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Reaping rich dividends China’s experiment with ‘storing brain power overseas’ is paying off


 For the last quarter of a century large numbers of the best and brightest in both India and China have left for western shores, in the belief that study and work abroad offer greater opportunities to personal and professional fulfillment.
However, unlike India which has spent a greater part of this time wringing its hands in despair over brain drain, the Chinese have pursued a systematic policy of encouraging their best to go overseas and acquire valuable expertise often at the expense of western universities and then wooing them back to set up their own businesses or work in top posts in government and state-owned enterprises.
In addition they have succeeded in creating a macro-economic environment that is dynamic enough to attract students back on its own strengths, notwithstanding direct incentives.

The policy of encouraging Chinese students to go abroad was instituted by the architect of China's economic reforms, Deng Xiaoping who believed that if even a small percentage of those who left returned, it would be to the overall benefit of the country. In the event, only a trickle of students in fact returned through the eighties. An embarrassed Ministry of Education (MOE) began to advocate a reversal of the policy, but the then general secretary of the Party Zhao Ziyang reiterated that it would be far-sighted of China to continue to “store brain power overseas.”

From the late 1980s, Chinese cities began to compete with each other to recruit overseas- educated talent, offering tax incentives, preferential loans to start businesses, free office space, better housing and faster promotions to those who returned. Currently, over 110 different kinds of special zones and industrial parks for returnees have been established across China, according to the Chinese MOE website. Over 6,000 enterprises are located in these parks employing more than 15,000 returnees. Government policy aimed in particular to attract back top-class scientists, economists and entrepreneurs, particularly those in high-tech areas.

According to Xinhua, China's official news agency, all 23 national chief scientists in China are returnees. Overseas-educated researchers have also played a predominant role in all of China's prestige scientific projects such as the space programme and human genome mapping.

Returnees have founded nearly all the country's high-tech companies listed on NASDAQ.

Charles Zhang the founder and CEO of, China's premier online brand and internet portal; Edward Tian, head of China Netcom, the country's second largest fixed line carrier; Robin Li, CEO of Baidu, the leading Chinese language search engine: are all returnees from top universities in the US.

“Returnees are a force to be reckoned with in every significant area,” says Jeff Huang, an entrepreneur who spent more than a decade in the US, before setting up his own cross-border merger and acquisitions advisory firm, Chisurf Ltd, in Beijing.

“All major financial institutions like the central bank and the securities regulatory commission are full of overseas educated personnel,” he points out. “These people have practical experience in the US and they come back to try and shape the future system and policy here from within, bringing best practices with them.” Although Huang says he personally thinks the economy works best free of governmental tinkering, he acknowledges that at an institutional level there is an openness in China to learn from abroad and take on board expertise from outside of the country's borders.

A case in point are universities. Universities across China are today spending vast sums wooing academics with foreign PhDs. According to Prof Feng Lu of Beijing University's prestigious China Centre for Economic Research (CCER), salaries for returnee economists range from $30,000- $50,000 per annum, excluding housing and other perks. A foreign PhD is a minimum qualification for a job at CCER. Professor Lu says that despite this stringent requirement on average there are 10-15 applicants for every post open at the centre.

Both ambitious domestic firms and the scores of MNCs that flood China are constantly on the look out for Chinese executives with MBAs from the best business schools abroad. Executives with foreign degrees and work experience can expect to be paid 2-3 times that of colleagues with only a domestic education, according to Ana Westlake a Beijing-based HR consultant.

Ultimately, the reason for the return of students is a conducive macro-economic environment where they feel they can realise their potential, according to Jeff Huang. A regulatory framework and investment climate that make it easy to invest and operate a business helps, he adds.

Thus although Huang did not avail of any special government loans or tax break while setting up his company in Beijing, he says that he didn't need them. “The whole process was a breeze. It took two weeks to get all the permissions needed, and we were ready to roll.”

While for years, “Chinese students going abroad felt that they could only achieve their dreams outside of China, this has very much changed now,” says Guo Yipeng, a researcher with China's Capital Airport Holding Company.

Taking a feather out of China's cap, India is also belatedly attempting to convert its brain drain into brain gain. The long-stalled granting of dual citizenship is one step in this direction. But ultimately until there is deep administrative and economic reform, creating a hassle-free climate for investment and buoyant, sustained economic growth the efficacy of these attempts is questionable.