Original URL: http://www.theregister.co.uk/2012/06/21/china_cost_of_living_rising/

Pricey China could put off ex-pat IT pros

Rocketing living costs may be good news for Hong Kong

By Phil Muncaster

Posted in Jobs, 21st June 2012 07:31 GMT

Ex pat IT professionals could soon find more job opportunities appearing in Hong Kong than on the mainland after new research revealed rocketing living costs in some Chinese cities, forcing employers to reconsider where they locate candidates.

The rankings for HR support firm ECA International’s Cost of Living Survey are based on the cost of typical day-to-day goods and services, ranging from food and drink to clothing, electrical goods and meals out.

The most significant finding of this year’s study is that it’s getting much more expensive to live in China. After the top four cities – all of which are in Japan – the most expensive places to live are Beijing and then Shanghai in fifth and sixth respectively.

Seoul, Singapore and Hong Kong come next in descending order, and then it’s the southern China boom towns of Shenzhen and Guangzhou in tenth and eleventh.

Perhaps more alarmingly, the rankings suggest these four Chinese cities are all more expensive to live in than London, thanks to a strong currency and high inflation. Goods and services typically purchased by ex-pats are therefore rather steeply-priced, ECA said.

Although these costs are in many cases left up to the employee to absorb, a common form of ex-pat package for those on temporary assignment for two or three years will typically include a cost of living allowance, according to ECA’s regional director for Asia, Lee Quane.

A company looking to offer these ‘home-based’ packages which has offices across Asia may now have cause to reconsider where it places international assignees, he told The Reg.

“It’s not an overriding factor because the company has to look at other things like supply and demand and the attractiveness of the location, to decide whether it needs to provide additional allowances,” he said.

“But it will make them reconsider whether they should be putting someone in Beijing or Shanghai if it’s actually cheaper to put them in Hong Kong.”

The survey did not include big expenses such as utilities, school fees and accommodation, which would probably push the cost of living in Hong Kong up above the other Chinese cities, although the gap here is also closing fast, according to Quane.

“Accommodation rates in cities like Beijing and Shanghai are starting to catch up with Hong Kong and then you’ve got the difference in tax rates – in Hong Kong 17 per cent while China goes up to 40 per cent,” he added.

“Also now in China companies have to enrol their staff in social security which increases the cost for employers and employees, which doesn’t happen as much in Hong Kong.”

All of which means it could be time for IT pros with itchy feet to put down their Mandarin phrase books and start learning Cantonese. ®