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Hewitt Quarterly
Asia Pacific
is made possible through the combined skills and experience
of Hewitt consultants from across the Asia-Pacific region.
For further information please
contact:
Hewitt Associates
2601-05 Shell Tower
Times Square
Causeway Bay
Hong Kong
Tel: (852) 2877-8600
Fax: (852) 2877-2701
editor-hqap@hewitt.com
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As China's economy matures, foreign and domestic companies are increasingly seeking new business opportunities in second and third tier cities, where markets are less saturated and start-up costs are lower.
That often means organizations have to relocate talented, experienced workers away from first tier cities such as Shanghai and Beijing. This is vital in order to maintain continuity of service and product standards in the new cities, and is a particular focus for international brands with hard-won reputations as market leaders.
Before successful relocation of existing talent can be achieved though, there are important cultural issues to be understood and challenges to be addressed, explains Ryan Metz, Regional Manager, Hewitt Global Mobility Services for Asia.
Without a clear insight into these hurdles, foreign businesses in particular may find it hard to persuade Chinese employees to move to developing cities with lower living standards. |
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Although it's common across cultures for employees to take on a difficult posting in exchange for a promotion or pay rise, Chinese people often face culturally related personal conflicts when deciding whether to move. Aging parents may rely on the relocation candidate for support. The importance of such social obligations is ingrained in Chinese culture through Confucian values. Workers in the public sector may also face formal sanctions from the state if they neglect their filial duties.
Against this background, it's vital to make a clear and unambiguous offer to employees, setting out how their career will benefit from such relocation, and offering them some flexibility, where possible, regarding the care of dependents.
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Career Path - Daisy You, Compensation & Benefits Manager for Rockwell China, says: "We offer a salary and benefits increase in the relocation package, but this is not the only factor for our employees. The line manager discusses career development with the employee, shares how the experience will benefit the employee professionally, and explains how the host city offers exciting business and development challenges."
She stresses Chinese employees see moving from first tier cities to developing cities as a personal sacrifice on behalf of the company and expect to be rewarded with a clear career path and future advancement. They expect to return to their home city in a relatively short period of time, adds You.
"Our [domestic] 'assignments' are usually for two to three years. These assignments and relocation packages are reevaluated and renewed annually." |
Family - The teachings of the Chinese philosopher Confucius have shaped Chinese culture, emphasizing, among other things, the need for respect toward parents and elders. The recent opening of China's economy and society to outsiders - after centuries of isolation and the turbulent events of the 20th century - have put these cultural values under pressure. They still weigh heavily though in many Chinese homes. Jensen Leung, International Mobility Team Leader for BP North Asia, says the one-child policy in China often means there is only one person to take responsibility for looking after elderly parents.
"We as a company are reviewing parental care and other family concerns in order to attract more assignees to go on assignment." The government has also been reinforcing these traditional obligations through policy. Government employees are officially required to support elderly relatives. Punishments can be imposed on officials "that fail in their filial duties", according to a report in China People's Daily this April. Given the huge number of elderly in China, it may only be a matter of time before the government gives guidance to private companies on employees' care of aging parents.
When a husband and wife both have careers, it may be harder to get the family to relocate. "Many trailing spouses are unwilling to put their careers on hold in China. Many spouses will choose to remain in the home city to continue their career while their partner goes on assignment," says Leung. Where families face separation because of relocation, companies need to consider granting sufficient home leave for employees to fulfill their responsibilities to parents, spouses and children, he adds.
| Paperwork - The Chinese national identity system, known as 'hukou', was implemented after 1949 to prevent the rural population from flooding into the relatively affluent cities. Today the system has largely broken down with the development of the market economy, as cheap labor from the countryside was needed to build the gleaming towers now seen in Chinese cities. Most of these urban centers have a large number of migrant or undocumented workers. Professional workers relocating need to address hukou issues through official channels. While the system is less rigid then it once was, it still creates challenges. In order to gain access to government services in the host city, such as school enrollment for children, relocating employees must first obtain a temporary residency permit. However, each municipality in China creates its own guidelines regarding applications for these permits. This makes it vital to have local HR support or help from a professional relocation agent with knowledge of the local rules. Some rules common in all jurisdictions include the need for a bachelor's or higher degree, documentation outlining the employee's specialized skills and a work contract with a local employer. Normally, the local employer must have a specified amount of registered capital. Companies need clear policies and effective strategies for dealing with these bureaucratic issues. This speeds up processing times and reduces the stress of relocation by reassuring employees that their families will be able to get access to essential services. |
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Schooling - One of the biggest challenges when relocating employees within China is finding good quality schools for their children. A successful application to the local government for a temporary residency permit does, in theory, allow access to local schools, but in practice does not guarantee a place. Leung says his company's experience is that the best schools often have limited space. The application process may also be complex and lacking transparency. Some schools ask for very high fees - often referred to as 'sponsorship fees' in order to enroll new students.
"The various fees for school enrollment are a challenge but we typically will pay these for our employees, even if they are quite expensive," adds Leung. "Some of these fees can raise questions of compliance as they are often undocumented by the schools, but the priority for us is getting employee's children into good schools. In the end, the education for an employee's children can't be compromised."
Regions Count - Because of China's size and diversity, relocating employees may find themselves in an area where they are unfamiliar with the local language dialect and even the food. Such issues can provide additional barriers to relocation and may require reassurance and support from HR teams.
Keys to Success - As foreign and domestic companies expand their operations in China, there is likely to be a growing emphasis on talent retention. Development of comprehensive domestic relocation policies to maintain employee engagement will become increasingly important. "The key to relocating is communicating with the employee and setting the right expectations," says Leung.
Companies that make employee relocation within China attractive and comfortable are likely to be the most successful in their expansion to China's vast and still untapped markets.
China Domestic Relocation Quick Facts
While 98% of companies agree employee relocations within China are due to business needs, only 36% acknowledge domestic relocations are a means of career development.
Around 60% of companies in China have a defined domestic relocation policy.
Most domestic re-assignments last from one to three years.
More than 60% of companies prefer a lump sum approach to relocation expenses, offering the assignee a one-time allowance to handle relocation costs.
Hardship payments are often given to employees relocating from first tier cities to developing cities.
Around 40% of companies provide housing assistance to relocating staff.
Nearly 15% of companies provide family accompaniment assistance - typically a cash allowance so that relocating employees can bring dependents with them.
The author can be reached at: ryan.metz@hewitt.com |
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