so moving to Hong Kong, a Chinese city, was an attractive option. As one scholar commented, When I was in the UK, I only thought that I would stay there temporarily. It is not a place for me to settle permanently. Now, since I am in Hong Kong, being surrounded by other fellow Chinese people, I feel very much settled. 41 Several people who had gone to school in New York did not like the city and were looking for a more Chinese environment. For example, one commented that he was always eating Chinese food overseas, so he might as well move to a Chinese city. 42 Overall, Chinese do not necessarily feel so comfortable in the West. One lawyer said that when she moved to Hong Kong, she felt as if a burden had been lifted from her shoulders, a burden that she didn t really realize that she had been carrying. All of a sudden she felt a lightness. The burden, she realized, was being Chinese in the US. Frequent questions about where she was from, or comments that her English was so good, constantly reminded her that she was not from the US but was from China. In most cases she saw it as well meaning, not a bias or prejudice, but it was a daily reminder that she was not from there. Moving to Hong Kong was a very liberating event, as she suddenly discovered how nice it was to be anonymous. In Hong Kong she was never reminded of where she was born. 43 Staying in Hong Kong? Having come to Hong Kong, are they planning to stay for the long-term or is Hong Kong, as the title of the paper suggests, merely a stepping-stone on their way back to the mainland? And, if they are being pulled back, why? Clearly this is a biased sample, as those who are prone 40 Zweig interview with lawyer in Shanghai. 41 Domio, Interview No Stephanie, Interview No. B2. 43 Zweig interview with a lawyer in Shanghai. Similarly, a mainlander who had studied in France said that he never felt that the French wanted him to stay, so he never felt comfortable there.

18 17 to leave for the mainland already have left and cannot be part of the sample. (Similarly, those who returned to the West rather than the mainland are also not in our sample.) To resolve this bias, I interviewed two lawyers and one academic who had already left Hong Kong for the mainland two lived in Beijing and one in Shanghai and asked them why they had moved on. Overall, the survey data suggests that as of now, the underlying hypothesis of this paper that mainlanders are treating Hong Kong as a parking spot on the way back to the mainland is wrong. When asked their long-term plans, vis a` vis staying in Hong Kong, or 52 percent said that they would stay 10 years or longer, while another seven (24 percent) were planning to stay at least another five years (chart. 1). Thus almost 75 percent of our sample expressed the intention to stay in Hong Kong for at least the next five years. Moreover, while academics may have a ten-year time frame, business people have a shorter time horizon. Nevertheless, since the data are surprising, let us find out why. Chart 1. Long term plans vis a vis Hong Kong (Total no. of respondents=98) 3% 1% 1% 12% 2% Stay in Hong Kong for at least 10 more years Stay in Hong Kong for next 5 years Leave within 2 years 32% 49% Move to the mainland in the near future Move back to overseas as soon as I can get a job Other No response

19 18 Family Factors While various forces can pull people out of their chosen residence, particularly when the site of relocation is their original homeland, moving onward is often not an easy decision. Two people, therefore, selected you feel settled here and don t want to uproot your family as the strongest force keeping them in Hong Kong. In our 1993 study of mainlanders in the US, 44 it was clear that wives did not want to return both because of their preference for life in North America and out of a desire not to disrupt their children s life. The wife of one Hong Kong academic has made her point clearly. I expect that it is very common for Chinese scholars wives to not want to return to the mainland. I believe that if any one of the scholars decided to return to China and asked his wife to go with him, the result would be that the wife would rather get a divorce instead. 45 In fact, one man said that his wife was Hong Kong Chinese and he respected her choice to stay in Hong Kong but this was not a decision with which he disagreed very strongly. Problematic Professional Factors on the mainland Professional factors can keep people here. For both academics and lawyers, the working environment in China made them hesitant to leave the parking lot: One person who said that she could easily get an academic position in community medicine in Beijing, felt that the environment is not ready yet for returning, despite feeling very culturally Chinese: If you go up there, you do not know what the environment is like; it may be very difficult to work up there. And, in her field of public and community health, she would feel very isolated. Similarly, academics working on theoretical issues, such as accounting or finance, felt that mainland 44 Zweig and Chen, China s Brain Drain to the United States. 45 Domio, Interview No. 4. One informant reported several divorces among his friends after wives refused to return to the mainland.

20 19 academia was uninterested in their work. A department head could pressure them to shift to more policy-oriented analysis, forcing them to set aside their academic foundation. Academic freedom is important. One social scientist, who works on protest activity, felt that the authorities in the mainland would not like his research. Despite being offered an associate dean s position at one of China s best universities, is staying in Hong Kong for the long-term. Similarly, another academic, who left a tenured position at an American university, said that he would not return to the mainland because of the lack of intellectual freedom. For a third scholar, Hong Kong was the best place for him, too, as he could pursue his career in an environment where personal relations (guanxi) were not the most important determinant of success. Hong Kong is a society where you can rely less on relationship to do things. On this point, Hong Kong is even better than the United States where you need to know certain people to succeed. The mainland is the worst in that you need to know certain officials in order to accomplish what you need to do. Therefore, the ability to maximize their research potential is important to our academics. In interviews carried out in the mainland in , Chen and I found that many returnees had been forced to take on administrative responsibilities when they returned. Concerns about this issue were voiced by one of our academic informants. There is an entire group of returnees, mostly involved in international relations, who are just so busy that they don t get any time to do any research. This scholar in particular felt that as a mainlander in Hong Kong, he could avoid administrative responsibilities and simply do his academic work. Salary keeps mainland academics in Hong Kong. When asked about the advantages of Hong Kong, almost all our academic informants selected high salary as a primary reason for staying in Hong Kong. But one said that if the salary gap between Hong Kong and Canada narrowed, he would quickly return to Canada rather than stay in the territory. 46 Moving to the mainland may entail a 30-fold salary cut, which would make it impossible for academics to 46 Stephanie, Interview No. C1.

21 20 support their families in North America, some of whom remain there in order to complete high school or college. Weaknesses in the rule of law on the mainland keep some lawyers in Hong Kong. One lawyer found freedom in Hong Kong absolutely critical to her decision to resist job offers on the mainland: I ask myself why [she has not moved to the mainland] and my classmates who have condos and cars in Shanghai also ask me. They want me to join them, to help make their law firms better, but for me, I am not sure that I want to do that. I like a free society, so there are many things in China that I don t like. The lack of a free press, the way they do their planning and zoning people in China think that their zoning policy is great but developers do not have a long-term view. I prefer a freer society in all aspects of life. 47 Another lawyer felt that he could not maximize his human capital in terms of income on the mainland because of the high transaction costs. The legal system is not so established in the mainland. There would be a lot more work establishing myself, as well as the law firm that I would work for, even if I were offered a position in a top law firm. Much of my work would be to establish an operational base for the firm instead of developing my own client base as I do here. Most of the international law firms in the mainland face problems with operation, training the legal staff, having the necessary facilities, and so on. Even if you were not required to deal with these difficulties, my business would still be hurt by its inefficiency. To me, as a lawyer, developing the client base is the real money. Similarly, the director of a head-hunter firm in Hong Kong felt that the free flow of information, and privacy, will keep Hong Kong as a nerve centre for private banking and wealth management. Also, the tax structure in China and the compensation levels here have stopped a massive flow to China. The salary gap is about 1:3 or even 1:5. Cultural Comfort as a Force Keeping People in Hong Kong An important hypothesis for this study was that cultural comfort pulled mainlanders to Hong Kong from the West, but might be a negative factor in keeping them here. In fact, there was 47 Zweig, law interview No. 1, Hong Kong.

22 21 a high level of ambivalence about Hong Kong s culture and the role of mainlanders in Hong Kong society. On the one hand, one informant felt part of a community in Hong Kong in which he could participate, as compared to living in the U.S. where he felt marginal and a nobody. 48 Because of that sense of belonging I can get more involved in local social issues and participate in community service. For that, I can take up more opportunity to serve the community. Similarly, even though he experienced anti-mainlander prejudice, one academic selected cultural comfort as the main reason for coming (or perhaps staying) in Hong Kong: I am the kind of overseas Chinese who enjoys being with Chinese people and living in a Chinese community. 49 Therefore, while he had a post-doc in England, he chose to move to Hong Kong. However, many academics felt strong racial prejudice from the Hong Kong Chinese. The role of culture is not that important as we feel isolated in Hong Kong also, just like ex-patriots. HK doesn t care about us. The government has all kinds of relations with the mainland but they never consult us about these issues. Sure, they put out a contract for consultants on China but that is a commercial relationship. So we can t make a contribution here either. 50 Many were quite surprised by, and bitter about, the level of discrimination that they felt from the people on the street. Such a negative response might undermine any sense of loyalty or attachment to Hong Kong, exacerbating the outward flow. Mainland academics rarely attend seminars about Hong Kong, as they are much more deeply concerned about mainland affairs. As one commented, I do not know much about local politics. It is not my area of interest nor can my professional knowledge shed much light for the local community. I think my colleagues in Hong Kong politics can contribute more. I am only a lay person in this area. 51 One lawyer who moved to Shanghai felt that Hong Kong really was a melting pot; nobody cares who you are, but that also means 48 Domio, Interview No Domio, Interview No Zweig, Mainlander in HK, Interview No Domio, Interview No. 5.

23 22 that when you leave, you don t leave behind many social roots. Finally, one academic who could only be characterized as a Hong Kong hater, commented rather harshly: the longer I live here the more I find we have a problem of discrimination from locals, which makes me feel very uncomfortable living here. Locals are very afraid of us the people from the mainland thinking we are a threat to them, because in general they lack confidence and are jealous of the advantages we have these days. On issues of promotion and substantiation, it is a very explicit rule that the locals have the advantage. That is not fair at all. 52 Despite these complaints, when asked to rank their sense of loyalty to Hong Kong on a 10-point scale, running from 0 to 10, mainlanders demonstrated a rather strong sense of attachment and loyalty, with most people selecting scores of 5 or greater (figure 3). The mean score was 6.0, and many chose 7 or 8. As one lawyer, who did not like the very hectic pace of life in Hong Kong, but nonetheless chose 5 on the 10-point scale, commented that though he did not really like Hong Kong, since I live in HK, I should do the minimum that a citizen should do. No. of respondents* Figure 3. Emotional Tie to Hong Kong Strength of Ecotional Tie *Total no. of respondents=98, of whom 20 gave no response. Question: How strong is your emotional tie to Hong Kong? 52 Domio interview, No. 19.

24 23 Finally, age is a factor. Several older mainlanders, with established positions, were unwilling to contemplate relocating again. Hong Kong was comfortable, a good place to end their academic careers. Moving to the Mainland Significant structural changes in China could pull people to the mainland. China s rapid development has created enormous opportunity for entrepreneurial souls. Also, while the growth of China s economy initially brought many lawyers and financial analysts to Hong Kong, by the late 1990s, the expansion of business opportunities on the mainland, and liberalization of China s regulations, began to pull firms out of Hong Kong into China proper. Government Policy In the education sector, the Chinese government has tried to transform the financial and policy environment for academics, and individual universities and colleges are actively seeking to attract good talent from abroad. Universities such as Beida, Qinghua, Fudan, Nanjing University and others have been received funding from the Ministry of Education, which allows them to significantly increase academic salaries. According to The Economist, poor countries must pay overseas nationals a much larger multiple of the average wage than would be true in the rich world. 53 Thus government programs, such as the Changjiang Xuezhe (Yangzi River Scholars) or the Bairen jihua (100 Talents Program), which give out individual grants of two million RMB which can be used in part to supplement salaries, help attract people to return. But, mainland universities cannot compete with Hong Kong salaries, so the forces that pull people onto the mainland cannot be income alone. 53 Outward Bound, p. 26.

25 24 We asked our informants if they knew people who have returned to the mainland, and if so, why they did so. Two factors were cited. First, they believed that many returnees were not that talented or had failed to find a good job, so they were settling for one on the mainland. Second, returnees, particularly to top universities, such as Beida and Qinghua, wanted policy influence. In the worlds of one observer, If you want to get into the power circle, you have to go back. If you stay here in Hong Kong you can be an advisor, but you will not get into the power circle. People s calculations are based on cultural factors, money and power, and people make a calculation about where they can get the most of each. If they want power or prestige, then they are most likely to go back. When the government in China invites you to participate in their inner decision making groups, it gives you great face. Then you don t really care so much about money. 54 The easiest way to really gauge the forces that could move people back is to look at those who have gone back or those who are seriously considering moving to a mainland institution. One professor who has been negotiating for some time with Beida was not going to get substantiated in Hong Kong, despite an acceptable publication record. The problem was that his department in Hong Kong was highly theoretical. So, instead they offered him an administrative post in the college and a visiting position in the department. He, however, claims that he was always interested in returning to the mainland, but was just waiting for the right platform. So, he is actively trying to create that right platform at Beida. An economist, who found the right platform at an excellent mainland university, explained his path back home in terms that reinforce the parking on the doorstep theme. While he could have found a teaching job in the U.S., his long-term goal was to return to the mainland. So, he first chose Hong Kong, rather than return directly to the mainland. Why? First, he came after the July 1 st, 1997 handover of sovereignty to China, so in his mind he was already back in China. (He admitted to being quite patriotic, saying that it warmed his heart to see the PRC flag fluttering over buildings in Hong Kong.). Second, Hong Kong universities are 54 Mainlander in HK, Zweig Interview No. 2