Chinese Cities Rise in ECA Cost of Living Report

June 28, 2012 Posted by China Briefing Reading Time: 4 minutes

By Sofia Liska

Jun. 28 – This year, Asian cities are once again moving up the ranks of global metropolises in terms of cost of living standards. According to a recent report published by ECA International, Beijing is now the 20th most expensive city in the world for international assignees (up from 48th in 2011) while Shanghai ranks 26th (up from 49th), Singapore ranks 32nd (up from 38th), and Hong Kong ranks 36th (up from 47th).

Japanese cities continue to dominate the list, with Tokyo, Nagoya, Yokohama, and Kobe all among the top 10 in the global rankings, while also representing the top 4 Asian cities. Within Asia, ECA ranks Beijing as the 5th most expensive city for international assignees, Shanghai 6th, Singapore 8th, Hong Kong 9th, and Shenzhen and Guangzhou ranked as 10th and 11th, respectively.

Inflation, the availability of goods, and exchange rates are all affecting living costs and assignee remuneration packages. ECA does two cost of living surveys per year in order to aid multinational corporations configure assignment salaries fairly. The surveys are carried out by comparing the prices of goods and services often purchased by assignees in 400 different cities around the world. It is important to note that these surveys do not factor in the costs associated with accommodations, utilities, car purchases, or school fees. However, though these items greatly affect expenses, they are generally compensated for separately in expatriate packages.

“The rate of increase in the prices of goods and services commonly purchased by assignees in China has gone up sharply in the past year,” said Lee Quane, Asia regional director at ECA International. “In addition, the renminbi has strengthened against major currencies. Together, these two factors have contributed to pushing up the cost of living in Chinese cities for international assignees significantly. For many companies, the cost of posting employees to China has risen significantly compared to those posting employees to Singapore, Hong Kong and other locations in the region.”

“A year ago, the cost of purchasing goods and services in ECA’s cost of living basket was almost 10 percent more expensive in central London than when purchasing the same items in Guangzhou, and 15 percent more than in Shenzhen,” said Quane. “Now, the cost of living in these cities for international assignees is approximately 1.5 percent and 2 percent more, respectively, than in London where, unlike China, prices have increased at a much slower rate than the year before and sterling has depreciated against many major currencies.”

Although Singapore has gone down in the Asia rankings, it has actually risen in the world rankings. This year it is ranked at 32nd on the global scale, whereas last year it was ranked at 38th and the year before it was at 69th. Now, it is ranked higher than even Berlin (47th) and Paris (34th).

“Prices of goods and services in our basket of items commonly bought by international assignees in Singapore have increased almost 6 percent on average in the last 12 months,” says Quane. “This is almost double the rate at which they rose a year ago. This together with the fact that over the same period the Singapore dollar has remained strong against other major currencies has contributed to Singapore’s continued rise up the global ranking.”

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