China Assignee Housing and Health Issues for 2014
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China Assignee Housing and Health Issues for 2014

Published: Jan 17, 2014

These include Beijing and Shanghai, as well as Guangzhou (across from Hong Kong), four massive areas with well-developed property markets and also the nation’s highest incomes.Rich in history, culture and opportunity, modern China is a fascinating destination for assignee families to live in successfully and experience. 

As with any fast-growing destination, China can offer international expats unique adjustment challenges, but there are two consistent hot topics in the air – both literally and figuratively – that global talent agility managers seek to better understand and address:

1. Housing: Setting Realistic Expectations and Budgets
2. Health: Ensuring “Duty of Care” Obligations

Why are these issues on the front burner now? What can be done upfront to proactively address them?
1. China Housing:  Setting Realistic Expectations and Budgets

Tier 1: These include Beijing and Shanghai, as well as Guangzhou (across from Hong Kong), four massive areas with well-developed property markets and also the nation’s highest incomes.

Tier 2: China has 160 cities with populations of 1 million or more, so it’s trickier to pin down second/third tiers where there is much growth and many expats. Tier 2 cities are often defined as: Xi’an, Nanjing, Shenzhen, Dalian, Shenyang, Wuhan, Tianjin, Chengdu, Suzhou and Hangzhou.

Tier 3: County-level capitals are generally classed in this tier, but the breakdown between Tier 2 and 3 is also not precise. Depending on one’s requirements, Tier 3 cities may include: Harbin, Wuxi, Xiamen, Fuzhou, Changsha, Zhangjiakou, Dongguan, and Zhengzhou."Generally, housing costs in the top Tier 1 cities [of mainland China], such as Beijing and Shanghai, have been on the rise over the years," according to Mercer’s Steve Nurney, who also points to dramatic cost variances in so-called “City Tier” status.

It is complex and there are no hard, fast formulas to determine a city’s tier, only common views based on 
population, income levels, services and infrastructure, and also cosmopolitan nature.

What Companies and Assignees Need to Know Upfront

Confusion can be common: the definition of a “service” or “fully-furnished” apartment could be quite different per location and even more so per landlord.

  • In a first tier city, it may translate to providing luxury and everything you need in a kitchen (cutlery, pots, pans, towels, etc.)
  • In a second tier city, it may mean only a maid coming in once a week for a clean-up
  • In third tier cities, a service apartment is a college dorm-like setting in a location that doesn’t have any customary western needs and extremely bare bones amenities…or none at all

"China has very different housing norms in comparison to that of the U.S. or European housing market,” says Kay Kutt, Managing Director of Relocation Services, Asia at Asian Tigers Mobility.

“Often a realtor is driving the market rates up,” she continued, “or not disclosing potential issues to secure their highest commissionable property.  Our unbiased opinion can be a critical-to-success solution to help educate an assignee and thereby reduce the risks associated with the China housing market.”

Finding quality accommodations within commute times, budget, and similar size to an assignee’s current home can be challenging. Confusion between similarly sounding local service apartment names can add to misunderstandings.

 

Villas designed for expats are commonly:

  • “Over-the-top” in decor (high ceilings, ornate cornice, traditional Chinese or French/Italian reproduction furniture, etc.
  • Difficult to heat
  • Poorly constructed and considered decrepit if more than 10 years old
  • Not prepped by landlords for viewing (Assignees may see them exactly as when previous tenants left – complete with food in the fridge!)

Looking beyond clear evidence of previous tenants can be challenging.

Realistic Expectations and Budgets

It is essential that assignees understand China housing options and costs can vary greatly. Likewise, companies need to allow assignees adequate time to search for a residence.  Assignees are encouraged to plan ahead and personally visit properties to avoid “rental regret” later.

NEI’s Destination Services Provider is typically involved in the home search process with the assignee. NEI keeps the employer updated during the process to help set realistic housing/budget expectations and clarify expectations between tenants and landlords.

2. China Health: Ensuring “Duty of Care” Obligations

Situation

Though expats terminate assignments early for many reasons, a growing cause in China is high air pollution exposure in many large cities.

Pollution, such as microscopic particles from exhaust, coal smoke and vehicle fumes, might be driving some expats out of Beijing and other locales, making it harder for global companies to recruit talent, according to the Financial Times. 

Families taking children to China have begun to take smog, water and noise problems into much greater consideration and fear being ”trapped indoors” during the assignment.

Dense smog attracted wide attention this past December as it blanketed 100 cities across more than half the country.

  • Many rushed to buy facemasks and air purifiers
  • Primary and middle schools in Nanjing were forced to close for two days
  • Shanghai hit its highest air pollution levels causing authorities to order children and the elderly to remain indoors

Such pollution in Shanghai shocked residents and caused some expats to reevaluate plans to stay.

Duty of Care is a generally accepted responsibility of employers to maintain a reasonable standard of safety when possibly placing employees in harm’s way.

What Companies and Assignees Need to Know Upfront

NEI recommends companies re-confirm their present Duty of Care protocol with internal Corporate Risk Management or Legal counsel and advise employees about potential pollution risks before heading to China. This can help reduce potential post-assignment legal liabilities should assignees later claim they were never advised of risks by the company. 
Strong documentation and effective communication between company and assignee ensures everyone is on the same page before departure.

“It’s important to communicate to assignees and HR representatives what potential concerns there may be,” says Kay Kutt. “It’s equally as important to provide effective solutions such as air quality tests prior to lease completion and installing air purifiers in properties in China.”

Realistic Expectations and Budgets

NEI recommends air quality tests that meet international standards and negotiations can be held with landlords/living facilities for additional HEPA home air filters.

Likewise, guidance can be offered to assignees/clients about how rainy seasons, poor construction (unsealed drains, damaged damp proofing, poor ventilation) may lead to high incidences of hidden mold and how to avoid purchasing contaminated water, food, furniture or paint. This helps improve both assignee productivity and client cost awareness.

As professor of biostatics at Harvard University's School of Public Health, Francesca Dominici sums it up: "You can choose not to drink or not to smoke, but you can't control whether or not you're exposed to air pollution. You can't just decide not to breathe."

It’s important that all global mobility stakeholders be aware of their Duty of Care responsibilities and tackle issues with realistic expectations, planning and support. With this approach, those heading to China can have an exciting, safe and career enhancing experience…one which they will look back on fondly and never forget.

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