For a long time, the full "bells and whistles" expatriate package was a staple in China. But the traditional red carpet benefits, including a high salary, generous housing allowances and a slew of other perks, are dying off. While this is no doubt a consequence of companies scaling back after the global recession, it also reflects an evolution in China’s expatriate world.
The country is no longer a hardship posting, as executives are increasingly vying to be part of the global and mobile working trend. According to a recent report on expatriates by the Economist Intelligence Unit, four in five executives believe that an assignment in a "major emerging market" aids career progression. In addition, a 2008 PricewaterhouseCoopers survey of 4,200 graduates in 44 countries found that 80% of respondents wanted to work internationally.
As such, there is stiff competition among young professionals for overseas postings – and this has not been lost on employers. The fact that China assignments are now perceived as a great opportunity is exerting downward pressure on expatriate relocation and housing budgets. The days of the "hardship allowance" – an additional payment for relocating to harsher living conditions at the host location – are numbered.
Furthermore, though expansion into China, India and other major emerging markets is intensifying as demand stagnates in the West, many companies are moving toward locally based remuneration policies for more junior recruits.
However, companies should not simply allow employee demand for career-propelling overseas experience to dictate global human resources strategies. Even though people are keen to work in China, they still need appropriate support for a successful transition.
For example, while deeper expansion into China will lead to increased presence in lower-tier cities, more expatriates may find themselves in work environments with a less cosmopolitan feel than places like Beijing, Shanghai or Guangzhou. Executives may be less willing to work in more remote areas, or find it difficult to adapt to cities lacking expatriate services.
At the same time, companies must not neglect the needs of professionals who have family responsibilities. While many younger staff do not have established life patterns, an overseas assignment still poses hardships for executives who must uproot their families from their home countries.
Many expatriate professionals are under substantial stress to adapt to a foreign working environment and meet tough targets, while their partner – who may have given up a job to relocate – is bored and frustrated by a lack of career opportunities in their new home. Fees to assist with relocation, social and professional integration, education and medical coverage all have a substantial impact on smoothing disruptions to personal and family lives.
In addition to considering support mechanisms for overseas placements, companies should also plan ahead for their employees’ return. Many of today’s expatriates accept a smaller allowance package based on expectations that more career opportunities will greet them when they return to their home countries. Employers must therefore address needs of expatriates who arrive back eager for higher status and wider responsibilities.
China’s expatriate world is evolving, and companies that ensure smooth transitions for these changes will reap the greatest benefits in retaining top talent.