Foreign companies in China are suffering from a heavy brain drain with an average dropout rate of 16.7 per cent this year, according to a survey by the Shanghai Association of Foreign-Invested Companies.

The survey based its conclusions on over 300 questionnaires completed by chief executive officers from foreign firms with a China-market experience of over 20 years and 100 big foreign transnational companies in September 2005.

The survey showed that foreign firms, especially those engaged in fields of real estate, consumer goods, telecommunication, education and hotel business suffered most, which lose on average 20 per cent of their employees annually.

Foreign firms in commerce, pharmaceutics, chemical industry, finance and electronic manufacturing also lost 15 to 20 per cent of their employees. The lowest brain drain rate in the survey was 5 per cent.

About 75 per cent of the respondents said that the brain drain rate should be kept under 15 per cent in order to achieve sustainable company development.

William H. Mobley, a professor with the China-Europe International Business School (CEIBS) said that the cost of the brain drain depends upon the tier of staff.

The fast economic growth in China has boosted the number of foreign firms and the demand for highly-educated employees. The number of employees in foreign companies in the real estate sector, for example, has surged by 45 per cent annually.

For managerial staff working in foreign-invested firms, job-hopping is an effective way to lift salary.

Zheng Weihao, a restaurant foreman in a foreign-invested five-star hotel in Shanghai, changed his jobs three times over the past four years, during which his monthly salary has increased from 2,000 yuan (247 US dollars) to 6,000 yuan.

"If I had kept the first job waiting for a promotion, I could only have my salary doubled at the best bet," he said.

Meanwhile, foreign companies are becoming less attractive to Chinese talents, as the gap of the employee's salary in foreign and Chinese firms is shrinking, and the differences in management mode are fading.

For instance, Zhang Yanmei, former human resources manager of Sony China, quit her job to work as vice president of Shanda Interactive Entertainment Ltd., a Nasdaq-listed Chinese Internet media firm. Tong Xuesong, a former high-ranking executive in Motorola found his new position as vice president of TCL, a leading home appliance maker in China.

"Working for domestic firms would give us more self-esteem and sense of accomplishment than for foreign companies," said a manager in a privately-owned Chinese firm.