Beijing Now Second Most Expensive Location in Asia for Expatriate Staff

Beijing is now Asia's second most expensive location for international assignees, up from 5th position last year. This is among the findings of the latest Cost of Living survey by ECA International.


While Tokyo still tops the list of the most expensive locations in Asia for expatriates, globally it has fallen to 10th place on the back of a weaker Yen – a significant drop from last year, when it was the most expensive city in the world for expatriate staff. Companies that need to assign staff to Japan can now do so for considerably less than in recent years, despite the country's long period of deflation being reversed earlier this year.


The difference in the price of ECA's cost of living basket between Tokyo and Beijing fell from 38% to 8% over 12 months.


Globally, Beijing is the 15th most expensive location for expatriates. Shanghai is in 18th position in the global results, and 4th in Asia. Hong Kong, in 28th place globally and 8th in Asia, is Greater China's third most expensive city.


Singapore has dropped one place in the regional ranking, to 9th place. It is now behind Hong Kong for the first time since 2010. This is largely due to the recent weakening of the Singapore dollar against the US dollar to which the Hong Kong currency is pegged. Globally, Singapore sits in 30th position, also just behind Hong Kong.


After Japan, some of the biggest falls in living costs in Asia have been seen in Indonesia – also partly as a result of a weaker currency. Jakarta has dropped 45 spots to 172nd place.


Karachi remains the cheapest location surveyed in Asia.


"Although the Chinese government has allowed the Renminbi to appreciate steadily against the US dollar and food and oil prices in China have been rising, Beijing's jump up the ranking is largely due to Japanese locations becoming so much cheaper because of the weaker Yen,” said Lee Quane, Regional Director – Asia, ECA International. "Nevertheless, living costs in Chinese locations have increased in recent years, making China a more expensive location than some of its neighbours for companies looking to set up operations in the region."


"Hong Kong's position – up one place in the Asian ranking and four positions globally – has remained relatively stable. As in many parts of the world, inflation here has slowed over the past year while the Hong Kong dollar has not appreciated against the major currencies to a greater extent than other currencies in the region."


To ensure that their employees' spending power is not compromised while on international assignment, multinational companies will often include a cost of living allowance in their pay package.


Living costs for assignees are affected by inflation, availability of goods and exchange rates, all of which can have a significant impact on assignee remuneration packages.


"Exchange rates play an important role when comparing the cost of living from one country to another," said Quane. "Employees of different nationalities will experience variations in cost of living to different extents depending on how strong their home currency is compared to the currency in their new location. In general, currency fluctuations have a bigger effect on an assignee's cost of living allowance than inflation. For this ranking, we use a composite base as a starting point to reflect an international lifestyle."


"It's important to remember that certain living costs, such as accommodation rental, utilities, car purchases and school fees are not included in our cost of living basket," continued Quane. "Because these costs are usually addressed separately by an expatriate's employer, we collect this data separately. But if we were to include such costs, Hong Kong and Tokyo would be higher in the ranking, while Beijing would be significantly cheaper due to lower housing costs."

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