Benefits of foreign degrees diminish in China
Returnees face a job market much like that for secondhand cars. George A. Akerlof, a winner of the Nobel Prize in economics, once published an article related to “lemon markets” that discussed just this issue.
Recently, a media outlet randomly interviewed 50 returnees in Hangzhou, East China’s Zhejiang Province, and found most of them were not satisfied with their salaries.
The starting monthly salaries of nearly 40 percent of the returnees ranged from 6,000 yuan ($919) to 8,000 yuan, which is similar to those of domestic colleges’ graduates in Hangzhou. Generally, returnees have had an increasingly small advantage over domestic university graduates in terms of job hunting.
However, returnees spent a lot of money to study abroad. Tuition plus living expenses can reach as high as 300,000 yuan annually, and it gets more expensive every year.
On the one hand, they face high costs, on the other are non-competitive salaries. It seems that studying abroad no longer pays off. There are profound social changes behind this situation, as well as a plausible explanation from an economic perspective.
In 2007, there were 144,000 Chinese studying abroad, of whom 44,000 returned. By 2016, the number of those studying overseas had risen to 540,000, with 430,000 returnees.
In just nine years, the number of Chinese studying abroad quadrupled. More surprisingly, 10 times as many chose to return. In economics, the supply-demand relationship is the most basic price mechanism. The larger the supply, the lower the price.
Many hiring managers in China are unfamiliar with most universities abroad, and as a result, foreign degrees don’t necessarily lead to jobs back home. Also, as more and more Chinese study abroad, each individual’s aptitude is difficult to measure.
A similar situation has emerged among Chinese college students. Before the nation increased enrollments, the number of students who were able to go to college was limited, so those people were regarded as talented and qualified. But with more bachelor’s degrees being awarded, many companies found that many graduates were not unusually competent. Therefore, they sought other indicators to judge applicants, such as whether they had undergraduate degrees from China’s so-called Project 211 and Project 985 universities.
Certainly, the quality of a school itself is always the best or at least the most trusted indicator, and it’s not possible for hiring managers to evaluate every college in the world. Students who went to lesserknown overseas colleges will find that it’s tough for hiring managers to judge their qualifications. So the reputation of a school will be increasingly important.
As a result, returnees face a job market much like that for secondhand cars. George A. Akerlof, a winner of the Nobel Prize in economics, once published an article related to “lemon markets” that discussed just this issue.
In the paper, he noted that in the secondhand car market, vehicles have been repaired and repainted, and in many cases their odometers have been tampered with and accidents have been concealed. The seller knows everything, while buyers rarely get the whole picture. This is a classic case of asymmetric information.
When you can’t evaluate the quality of goods or services, you will be inclined to spend less to obtain them. When companies can’t evaluate the quality of an overseas degree, they will usually offer lower salaries. As the number of returnees has increased and the students’ quality has varied widely, the starting salaries have naturally declined.
In reality, Chinese companies can use some simple and feasible methods to evaluate returnees. For example, for those who went abroad after they obtained undergraduate degrees in China, the domestic university experience can be used as a gauge. The first degree is closely related to the college
entrance examination results, which reflect a person’s IQ and diligence. It also puts students back to the 985/211 line, which is more familiar in China.
In term of those students who went abroad right after high school, they may have avoided the domestic college entrance examination. In this situation, hiring managers will use their own judgment in evaluating the applicants.
However, applying domestic standards means there’s increasingly less benefit to studying abroad. In theory, when it comes to familiarizing Chinese hiring managers with foreign schools, the establishment of a unified and credible university ranking would be very helpful. But there’s still the question of how to create such a list and win hiring managers’ acceptance of it.
For many people, then, it’s better to study hard and attend one of China’s 211/985 universities, which can easily be evaluated by companies here.