Fewer Employees Moved to China in 2013; The heady days of people rushing to China in search of opportunity are waning.

Jan 16, 2014

Fewer Employees Moved to China in 2013

The heady days of people rushing to China in search of opportunity are waning.

At least one relocation firm has found that more people moved from China to the U.S. last year than the other way around, the first time this has happened since St. Louis-based UniGroup Relocation, which moves more than 260,000 families yearly, started compiling this data in 2006. Meanwhile, the move of household goods into China tracked by another relocation firm, Asian Tigers Mobility, fell 10% in 2013, the largest drop in more than a decade.The shift comes as China’s economy grows at its slowest pace in more than 20 years, labor costs rise and pollution soars. Foreign companies also worry about intellectual property issues and social unrest in the world’s second-largest economy.

“China has lost some of its luster,” said Mark Zandi, chief economist at Moody’s Analytics.

UniGroup’s migration data — which cover only the firm’s clients, mainly corporate employees — is the latest indicator that China hasn’t panned out as expected for some companies.

Multinationals have looked to China in recent years as Western economies have slowed. But as the U.S. economy starts to recover, some of those companies are now shedding staff in China.

Hewlett-Packard Co.HPQ +2.50% is laying off a small percentage of its workforce in the country, part of a global restructuring, The Wall Street Journal reported in December. Meanwhile, Johnson & JohnsonJNJ -0.17%

is cutting its pharmaceutical staff by an undisclosed amount even as the company breaks ground on a manufacturing facility in the country. And Revlon Inc.REV +0.70% said last month it’s eliminating 1,100 jobs and exiting China after making a “holistic assessment” of the market’s costs and opportunities.

For a growing number of companies in China, “business growth has reached a plateau, and when that happens, they cut back on costs,” says Rob Chipman, chief executive of Asian Tigers Mobility. “People are the biggest component of costs.”

To be sure, not all companies are fleeing for the exits. Data released Thursday show China recorded a modest 5.25% rise in foreign direct investment in 2013, with foreign direct investment from the U.S. rising 7.13% on-year to $3.35 billion and investment from EU increasing 18.7% to $7.21 billion, according China’s Ministry of Commerce. And as many of China’s citizens return home after obtaining degrees overseas, the talent pool has widened. Many multinationals can hire locally rather than bringing executives over from outside.

It’s not just China that’s seeing an outflow of people. UniGroup Relocation tracked twice as many moves last year from Asia Pacific to the U.S., compared with moves into the region, the first time this has happened in any “sizable numbers” in the time it’s compiled this data, according to Pat Baehler, the company’s president.

Meanwhile, significantly more people are moving to the United Kingdom and France from Asia Pacific than from these countries to the region, the relocation firm’s data show.

The slowing of major Asian economies and Asian students’ pursuit overseas education are also likely factors behind more people moving to the West last year, according to Michael Stoll, an economist at the University of California, Los Angeles, who is consulting with UniGroup on its research.

Mr. Chipman of Asian Tigers said he believes it could be another year or so before the trend reverses.

Until then, “we just have to batten down the hatches and work harder,” he said.