Tier 1 Cities in Mainland China: the high compensation level in Mainland China is mainly caused by an increasing demand for expatriate
managers, combined with rising costs of living and air pollution, which makes it more challenging to attract and retain international executive talent. This trend is particularly observable in
China's tier 1 cities such as Beijing, Shanghai, or Guangzhou. These cities represent the most developed areas of the country and are considered to be the center of economic activity.
Industries that have emerged as driving forces of Chinese economy tend to cluster around Tier 1 locations, as those cities have the biggest potential to attract foreign and domestic
Tier 2 Cities in Mainland China: when taking tier 2 cities into consideration, the compensation packages for expatriate executives is
significantly lower and reaches an average of USD 231,000. If only these cities were taken into account, China would appear near the bottom of the regional ranking. Tier 2 cities, represented by
locations such as Dalian, Tianjin, Qingdao, Chengdu, Nanjing, Shenzhen, and Suzhou, are catching up fast - they have a well established infrastructure and offer fast access to
international airports. As China's wages rise nationwide and interior regions receive greater investment and governmental support, foreign-invested companies are venturing more
into China's second-tier locations.
Hong Kong: meanwhile the expatriate population in Hong Kong has recently declined and an increasing amount of expatriate executives,
especially from the United States, England, and Australia are leaving the island. The gap between the total expatriate packages offered in Mainland China and Hong Kong has widened. The total
cost of an expatriate pay package in Hong Kong has dropped by 2% and reached USD 267,000 on average.
Taiwan: the lowest expatriate packages within the Greater China region are paid in Taiwan, with an average total expatriate pay package
of about USD 234,000 per year. One of the reasons for the smaller expatriate packages in Taiwan is that expenses for accommodation and international schooling are lower compared to
other regions. The cost to companies of providing the benefits element of the package is almost half as high in Taiwan as in Hong Kong, for example.
Expatriate managers in China are especially in demand for job functions such as sales and marketing, followed by banking and financial services, education, human resources, advertising,
manufacturing, healthcare, and the IT sector. As the infographic above indicates, 85% of expatriates are employed by international corporations in China. Only 15% of Chinese companies currently
employ foreign executive talent.
There has been a trend in recent years for Chinese companies to hire foreign executives since they are facing a shortage of highly skilled managers. Another reason for higher demand for foreign
talent is being spurred by governmental policies that encourage companies to hire executives directly from the international market. Since China is moving up the value chain from a low-cost
manufacturing location to a diversified innovation-driven economy and increasingly expanding business activities overseas, the demand for executive and skilled technical foreign
talent is expected to continue.
(July 2016). MyExpatriate Market Pay Survey. Cost of total expatriate pay package in China second highest in the Asia Pacific region. Retrieved
Blundy, Rachel. (August 2016). Is the expat community changing in Hong Kong? South China Morning Post. Retrieved from http://www.scmp.com/news/hong-kong/education-community/article/2002932/expat-community-changing-hong-kong
Craig, Richard and Qiang, Jacqueline (November 2010). China Business Review. Retrieved from https://www.chinabusinessreview.com/chinas-emerging-tier-2-cities-opportunities-for-us-companies/
Harjani, Ansuya (May 2015). CNBC. An expat? You'll get the fattest packages here. Retrieved from https://www.cnbc.com/2015/05/07/an-expat-youll-get-the-fattest-packages-here.html
Nylander, John (May 2015). Expat Pay Is Getting Fatter In China. Forbes Magazine. Retrieved from https://www.forbes.com/sites/jnylander/2015/05/20/expat-pay-is-getting-fatter-in-china/#1b9ace346864