A study investigated the communication patterns among 11 foreign expatriate managers and 75 Chinese managers in Taiwan with four different levels of second language competence. In particular, the study examined (1) how foreign expatriate managers perceive the importance of second language competence; (2) how Chinese local managers perceive the importance of foreign expatriate managers' second language competence; and (3) how communication is affected by relative levels of competence in English and Chinese and by cultural differences. It was found that second language proficiency is becoming increasingly important, and that elementary Chinese language competence is of significant value for foreign managers, while intermediate Chinese competence does not aid foreign managers in on-the-job communication, except for listening in some group situations or as an aid in understanding Chinese culture. Foreign managers fluent in both Chinese and English experienced the highest communication effectiveness, and those with limited second-language proficiency but an appreciation of Chinese culture were better able to compensate for their second-language limitations. The significant payoffs in learning a second language appear to come at both ends of a Chinese-English language competency continuum, with fewer benefits accruing in the middle. (MSE)