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Advice on structuring relocation

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emerson

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Joined: May 11, 2007
Posts: 373
Location: Shanghai
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Posted: May 11, 2007 - 11:43 PM
Post subject: Advice on structuring relocation

Hi all,

My company has offered me a position working for our Hong Kong subsidiary in in Shanghai. I would like to accept, but am having some difficulty acquiring information on structuring a competitive benefits package. Recognizing that benefits vary by experience, education and company, I would welcome any feedback on the following questions or related advice on other points to consider. For reference, I am a mid-level marketing and operations executive with over ten years of experience. I speak and read Chinese at an advance level and will be relocating with my wife.

Is it reasonable to expect my employer (a US subsidiary) to contribute towards my US social security payments?

What is a reasonble/respectable monthly housing allowance?

Any estimates of basic monthly salary? (have seem estimates of 40,000-60,000 RMB)

Is it reasonable to require my employer to pay for a certain number of trips back to US each year?

Taxation--my employer is offering to pay all PRC taxes--and I am on the hook for US taxes on any amount over $82K

Is a car or transportation allowance a typical benefit?

Thanks in advance for your help!!

peytonmanning

Talker

Joined: Nov 01, 2006
Posts: 88

Status: Offline

Posted: May 12, 2007 - 09:02 AM

Social security taxex are normally your burden; company will pay their normal share. Housing allowance are variable related to family size, position and ability to live on the local economy. You could expect >$2,500/month (or more) and if you currently work for this company your salary should remain basically the same (maybe a small bump for the overseas posting). Most US companies offer one trip "home" a year. The taxes are typical although some companies to a tax equalization adjusting your income as if you were not overseas - usually a benefit fo them. Again a car (and/or driver) varies by position and company and ability to function on the local economy. In other words everything is negotiable.

sinned69

SuperStar

Joined: Sep 01, 2004
Posts: 1511
Location: China, Middle East, Asia Pacific
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Posted: May 12, 2007 - 09:10 AM

Really it's reasonable to get whatever you can... based on what you will bring to the company, and what they have as an alternative if you don't take/get the position.
there are no real standards now for expat packages or at least the avergae package is getting a little blurred as many foreigners arrive or want to come here lured by some false sense about just how easy it is being here.

Those foreigners coming from abroad to be based in PR China, especially when locating to cities like Shenzhen, Guandong, Beijing, Shanghai as many employers/companies take them as developed/first class cities (though I beg to differ).

The standard used to be, a larger salary than what you'd ordinarily be on, plus usual benefits (superannuation, taxes, salary sacrificing etc) as well as medical coverage for self and family if applicable, an agreed monthly sipend/allowance, relocation costs/shipping, half yearly return flights, all usual annual vacation/leave entitlements as per home country plus the public holidays of PR China. Also a reasonable housing allowance can be anything from a few thousand 元 to 元10k-20k/mth.

If you're smart you'd set an amount, agree on it, find something a little less and pocket the differenece, or as many laowais used to do, actually buy some property and use the housing allowance to pay the off mortgage. Smile

The monthly salary is really subjective, and from reading between the lines you will be in a uniquely powerful position in terms of being to negotiate up your terms since you can speak/read & write mandarin to an advanced level, which is something many foreigners cannot do, so use it to leverage the company especially concerning the US tax >$82k. Sounds like some of your salary will paid offshore and some locally, and thats the way to go as it gets really cumbersome getting paid completely in 元 as i do each month -its really a hassle exchanging and TTF money offshore. also have you considered setting up a swiss bank account, to offset taxation? its not as ludicrious as it may sound, and is easily done -worth pursuing IMO.

Use your current salary as a guideline. Also consider stocks/bonds/shares etc. as part of the package...

To put it bluntly, make them need you, not you need them Wink

and IMO it will be easy to do with the right skill set, abilites and language advantages.

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g-force

Barker

Joined: Apr 07, 2007
Posts: 127
Location: Shanghai
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Posted: May 12, 2007 - 09:31 AM

One additional issue to consider is RMB appreciation. Most US companies give expat packages based on USD. You might want to tie your housing/living/transportation allowances to RMB instead of USD.

horsemandk

StreetBeater

Joined: Mar 23, 2006
Posts: 2241
Location: Shanghai
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Posted: May 12, 2007 - 11:18 AM

Salaries for expats have been dropping the past year when transferred overseas and the same goes for housing allowance. Some of the new expats I've been talking to get 1500,- USD for housing allowance and they have to do everything themselves. Rules are changing, there's nothing special in being transferred to Shanghai, it's the same as being transferred to another big city in any country in the world.

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sinned69

SuperStar

Joined: Sep 01, 2004
Posts: 1511
Location: China, Middle East, Asia Pacific
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Posted: May 12, 2007 - 01:23 PM

Quote:

thats so true, unfortunately it is not like many other international cities in the world though -far from it at this stage and for the foreseeable future. unfortunately there are so many foreigners coming or are here already seeeking a chinese sabatical, that there is an imbalance of supply vs demand.

still me thinks that in this case (the original poster) has a slightly better skill set than many in that they are able to not only speak chinese, but read and write it... this is becoming a skillset more in demand, as i predicted it would only a few years back and was boohooed by many on this website at that time...

having the language ability is a must have, especially as laowais begin to complete with returning chinese ABC's and the like for the same positions in many instances...

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emerson

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Joined: May 11, 2007
Posts: 373
Location: Shanghai
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Posted: May 13, 2007 - 12:15 AM

All,

thanks for the feedback and suggestions. You confirmed many of my suspicions and raised a few points I had not considered. I think my next step will be to sit down with a tax specialist to figure out the nuances of my employers offer. Thanks again.

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Rais

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Joined: Nov 17, 2006
Posts: 298

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Posted: May 13, 2007 - 10:10 AM

horsemandk wrote:

I know quite a few with a housing allowance of 8k to 10k USD. The packages might have dropped some and there are far more of those who are willing to come here, but there are just as many new companies.

yu888
Board Deity

Joined: Jan 25, 2003
Posts: 18037
Location: ZhongShanParkArea SH

Posted: May 13, 2007 - 10:29 AM

sinned- just want to clarify one minor detail in your comments- "returning ABC's" makes no sense as ABC's are born overseas. You mean returning overseas Chinese i imagine. Most ABC's coming expereince many of the same issues as the other laowai's given than many if not most hardly speak enough chinese to function, though some of those who do go thru the same "god-like" complex that some other incoming expats do.

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p1atl10

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Joined: Mar 18, 2005
Posts: 6259
Location: Shanghai
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Posted: May 14, 2007 - 06:30 AM

Emerson....
Be extemely careful about the US tax situation. You say that your company will pay the Chinese Tax, but you will be resposnsible for the US. Yes the first 80 grand is tax exempt. But be aware that any assistance your compant gives you, Housing Allowance, Home Leave, COLA, Car and Driver, etc, will be considered taxable income. Your Adjusted Gross Income will ballon....and your tax bill will be huge, even with the exemption.

That is why most US expats are on a "tax equalization" plan. You pay taxes as if you were in the US, the company pays the difference. In my case, my business pays the China Tax, which in my case in nothing because I travel outside China for more than 90 days each year. I give up the 80 grand exemption, but overall the tax bill is much less that if I had to pay taxes on the adjusted gross.

If you are structuring your own package, might be worth the time and money to get some professional tax advice. All the large US accounting frims have offices here.

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emerson

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Location: Shanghai
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