There are more expats leaving Beijing than arriving, with expats telling media outlets that increasing living costs and stagnating pay packages are among their reasons for going. Official figures reveal that the number of expats in Beijing peaked in 2010 and has begun to fall since then.In a concerted effort to understand why so many expats are leaving Beijing, the city’s Municipal Government arranged meetings with expats earlier this year and asked them how they could better meet the needs of foreigners living in the capital.
Air pollution was cited as the primary factor for why most people are leaving, or are considering leaving, and this was particularly important for expats with young families.
The smog that regularly fills the skies above the Chinese capital sparked the country’s first red alert in December last year, which in turn led to construction sites and schools being closed and traffic restrictions being put in place.
There are more than 22 million people living in Beijing, which means pollution from traffic and factories creates unsightly smog regularly.
Unfortunately, the smog is made up of particulate matter called PM 2.5, which when inhaled can lead to a number of serious health problems – and these respiratory health issues are becoming more prevalent in China because of the pollution. To put this into perspective, the World Health Organisation recommends that the PM 2.5 levels in any city should be less than 25, but Beijing rarely meets this recommendation.
One news report says the international firms working in Beijing are finding it more difficult than ever to attract expats and to keep them in the city because of the pollution.
There’s no doubt that Beijing is working hard to clean up its act, with some tough environmental laws now in place that have hefty fines for anyone breaking the rules. These laws will reduce car usage and curtail massive industrial factories.
However, once winter begins, most of the public heating systems are coal-fired, which adds to the pollution.
The BBC broadcast a report in January this year asking what Beijing was doing to improve its air pollution and highlighted that the government regularly ‘declared war’ on the causes of the capital’s smog problems.
As part of that report, they highlighted the air that was monitored at the US embassy between 2008 and 2015; the figures reveal that the daily average air quality index was hazardous for 4% of the days monitored, very unhealthy for 14% and unhealthy on 49%. The air quality was rated as good on just 2% of the monitored days.
The next big issue was the question of food safety, which rated highly as a concern for expats.
That’s because there are regular food safety scandals in Beijing and many expats are avoiding locally sourced products and opting for more expensive imported food instead. This means they are paying between two and three times the original cost.
The expats told Beijing’s officials that their health is important for career development and many said they had noticed issues with their skin and hair while living in the capital.
Another problem highlighted is the cost and quality of education, which is an increasingly important issue for expats in Beijing, with one American telling the officials that his company’s education allowance only covered 25% of the international school’s fees that his daughter attended.
School fees are often part of an expat’s pay package, but the big problem is that these are stagnating while inflation and the cost of living in China are rising quickly, which means expats are no longer feeling as well off as they once were.
In addition, one study published late last year pointed out that expats are facing expiring work contracts, their employers are reducing labour costs to lay people off, and China’s slowing economic growth is rated as another issue for expats to deal with.
There’s no doubt that China’s economy has hit the buffers in the last year or so and there are fewer opportunities for expats to enjoy there.
One relocation firm says the trend for US expats moving to Beijing peaked in 2013, and by the following year the numbers doing so had dropped by 22% and has kept on falling since.
In addition, Chinese employers are also looking to take on more local employees without having to rely so much on expat experience and expertise.
However global consultancy ECA International says that the cost of relocating expats to Beijing has fallen this year, and Beijing and Shanghai are no longer the two most expensive cities for expats in the Asia-Pacific region.
In their ‘Cost of Living’ survey, ECA reports that Beijing has now fallen to become the fourth most expensive location for expats, with Shanghai in third place and Tokyo now being the dearest – mainly down to currency fluctuations and rising living costs.
China will remain expensive
In the report, the firm’s regional director Lee Quane said: “It’s likely that major cities in China will remain expensive destinations for the foreseeable future for mobile executives.”
In the firm’s list of the world’s most expensive destinations, Beijing is ranked in 11 position, with Shanghai in 10th.
Declining opportunities for expats in Beijing are also being mirrored in Hong Kong which is, according to ECA, the second most expensive destination in Asia-Pacific for expats.
This is down to its strengthening currency and the rising costs of services and goods, with many employers needing to increase their employee’s living allowances regularly to help meet rising bills.
However, a more worrying report from ECA also points to the issues with air pollution, with Beijing and New Delhi being awarded the lowest scores in the firm’s location ratings survey, though the report also places Beijing in joint 28th place for being the ‘most liveable mainland Chinese location’.
Reduction in the financial packages
According to media reports, expats in Beijing are seeing a big reduction in their financial packages, which have not increased. There’s not much support from employers either on a range of other issues – including finding housing which is a major issue in the capital and very expensive.
Housing costs are a growing problem for many expats, who are having to compromise on the size and location of their apartments and moving to smaller ones to fit in with their budget needs. Expat media in Beijing also reports growing numbers of expats finding their rent being increased without any notification by their landlord and some of these increases are described as ‘excessive’.
This has been underlined by the UK-based Global Cities Business Alliance, which announced in April that Beijing’s rising rents have made it the least affordable city in the world to rent a home in.
The home renting situation is so bad that the cost of rent has now reached an incredible 1.2 times the average monthly salary being paid in Beijing.
So despite expats working in Beijing earning more than average than local employees, they are finding that housing costs are taking a large chunk from their earnings and this is now a key factor in whether they decide to stay or leave.
However, one media report says that the issue with pollution is leading to employers offering generous hardship packages in a bid to move to Beijing, and some senior executives are being paid ‘hazard pay’ for working there.
Some employers are also offering expats air filtration systems for their homes as well as extra holiday time so they can visit their families living in less polluted countries; these air filtration systems are now increasingly being seen in restaurants, offices, gyms and expat meeting places.
There’s also been a trend in the type of insurance healthcare packages being offered to expats that are switching from offering care with an international hospital to ones that deliver care in Chinese public hospitals.
Indeed, when expats met with the municipal government officials they flagged up the lack of medical resources in the city and mentioned that they were in need of major improvement.
Improving the experience of expats
There’s no doubt that the Beijing municipal government is working towards improving the experience of expats living there because its biggest fear is that the departure of foreigners is accelerating and this will, in turn, undermine the capital’s international competitiveness.
This has been underlined in a report that revealed that many of the world’s top 500 companies that have a base in Beijing are now considering moving to its rival city of Shanghai.
Another problem that was not highlighted in the official media reports from the municipal government meeting with expats is the question of visas; in recent years it’s become more difficult for expats to gain relevant Chinese work visas and the rules are becoming tighter.
It’s also almost impossible for an expat to gain permanent residency in China; even temporary workers need to meet stringent conditions before gaining a visa.
However, the central government announced earlier this year that it had plans to relax green card rules in a bid to boost its attractiveness for international talent.
The State Council said that expats working in a number of areas could be eligible to apply for permanent residency – but has not specified which areas of work these will be.
The director of a leading think tank in China told one newspaper: “China has, for the last three decades, focused on attracting foreign capital but in the decades ahead there should be a shift to foreign talent.”
Despite this, there are still opportunities for expats in Beijing. A partner with Heidrick & Struggles China, George Huang, told one newspaper that while his firm is helping multinationals find local talent, there’s a growing need from domestic firms to find senior expat professionals.
However, he said there were a number of obstacles when it came to recruiting expats, which included the cultural gap and a problem with pollution in Beijing as well as Shanghai.
The local government officials point out that the problems affecting expats are also problems for local people, and they acknowledge that the city has developed rapidly over the last 30 years and there are many issues that have been neglected but which should now be tackled.
The problem is that no one knows how long the government will take in fixing these problems and so the issues affecting expats will continue and probably get worse over the coming years, so even more expats will probably pack their bags and head to another country.
One of the major reasons that the expat exodus is taking place from Beijing is that they’ve been very successful at what they are doing, so while there are rising costs for maintaining a family of expats in Beijing, there’s also a growing talent pool of local executives who are more than willing to replace expats leaving, and they will be cheaper and prepare to put up with the pollution.
The questions of pollution and food safety in Beijing are also important, but it appears that the trend of expats leaving the capital city will continue as many of them opt to put their health before their career.