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To some, Denis Zaviyalov is a dream MBA hire. He’s lived and worked abroad, has studied Mandarin since high school, and has seven years’ experience in China. He’s getting ready to graduate from Wharton, the best business school in the world for the last three years, according to the Financial Times rankings.

So when Zaviyalov went to the 2008 Shanghai Overseas Job Fair for Financial Professionals in New York, he was surprised to find that despite the event specifically encouraged Wharton MBA students to attend, the Chinese companies there were uninterested in hiring Westerners or recent MBA graduates.

"[It] should have been called the ‘2008 Shanghai Overseas Job Fair for Overseas Chinese Who Had Lost Their Finance Jobs On Wall Street’," he complained in his blog.

In a subsequent interview, Zaviyalov said that the employers represented at the fair were only interested in hiring experienced, ethnically Chinese professionals. "A few company representatives told me they were surprised to see a waiguoren among interested candidates," he said.

Lead balloon

According to a recent report by Pacific Bridge, a human resources consultancy, job applications from Western finance professionals to Asian companies have "ballooned" recently. Simon Wan, president of executive search firm China Team, says that his firm has received double the usual amount of applications from Westerners in the past two months.

Given the economic crisis, Westerners are looking at China’s relatively high GDP growth and assuming that this implies better employment opportunities than at home. They are wrong, said Wan. "The reality is they aren’t getting hired."

Andrew Hupert, a management consultant in Shanghai and professor at New York University’s Shanghai program, has observed the same phenomenon.

"I’m hearing from a lot of people I knew who were very well established in other markets, who are finding themselves without a job, and now they’re interested in China," he said. "I don’t know how interested China is in them."

Even as the supply of Western business talent available for work in China swells, demand is on the decline. Not only are foreign MBA graduates having more difficulty getting into Asia, so are investment bankers, controllers and CFOs. "In fact, many hiring companies are now somewhat uninterested in Westerners if they are from bankrupt companies like Lehman Brothers," claims the Pacific Bridge report. In fact, Pacific Bridge concurs, to a certain extent, with Zavilayov’s assessment: "Asians returning to the region will be particularly favored."

There is more to this phenomenon, however, than simple ethnic preference. While it may be true that some domestic Chinese companies consider foreign hires "exotic," as Zaviyalov suggested, the more sophisticated multinationals also have reasons to refrain from snapping up refugees from the collapse of Western financial firms. Given the current uncertainty, most firms are taking a "wait and see" attitude, said Wan.

No local knowledge

Those that are hiring are looking for people who know China and the Chinese market well. Hupert pointed out that many of those now looking for work in the mainland are finance people accustomed to the open markets of New York or Hong Kong. They may be experienced, he said, but their experience doesn’t apply here: "China doesn’t have an internationalized currency, or an internationalized stock market, or bonds, really."

At the same time, employers have reason to question the commitment of such economic refugees. Experienced expats are likely to be more expensive than domestic hires. Their language skills are probably inferior, and their business connections in China likely nonexistent. Once Western economies recover, firms risk either losing their investment in training and acclimating these foreign hires as they return home, or accommodating a spike in salary demands.

While Western MBA graduates may not count as economic refugees per se, they face a similar problem. According to Zaviyalov’s informal assessment of his peers, there are two classes of Western MBA graduates looking to China for work.

The first class has either already worked in China and wants to come back with an MBA to climb the promotion ladder, or wants to start a business in China. "These people want to stay in China long-term," he said.

However, another class sees China as a temporary stepping stone, a quick stint in the world’s largest emerging market. This group is specifically committed not to staying in China long-term.

"Some Western MBAs I know think that expats do not develop professionally, but rather freeze at one level and lose their competitive power on the job market in the US," said  Zaviyalov. "Therefore too many years of expat experience could cause irreparable damage to one’s career prospects back home."

Unfortunately, many firms have difficulty distinguishing between the two groups of applicants.

Silver lining

At present, neither Chinese nor multinational firms need to hire temps, refugees, or dilettantes.

"What China needs," Hupert argued, "are people who can sell insurance." He believes the future top salaries here will be commanded by those who tap domestic demand; people who can sell structured financial products to families and manage teams who can sell insurance products to families.

This is not all that China needs, however. Wan of China Team believes that long-term prospects for foreign hires remain good.

"As more companies move their Asia headquarters to Shanghai or Beijing, there are more top jobs  there compared to five years ago," Wan said.He also believes that expat salaries are lowering. Younger Western managers in their 20s and 30s, he said, are "very competitive in pay and experience compared to middle managers in China."