SOURCE: Cartus

Cartus

February 10, 2011 09:00 ET

Cartus Survey Shows Global Relocation Assignments Into China Continue to Grow

DANBURY, CT--(Marketwire - February 10, 2011) - A new report from Cartus Corporation, the premier provider of global employee relocation services, reveals that corporate relocation assignments related to China continue to grow. An overwhelming 96% of companies responding to the Cartus survey, "Destination: China," saw increased or stable relocation assignment activity within China in the past two years.

The survey, which was fielded in the fourth quarter of 2010, reflects data and first-hand commentary from senior executives at 68 multinational corporations based in Asia Pacific, Europe, the Middle East, Africa, and the Americas, representing a total employee population of more than three million. Cartus' survey identified trends in relocation assignments and destinations as well as challenges faced by companies relocating employees to China.

"Companies are now looking to China for its tremendous market opportunities, and it appears they will continue to do so as world economies improve," said John Arcario, executive vice president at Cartus. "Maximizing opportunities for growth will depend on an effective workforce that has been properly trained to be deployed in non-traditional locations and assignment types. Getting the right people to the right place is always a complex yet critical goal, and in China, the challenges are immense."

Key Survey Findings

  • Respondents predicting increases in assignment volumes over the next two years grew by more than one-third compared to the last two years.

  • Tier 2 and Tier 3 cities are estimated to gain new prominence for corporate relocation activity in China, while Tier 1 cities are expected to have continued growth in corporate assignments.

  • Non-traditional types of assignments (e.g., permanent one-way moves, returnees [i.e., Chinese nationals who have previously lived and worked outside of China], and localized assignments [in which assignees are switched over to local compensation and benefits plans following the assignment]) are predicted by respondents to grow more than 2.4 times the rate of traditional relocation assignments in China during the next two years.

  • 46% of survey respondents expect intra-Asia relocations to be on the rise over the next two years, compared to only 35% who noticed an increase in intra-region relocation volume in the previous two years.

  • Multinational companies continue to require outside talent to run their operations in China; 88% of companies identified the transfer of skills and knowledge as the key motivation behind sending an executive to China on a relocation assignment.

  • China's outbound relocation volume is also growing, as 61% of companies expect growth over the next two years, with 18% anticipating this to be a significant increase.

Tier 2 and 3 Cities Gain New Prominence Among Relocations into China
Prime beneficiaries of the continuing growth in assignment volume appear to be the smaller Tier 2 and Tier 3 cities within China, which are expected to see an increase in activity over the next two years by 54% and 30% of companies, respectively, according to survey respondents. Top cities cited for assignment growth include Tier 2 cities Suzhou, Chongqing, Qingdao, and Chengdu, and Tier 3 cities Jiangmen and Nanning. While Tier 2 and Tier 3 assignments are on the rise, growth into Tier 1 cities such as Shanghai and Beijing also increased unabated, with 50% of respondents having seen growth in the past two years, and 60% anticipating growth in the next two years.

China is the world's largest exporter and the fifth largest consumer market, with a population approaching 1.4 billion. There are approximately 300 Tier 2 cities, often defined as those that have populations of more than one million and with fewer amenities available to serve residents; and approximately 1,200 Tier 3 cities, which are considered economically underdeveloped.

Expanded Assignment Types
In addition to identifying regional growth, the Cartus survey provides insight into a company's decision to use non-traditional mobility types to expand their assignee base. Although all assignment types are predicted by respondents to show growth, non-traditional types (such as permanent one-way moves, returnees, and "localized" assignments) are predicted to grow more than 2.4 times the rate of traditional types when comparing the next two years to the previous two. Long-term assignments remain the most common policy type, but the fastest growing assignment segment is short-term -- those typically lasting between four and 12 months.

Talent Closer to Home
Just as relocations to China are on the rise, the study notes that intra-Asia relocations are also growing as businesses seek regional talent to fulfill assignments in an effort to overcome cultural challenges and costs associated with moves from outside the region. During this time of growth, 46% of respondents expect intra-region volume to increase, compared to the 35% who noticed an increase in the previous two years.

On the other hand, the Cartus report also cites a significant talent shortage due to an inadequate number of employees in China who are equipped with the skills and experience required to work in a multinational corporation. This is further illustrated by survey results indicating that 88% of companies identify that the transfer of skills and knowledge is the key motivation behind sending an executive to China, while 62% state that the development of the employee is paramount for an outbound assignment.

"Organizations doing business in China are working to overcome the talent barrier by cultivating intra-Asia talent," said Kenneth Kwek, head of Cartus Asia-Pacific operations. "It's clear that multinational corporations will also continue to deploy assignees from outside Asia to help establish and expand their presence in China. In addition, the survey shows that multinationals are going to need a combination of staffing approaches from both within and outside of APAC to fulfill their needs in China."

Other findings of the Cartus survey include:

  • 42% of multinational companies surveyed saw an increase in assignments into China from outside the APAC region in the past two years; 55% anticipate an increase in the next two years.

  • Returnees form an increasingly large segment of the assignee base. Forty-seven (47) percent of respondents expected an increase in returnees versus 2% who expected decreases.

  • Although long-term assignments will remain the most common policy type, 74% expect short-term assignment growth from outside the region; 59% expect an increase from within the region.

  • Survey respondents indicated the top challenges in Tier 2 and 3 relocations are schooling (33%), family adjustment (32%), health care (29%), and cultural differences (21%).

  • Many policy elements frequently offered for long-term assignments into Tier 1 cities -- housing allowances, goods and services cost of living allowances, and educational assistance -- are offered much less frequently for Tier 2 and 3 relocations.

For more information, including the assignment types reflected in the survey, please click here to view the "Destination: China -- the Cartus 2010 China Inbound Pulse Survey."

About Cartus
Cartus provides trusted guidance to organizations of all types and sizes who require global relocation solutions. Serving over 50% of the Fortune 100 and providing service to over 160 countries, we apply our more than half century of experience to help our clients with their mobility, outsourcing, consulting, and language and intercultural training needs. Honored in both New York and London by the Forum for Expatriate Management in 2010 as "Relocation Management Company of the Year" and "Best Vendor Partnership," Cartus is part of Realogy Corporation -- a global provider of real estate and relocation services. To find out how our greater experience, reach, and hands-on guidance can help your company, visit http://www.cartus.com; read our blog at http://www.cartusblog.com; or click http://www.realogy.com for more information.

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