The total cumulative number of Chinese nationals returning to China to fill senior executive positions reached 800,000 in the last five years, according to The Chinese Academy of Social Sciences. This figure has almost tripled since 30 years ago, with 272,900 people arriving back in China in 2012.
For years now, high-flying foreign-born Chinese and newly returning Chinese nationals have been eligible for expatriate compensation packages, when they negotiated for senior executive positions in China. With currency inflation, strong talent demand, and other factors pushing salaries for top talent in China ever upward, however, organisations are increasingly establishing new controls on expatriate packages in an effort to keep total compensation costs in check.
According to executive search firm CTPartners, one measure that is becoming more common for returnees is that they are awarded an expatriate package with allowances for living, education, tax equalisation, and other relocation expenses but only for the first two years, after which they have their compensation localised. In other cases, companies offer returnees a so-called “local plus” package, instead of the richer expatriate package.
Tax differentials in the region are also leading some multinationals in financial services to relocate jobs from China to Hong Kong as China’s 35% to 45% top income tax rates bump up salaries in mainland China faster than the 15% tax levy in Hong Kong.
Paul Arkwright
Publisher
