Incomes still on the rise for overseas executives

Even though a large number of multinational companies are localizing in the Chinese market, the salaries of leading overseas executives have not localized, and some have seen their salaries increase over the past few years, headhunters said.

Sun Haining, marketing and public affairs director at Randstad China, said the salaries of overseas executives have been increasing very rapidly in recent years, with 50 percent of them seeing their salary increase by more than 50 percent in most industries.

"As the Chinese market has been showing great vitality, a large number of multinational companies are now attaching more importance to this emerging market by moving their Asia Pacific headquarters to Chinese mainland cities, which is especially true in the manufacturing and luxury industries," Sun said.

As a result, the number of C-level overseas executives - the chief executive, chief financial and chief operating officers - has increased in the past few years, Sun said. Although basic salaries have remained largely unchanged, more subsidiary items have been included in executive packages, such as a housing allowance, car allowance, relocation allowance, medical care, accident allowance, children's education allowance and even an environmental allowance. With all of these added, the incomes of executives from overseas has surged.

Simon Lance, regional director of Hays in China, said incomes of marketing division workers in the human resources industry have been decreasing in South China, while incomes of marketing division workers in the high-tech industry are slightly higher than those in the engineering division.

"In general, the income of expats working in the life sciences industry has been growing steadily over the past few years in China. However, with more multinational companies adopting a localization strategy, expats' benefits have been cut down and the total expat contract has been shrinking as a consequence," he said.

David Nagy, managing director of DHR International China, said companies across all industries move to "localize compensation structures", except the most senior positions. Each company approaches this differently, but the objective is the same, he said, which is to close the gap in total cost to the company between Chinese nationals and foreign hires, and move away from higher cost benefits and allowances typically associated with expatriate assignments.

"For functional leadership positions in China, the difference in cash compensation, which is base salary and target bonus, between Chinese nationals and foreign hires has narrowed dramatically, and most companies are seeking to hire Chinese nationals for these positions. This being said, there are cases in which a foreign candidate is a better fit for the role. Most companies are still willing to offer medical insurance and varying levels of assistance for housing, children's education and tax assistance for director-level positions for foreign nationals," Nagy said.