These people have good reason to be cheerful. After an overseas education that gives them the edge over their local contemporaries, they have returned from stagnating overseas economies to find China shimmering with promise.

"Ten years ago you might still feel slightly embarrassed of being Chinese, but now what can be more glorious than being Chinese?" asked AJ Hu, one of the evening′s participants. Young and smart, Hu abandoned a fast-track career with Nokia in Silicon Valley and moved back to Shanghai last year to take over a consulting firm that specialises in business registration and licensing services for foreign enterprises and individual investors.

Like most returnees, the 28-year-old Hu sees more abundant opportunities at home than abroad. "Unlike New York where you′re left to discover its hidden treasure, Shanghai is for you to create. It′s like a teenager […] with so much potential to grow and you can feel its beat, dynamics and excitement."

When Hu left Shanghai in 1998 to attend graduate school in the US, everyone he knew believed he was leaving for good. Over the next four years, he earned an MBA from the Southern Methodist University, Dallas and an internship with Nokia, before being offered a permanent position in its global marketing department to become that department′s youngest manager. The future held steady promotions and relocations to different cities and continents. It was what he had hoped for, but still he felt something was missing. "I was happy, but also realised this way I′d have a typical and predictable life."

So, to everyone′s surprise - including his own - he decided to return to China. "The year of 1997 can be seen as a line separating two waves of exodus," he explained. "Those who left after 1997 had already tasted the fruit of the Chinese reforms of the early 1990s, and therefore weren′t completely overwhelmed by Western materialism. They left China because they were in search of a different experience rather than a different life. And while this experience is very worthwhile to have, it isn′t necessarily to keep."

Perhaps that′s one reason why the early years of the new century are seeing the biggest tide of returning talent in China′s history. The social phenomenon is so significant that the neologism haiguipai (′sea turtles′, a colloquial name for returned overseas professionals) has been included in recently published lexicons.

But it wasn′t that long ago that China was suffering from a brain drain. About 450,000 of the Middle Kingdom′s best and brightest have left to study overseas since 1978. Only 140,000 have returned. However, as central and local governments redouble their efforts to woo successful Chinese executives back to the homeland, the number of returnees has been growing. In Shanghai alone, more than 32,000 returnees are working or starting up businesses, 90 per cent of them with doctorates or master′s degrees from overseas; so far they have set up 2,400 enterprises, with total investment topping US$420 million. Furthermore, these numbers only include returned scholars - the official definition of the term ′returnees′ - and leave out the overseas-born Chinese or emigrants who chose to return after years of living abroad.

"We′re in need of top-level talents who not only understand Chinese culture and systems, but are also conversant with advanced foreign concepts and technologies," said Huang Weimao, director of the Shanghai Service Centre for Returned Chinese Scholars, a government agency that helps returnees cut through bureaucracy.

To attract high-calibre overseas Chinese professionals, the Shanghai government has issued returnees ′green cards′ that put them on equal footing with locals in matters concerning housing, car purchasing, starting a business and sending their children to school. Red tape is also cut when processing applications for business permits or bank loans, or arranging currency exchange. In addition, the Shanghai government has set up seven ′returnee startup parks′ where qualified entrepreneurs can enjoy rent-free office space for the first three years.

Riding the tide of Chinese reforms, many ′sea turtles′ have achieved the most significant successes in their career on home ground. Richard Zhang was one of the first Chinese students to be sent abroad to study right after the Cultural Revolution, and acquired his academic qualifications, including his doctorate, in Germany. When in 1995 the German pharmaceutical and speciality chemical group Merck decided to set up its first office in China, Zhang agreed to relocate with the company back to Shanghai and take up the position of chief representative, China.

"China was a completely new arena for the group," Zhang said. "I came back alone, doing all the groundwork that included market researching and cold-calling clients. Then, gradually we acquired the right to be a legal entity, had our own offices and got out of the shadow of our agents."

Now under Zhang′s supervision, Merck China has more than 300 employees, and offices in Guangzhou, Beijing, Shanghai and Hong Kong. Zhang attributes the group′s rapid growth to its ability to service the highly specialised demands of a niche market. Merck, for example, is responsible for the chemical in the paint used by Dazhong to give their taxis their distinctive turquoise sheen.

Although China is far from yielding the biggest volume of business for Merck, Zhang believes it has the potential to do so. "China is seen by many as the only hotspot for the next 15 or so years. While nearly all Western economies are stagnating, China possesses the hottest prospects. My own career at Merck wouldn′t have reached such significance if I had stayed anywhere else," he added.

One of the first to leave China and one of the first to return, Zhang admitted that good timing has contributed significantly to his success. Merck, too, arrived in China at just the right time and with his German experience and Chinese background Zhang functioned as a bridge linking the two. "I could interpret the parent company′s requirements, concerns and thoughts to the local staff and at the same time explain some of the Chinese subtleties to the Germans."

However, Zhang stressed that success depends on how one positions oneself. "Returnees′ only advantage is that they′ve seen the outside world and experienced something different. But, this doesn′t guarantee them anything. The most important thing is to know yourself well."

Allan Hong agrees. "For returnees the so-called gold rush is probably over. Back in the 1990s when many multinationals were trying to set foot in China, a returnee with his combination of Chinese business insight and Western management skills could easily snatch up a general manager position and get paid a fortune. But now, few companies can afford that."

Armed with a master degree and doctorate from Yale University and years of work experience in the US, Hong, 48, returned to Shanghai in 1995. He helped American pharmaceutical giants such as Roche and Praxair develop their position in China and subsequently became the general manager, China for both companies. However, in both cases he was swiftly replaced by a local manager after the new joint venture started profiting steadily.

"Haiguipai in the multinationals are in fact quasi-expats," Hong said. "They have the cultural knowledge, language skills and networking abilities, but they also cost more. It′s only natural that more and more of them would be eliminated once the multinationals′ business in China was firmly established and locally-trained executives could smoothly take over the operation."

But returnees still have the advantage over locals in language skills and cultural experience. "They might start out the same as locals and no longer get paid a six-digit annual salary, but in the long run they are likely to move up to a higher bidder," said Hong who has now stepped down from being a scientist and manager, and has just finished his book based on his own experiences of working with multinationals as a returnee.

For Hong, the ′gold rush′ might be over, but for many others it is just beginning. Indeed, China is full of opportunities at the moment and returnees are well postioned to grasp them. But as China moves into line with the rest of the world, and local talent becomes better trained, they may return to find their employability has increased by less than their expectations.

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