TOKYO-- Cheaper local labor is one of the biggest drivers for companies to relocate, but there is another question that must be considered: How appealing is the location for expats?
This is a crucial consideration because dispatching capable employees overseas is often essential for achieving long-term growth, especially given today's increasingly global economy.
"At many companies, expat status used to be seen as a relaxing reward, but that's changing," said Koichi Tanaka, Principal at consultancy Mercer Japan. "In addition to language skills, expats today are required to have more skills, to be capable of achieving results no matter where they are located and to transfer corporate values and principles to local workers."
Mercer's Quality of Living Survey ranked 230 prominent expat destinations. Many Southeast Asian cities, where labor costs are lower, came in below 100 on the list, while some, such as Dhaka, Karachi in Pakistan, and Yangon, ranked below 200. "Expatriate packages sometimes can even offset the benefit of lower labor and living costs," said Lee Quane, a regional director for Asia at ECA International, a human resources company. "In order to attract talent to some of the cheaper, less developed locations, companies often need to provide greater incentives than they do when moving employees elsewhere."
Living abroad can be tough enough on its own, but poor living conditions can make a stint overseas even more difficult. Sometimes the hardship compensation offered by companies is not enough to keep expats from leaving.
This was the case for Taiki Aikawa, once a manager at a clothing factory in Guangdong Province, China. "What made it so difficult for me was the water. Although I was buying bottled water, I had stomach problems regularly, almost once a week," he said. Even though he knew that working for a couple of years in China would put him on track to become an executive in the near future, he said he had no choice but to quit and return to Japan.
Traffic congestion is another growing problem expats often face, especially in rapidly growing Southeast Asian economies. And traffic jams are causing another critical problem: air pollution. A healthy environment is one of the top cocerns for expats. Though Xi'an and Chongqing are emerging as business destinations, Mercer's report notes, air pollution and difficulty in providing clean water remain major challenges to improving quality of living in those cites.
Even when the air and water are clean enough to ensure a healthy standard of living, a lack of basic infrastructure can cause issues in both work and personal life. "The slow Internet connection is the major issue, since my work is mainly done online, such as maintaining social media and online advertising," said Robert Grey, an international marketing manager working for a biotech company in Shenzhen, China.
In other countries, such as Myanmar, the power supply is often an issue. "It is improving compared to when I first came a couple years ago, but before the rainy season, it can still be tough," said a chief representative with an insurance company in Myanmar. "Sometimes outages happen five times a day."
Tokio Marine & Nichido Fire Insurance, one of the largest insurance companies in Japan, pays hardship compensation in certain countries, including India and China. It also provides an air purifier to all of their expats in China. In addition, the company ships Japanese food, DVDs, magazines and books to its overseas workers. For expats dealing with difficult living conditions, such benefits can be more helpful than a higher salary.
On the flip side, where do expats want to be sent? Singapore was ranked the "most livable" location globally, according to a report by ECA International. Singapore's high score comes in part from the city-state's widespread use of English and its well-developed transportation infrastructure. "Most expats, even Westerners, adjust and feel comfortable within a month," said Quane.
Apart from Singapore, the report's other top 10 Asian cities are Osaka, Nagoya, Tokyo, Yokohama, Hong Kong, Taipei, Busan, Macau and Seoul.