Posted by
B_K
16 yrs ago
Hi,
I am at the final stages of discussions with my employer about a transfer to Hong Kong. They have made it clear that it will be a local plus, not expat package. Informal queries reveal that to mean a salary higher than local people, with housing allowance but no other large benefits.
Before I enter the final discussions, I would like to have a better understanding of what package I can assume.
The position is department manager in a large MNC. It is a small but high profile department, about 5 people, with Greater China responsibility. Such a position would pay around £50-55k in UK (750-850k HK$).
This transfer is initiated by myself - I have been asking for such a transfer for a couple years. It is not the company telling me to go there.
I have previously worked in Singapore and got the impression that Local Plus packages was very much a hit or miss - luck of the draw seemed to determine your package, the spread in salaries for similar position was huge compared to Europe.
There is a very strong shortage of skills in this line of work in both Shanghai and Hong Kong. I am told that my employer is considering some kind of lock-in to ensure that I don't jump to another company within 2 years. Could be a sign-on bonus that is repayable if I leave within that period.
I am Western European, male, mid 30s.
1. Should I expect more, less, or about the same in this position that I would make in UK? (Considering: local plus, the transfer is requested by myself, 2-year lock-in)
2. I could possible request to be located in Shanghai instead, but my wife is not keen on moving there. Should I expect same or lower salary if I decide to go there instead?
Any advice is most appreciated.
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"1. Should I expect more, less, or about the same in this position that I would make in UK?"
I'm not an expert but you should expect more. Cost of living, and especially cost of housing, is much higher.
Also as you say there is a shortage of skills here so...
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B_K
16 yrs ago
axptguy, thank you for your comment, but cost of living in HK is definitely less than in central London where I currently live. That includes housing, entertainment, clothing, food. This is confirmed by central London having the world's highest housing prices per square meter, reports such as "UBS Prices & Earnings Report", my hong kong friends living in London, and by myself scanning a number of HK apartment rental websites.
With food I mean eating out at low-medium priced places. I don't worry about price of top restaurants, as I only go there when my work will pick up the tab :)
With entertainment I mean the kind of entertainment that I actually go to and pay for with my own money. E.g. pubs, cafes.
Tax rates are also significantly less in HK than UK.
housing costs outside central london are naturally at a more manageable level, but i prefer to live centrally.
I hope you are right in that I should expect more... I will find out in a week or two.
cheers
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"axptguy, thank you for your comment, but cost of living in HK is definitely less than in central London where I currently live. That includes housing, entertainment, clothing, food. This is confirmed by central London having the world's highest housing prices per square meter, reports such as "UBS Prices & Earnings Report", my hong kong friends living in London, and by myself scanning a number of HK apartment rental websites."
Fair enough. Remember though that prices in the listings aren't very accurate. If nothing else you have to add a pretty hefty management fee AND usable square footage (your actual apartment) is typically 15-35% less than stated.
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B_K
16 yrs ago
Thanks for the info on mgmt fee, I did not consider that. I do think that actually it's not 100% correct to just compare square footage price...
Another way to look at it is what do I get for the same price in HK as I currently pay in London?
I would say that I consider £1500/month (hk$22,000) to be a reasonable price level for me (add £1300/hk$20k on top of that in council tax). For that I will get a 1-bedroom flat at around 500-600sqft in a Victorian conversion in a decent London area e.g. west hampstead suitable for a couple. For hk$22k I can definitely get something "nicer" than that, trying to take different building styles and differences in city layout into account.
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B_K
16 yrs ago
The only 2-year lock-in that I can think of is to give a sizeable sign-on bonus at start, which must be repaid in full if I leave within 2 years. I know several ppl in Shanghai with such a contract.
What happens if they want to change job is that they get their next company to repay that bonus.
The ppl involved in my salary should not be HK... the Regional VP is singaporean, the functional VP is american, the HR in charge is british. My current regional HR director is also british.
I will read the potential contract with a magnifying glass :)
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Just my 2 cents worth on housing in HK. Housing is very expensive here (and I have lived in London too). Even for a 700 sq ft place here likely to still have 2 - 3 bedrooms (just all of them very small). You might be lucky to get a 700 sq ft one which someone has converted into one bedroom of a decent size. In my experience, at the moment, HK$22K a month will not buy much in the expat area of "Mid-levels" (15 min walk from Central) although you may find more for your money further out (which I note is not your preference). Other people may have more up to date info on the size etc of a flat which you can get for HK$22K a month.
Also, we have just been looking to move apartments (landlord recently gave notice on ours) and were told by the estate agent that there is not much on the market at the moment and that landlords typically take properties off the market before Chinese NY (which is in early Feb this year) and put them back on afterwards for 20% more. Expat packages seem to be pretty rare in lots of industries now (note at my work they only give them for secondees from the London office who are still taxed in the UK but receive a salary uplift to cover housing). Also, by way of example, the housing allowance that friends get (which is supposed to be market rated) has gone up 16% in the last 12 months which is supposed to reflect the increase in the rental market over the last 12 months. If you are expecting housing as part of your package, you should check if it is market rated as it is usual here to sign a 2 year lease with a 12 month break (on 2 months notice) and the market can change a lot in 14 months. IE: what you think you are getting now may not buy anywhere near the same level/quality of apartment in 14 months time if your rental allowance is not re-calcalculated for the market changes when you go to sign up your lease again in 14 months to 2 years time.
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Couple of things you might want to review -
Medical insurance - we have found that our medical insurance sometimes doesnt cover what we would have had covered under NHS and the costs seem to be high here if you go private.
Public transportation is definately cheap here and taxis are inexpensive too.
Food wise there are some things that are lot more and some that are less, from the supermarkets. Restaurants are I feel comparable with Ldn as are the cost of lunches etc.
Clothing / shoes we have found it more expensive, but that may be because we dont really have energy to hunt for items so you end up going to what are probably higher end stores which have european sizes.
One thing you might want to consider is by moving from GBP you are going to be putting your earnings into US (unless the peg changes) which at the moment is a pretty weak currency and not really improving.
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"Food wise there are some things that are lot more and some that are less, from the supermarkets."
Indeed. You can get veggies and fish dirt cheap but you may not trust local suppliers when it comes to purity. Organic food is definitely more.
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And red meat is expensive in supermarkets as imported. Having said that, we have been using two websites which opened recently where you can order fish from New Zealand and meat from Australia which is airfreighted up to HK. Good quality and not too bad a price.
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aemom
16 yrs ago
I know you are asking about money-related issues, but you also might consider hours of work. Seems that most people I know work much longer hours here than they did in their home countries. Some even work half-days on Saturdays.
If you have children, you also need to think of schooling and entertainment. School fees are quite high. The 'good' schools require interviews and have long waiting lists. Sports and play activities etc cost a lot more here than they do in our home country - and we don't have a backyard to send the kids out into.
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JAR1
16 yrs ago
Be careful with HKD22k per month for rental. I am from the Uk and rent here for HKD27k per month in mid-levels and the apartment is smaller and not as nice as anything I had in the UK for much much less. Do not expect to get a lot for HKD22k in terms of standards. Remember you need more than 1 bedroom here because there are no cupboards/storage so you need the 2nd bedroom to keep things in.
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B_K
16 yrs ago
Thank you all for informative feedback, especially on the part of ensuring that housing allowance is indexed and increasing. I will definitely keep that in mind.
JAR1, I am curioius to where you stayed in UK if you say that you paid much much less than HKD27k/month (£1750). I am not aware on any such priced location in central london, and i pay a fair amount of attention to the market as i own and rent out 2 flats myself. I do agree that if you stayed somewhere else in UK, prices are much less, but then we would be comparing two very different markets.
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B_K - for what it is worth - I had a one bedroom apartment with a balcony in a newish building with a concierge for £275 a week when I was in London 3 years ago. It was in Limehouse (and I know East London is not considered as good (and certainly not posh) an area as some other parts of London) but was really close to the DLR station and only 6 mins on the DLR to Bank tube station which was near my work so I considered it very much central London and was super convenient for me. This would be a lot closer to work (if you worked in Central HK) than what you would get in HK unless you chose to live in busy, noisy, "peering into neighbouring buildings living rooms" SOHO. When I was looking for a flat in London I looked all around Canary Wharf, Limehouse, West India Quay etc and the one bedroom flats at the time were all under £300 a week at the time. Prices may have changed a bit in 3 years mind or you may be talking about prices in Angel or Islington which I expect are a lot more expensive than East London.
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"And red meat is expensive in supermarkets as imported. Having said that, we have been using two websites which opened recently where you can order fish from New Zealand and meat from Australia which is airfreighted up to HK. Good quality and not too bad a price."
Love the link for those two sites!
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http://www.south-stream-seafoods.com/ - NZ fish and Aussie meat
http://www.australianproduce.com.hk/ - Aussie meat etc
I have primarily used the South Stream one
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ABCGG
16 yrs ago
B_K, there are actual cost of living indices that you can refer to, rather than relying on different opinions. For the salary component of my expat package, a cost of living index is included in the calculation, updated annually. For example, the last calculation was in February 2007, when it was indeed more expensive to live in HK than London (115% of the cost, according to the index). Your employer should be able to share this information with you before you make a decision.
Rents have gone up a lot (ours from HKD55k to around HKD75k in 2 years) and if you have (or expect to have) children, you should consider the cost of education, including the possible need for debentures.
Finally, my company has a lock-in of sorts, in that I have to repay them the cost of relocating my family and me if I leave before my assignment ends.
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B_K
16 yrs ago
Hi ABCGG,
Many thanks for your comments.
The most detailed report I could find is:
http://www.ubs.com/1/ShowMedia/ubs_ch/wealth_mgmt_ch/research?contentId=103982&name=eng.pdf
Links to any other reports will be most appreciated.
I don't have children, though it is not unlikely that one will arrive in the reasonably near future. I don't intend to stay there long enough that the child will reach school age.... on the other hand, you never know.
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After having spoken to friends, rents in Uk were very high in the last year and are now a little better but still high. So you might find Hk cheaper comparitively. I am actually moving to Uk and found the reverse. I thought the rent was much higher for a small apt than in Hk, besides the layout in London is so old, here most of the places inside are pretty modern and so is the mtr system whisch makes conveneint livng in Hk. would you happen to know of any really conveneint places to places to live in the city, which in your opinion is good in Uk. i am not interested in canary w.
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ABCGG
16 yrs ago
This is from June 2007, a bit out of date, but in line with purefit's comments. A fairly authoritatitive source, Mercers.
http://www.mercer.com/costofliving
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"i am not interested in canary w."
That area, while very modern, is not for everyone. Some people find it a bit sterile and manufactured. It's no "old neighborhood". But there are some very nice apartments there.
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B_K
16 yrs ago
I unfortunately find the Mercer report not very informative, as it contains zero information on the actual calculations of the index. The UBS report mentioned above is much more detailed, with a breakdown in each category and thorough description of the methodology.
Cost of living for a foreigner is very much dependent on your lifestyle. Can you adapt to enjoy what is cheap and avoid what is relatively expensive? Fresh meat in HK is expensive... but if you're vegetarian or prefer to eat fish and chicken, it's not very important. My wife loves fish and seafood and hardly ever eats red meat.
I enjoy eating out after work with my friends, having some cheap food and a beer or two on the street. I don't mind plastic chairs and tables right on the sidewalk. I can't really do that in London as such places virtually does not exist. I had a plate of Indonesian fried rice with chicken yesterday for £9/HK$135. That is quite expensive, in my opinion. Some folks in HK don't like rice or noodles and must have pasta or potato. Of course it gets expensive.
I have seen that e.g. Lagos in Nigeria is extremely expensive on such rankings... but you could cheaply have a nice house with garden, swimming pool and 5 servants working in your house. Could you do that in Europe? I think not.
In West Hampstead, slightly northwest of London city center, you would be looking at around £1600/HK$25k/month in a 120 year old building, very poor building quality inside, and 1 bedroom, about 450 square feet. Figure 40 minutes on tube (train) to canary wharf, or 15 minutes to Bond street (shopping area)
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"Cost of living for a foreigner is very much dependent on your lifestyle. Can you adapt to enjoy what is cheap and avoid what is relatively expensive? Fresh meat in HK is expensive... but if you're vegetarian or prefer to eat fish and chicken, it's not very important. My wife loves fish and seafood and hardly ever eats red meat."
Agreed with you about adaptation. Also many foreigners (including yours truly) prefer organic produce, meat and fish. This drives up the price here more than in Western Europe or the US.
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B_K
16 yrs ago
Just discovered this fresh cost of housing report. Prime location in London comes out at exactly twice the price per square meter than prime location in Hong Kong. According to this guide, this is the case for both rent and purchase. This report complements the UBS guide mentioned above quite well.
http://www.globalpropertyguide.com/investment-analysis/Most-expensive-cities-in-2008
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Interesting B_K. But that only lists purchase prices, not rentals.
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B_K
16 yrs ago
Scroll down the page for rentals... it's definitely there.
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