December 5, 2007
China Expatriate Salary increase rate is on the rise in 2007 according to Hewitt Study
SHANGHAI—China’s expatriate population is expected to grow next year, according to the Hewitt’s Expatriate, China Hire and Returnee Compensation and Benefits Study 2007 conducted by Hewitt Associates, a global human resources services company (NYSE: HEW). The study revealed that 55 percent of participating organizations plan to increase the number of expatriates they employ in 2008, up from 5 percent last year.
The study also showed that Western expatriates are no longer the largest expatriate group in China, representing only 21.4 percent of all expatriates this year, compared with 24.8 percent and 30.7 percent in 2006 and in 2005. Instead, companies are increasingly recruiting China-hired foreigners and PRC returnees. The former represents 41.3 percent of all expatriates today.
Michael Song, head of Hewitt’s Greater China Compensation and Benefits Measurement Consulting Practice, said, “China has experienced tremendous growth in recent years. However this has led to shortages within the talent market, and a frustrating gap in leadership. As a result, many organizations are turning to expatriate talent to fill the gap. Despite this, companies are increasingly trying to minimize their fixed costs by accessing China-hired foreigners and China returnees.”
Hewitt Expatriate, China Hire and Returnees Compensation and Benefits Study 2007 also revealed that returnees and China-hired foreigners are most closely aligned with local salary increase rates, next followed by Asian expatriates. Across the board and when comparing with 2006, salary increase rates are up about 0.5 to 1 percent on average and 2-3 percent in a few cases. At the returnee top executive level, this group saw a salary increase rate of 9.4 percent in 2007, up from 4 percent in 2006.
In 2007, the Western top executive package is leading the pack at US$ 393,743, with Hong Kong/Singapore and China hires reporting total annual top executive cash packages of US$ 354,249 and US$ 331,693, respectively.
According to the study, the prevalence and value of expatriate premiums for the global package has remained the same over the 2006 to 2007 period. For regional packages, the data revealed a slight increase in both the prevalence and value of the premiums. China hires on the other hand, witnessed a slight decrease in the prevalence of premiums. And while benefits such as children’s education continue to be offered to global assignees, most study participants said they do not offer this to China-hired foreigners and China returnees except at top executive levels.
The study also revealed that companies are increasingly trying to localize their workforce, but at a slower pace than originally expected, with 42 percent of participants reporting they have a formal localization plan in place, as compared to 55 percent of organizations in 2006 and 46 percent in 2005. Concerning localization, several companies have indicated that communicating localization plans with their expatriates has proven to be very difficult, especially for global and regional packages. And rather than simply reducing the numbers of foreigners or returnees within their operations, companies are seeking more creative means to localize packages.
About Hewitt Expatriate, China Hire and Returnee Compensation and Benefits Study 2007
Hewitt Expatriate, China Hire and Returnee Compensation and Benefits Study 2007 profiles 500+ benchmark positions for six different categories of expatriates: Western, Hong Kong/Singapore, Taiwan, Other Asian, China-hired Foreigners, and PRC Returnees; and two aggregated compensation data cuts across six benchmark levels (Top Executive, Director, Sr. Management, Middle Management, Sr. Professional / Supervisor, Professional). The study is in joint cooperation with the American Chamber of Commerce, the British Chamber of Commerce, Chambre de Commerce et d’Industrie Française en Chine, China Australia Chamber of Commerce, and the Delegation of German Industry and Commerce. 142 companies participated in the 2007 benchmarking exercise. The report provides detailed salary and benefits information around all expatriate categories by individual position and includes a 28-page in-depth executive summary analyzing expatriate trends in the market.
About Hewitt Associates
With more than 65 years of experience, Hewitt Associates (NYSE: HEW) is the world’s foremost provider of human resources consulting and outsourcing services. The company consults with more than 2,400 organizations and administers human resources, health care, payroll and retirement programs on behalf of more than 350 companies to millions of employees and retirees worldwide. Located in 35 countries, Hewitt employs approximately 24,000 associates. For more information, please visit www.hewittasia.com.
In China, Hewitt is the largest HR consulting and outsourcing firm, with more than 200 associates in Shanghai, Beijing, Guangzhou, and Hong Kong. The firm has spent the last decade building a China business that meets the diverse human capital management needs of clients, who represent large and well-known foreign invested and local Chinese enterprises. Hewitt’s research such as Total Compensation Measurement and the Best Employers in China study are widely recognized as leading sources for HR, benefits and compensation trends and information in China.
About AmCham Shanghai: The Voice of American Business in China
AmCham Shanghai is the largest and fastest growing American Chamber in the Asia-Pacific region with more than 3,700 members, including 1,700 corporate members. The Chamber hosts more than 250 events each year and has 22 active industry committees. AmCham Shanghai’s mission is to create a better business environment for U.S. companies and to help foster China’s overall economic development. For more information on AmCham Shanghai, please visit www.amcham-shanghai.org.
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