China proving costly for expatriate professionals
Monday, December 24, 2012
As the global economy continues to worry analysts and investors, many companies are evaluating the potential presented by emerging markets such as China. As international trade with China becomes a more tempting proposition for companies in North America and Europe, some organizations are sending expatriate workers to China to aid in expansion plans. However, according to The Telegraph, this trend may soon reverse.
The news source reports that expatriate professionals are seeing intense competition for available jobs, with many positions being taken by skilled locals, especially for executive-level roles. Many expats have experienced greater difficulty in finding work in major Chinese cities. Increasingly, local candidates have excellent English language skills and many have valuable international experience, making them a cost-effective alternative to traditionally expensive expatriate workers.
Many Chinese companies have taken an aggressive stance on foreign trade, sending managerial professionals overseas. This, in turn, allows many candidates to observe how Western nations do business and improve their English. Upon returning to China, many such individuals are finding work in positions traditionally held by expats. Another factor that may be contributing to this emerging trend is the fact that organizations are now required to pay social security contributions for foreign workers, making hiring expatriate professionals prohibitively expensive for many companies.
"As expats in China are now being asked to contribute to social welfare, there is little incentive for employers to retain expatriate staff unless they are in essential roles," Chris Devonshire-Ellis, principal at Beijing-based accountancy firm Dezan Shira & Associates, told the news source. "It is less a squeeze and more an increasing demand for more appropriate talent - much of which happens to be in the remit of returning Chinese or well-educated local Chinese with English language communication skills."
Many expatriate professionals around the world choose to stay in short term rental apartments or furnished extended stay units, as they provide expats with a cost-effective alternative to lengthy leases that may be unsuitable for contract employees. However, increased demand and rising costs have meant that many expatriate workers are finding major Chinese cities to be too expensive, according to The Standard.
The news source reports that 16 of the 50 most expensive cities in the world are located in China. Analysts at human resources consultancy ECA International recently published a report that indicates that the cost of living in Beijing and Shanghai rose significantly from 2011 to 2012. While housing costs were excluded from the researchers' analysis, the general cost of goods and services was found to be substantially higher in the most recent data available.
The resiliency of China's currency in light of global economic uncertainties was also cited as a factor in the cost of living increases observed across the country. Lee Quane, executive director of ECA International, said that living in Chinese cities had become 5 percent more expensive in 2011, considerably more than the 2.7 percent reported in Singapore.
"This, together with the fact that the renminbi has strengthened against many currencies... is making Chinese locations increasingly expensive," said Quane, as quoted by the news source. "This could be stripping them of the competitive edge they once had over other locations in Asia as companies looking to set up in the region might think twice, now, about posting staff to China."
While corporate furnished apartments and serviced apartments can provide executives with a cost-effective alternative to long-term leases in Chinese cities, the rising cost of living evident this year could be yet another hurdle for international companies to overcome.