Catshanghai

I’ve just been reading this tread on the Shanghaiexpat forums. It is not always the best place to go for objective views on what is happening in Shanghai. Too frequently, the site is full of ignorant bigotry. It’s a good place to find out where to buy things like obscure foreign cheeses. I also like to go to the technology forum, because the threads are usually well informed. I am more of a lurker than an activist. Anyway, this question and answer thread grabbed my attention. It discusses the reasons and the rights and wrongs of the Shanghai pay gap between locals and foreigners.

Oomomo thinks it possible for anyone to live comfortably on 10 000 RMB a month.

Ayi (household income = RMB10,000 per month)Housing mortgage=RMB3,000Utilities = RMB1,000Food = RMB1,000Transport (cycling) with occassional bus (no taxi) - RMB300Entertainment = RMB500 (usually a family meal outside)Clothings, groceries and other household items = RMB2,000(This group of people will invest money on stocks and the remaining will be saved)
ShanghaiExpat :: View topic - Should foreigners get paid more than locals (split)

Yu888 thinks the reason overseas workers being paid well, because they are highly skilled and add value to the company.

As for now, if I had to hire for a position between an average University Grad from Fudan in, say business, and an average University Grad from a similar top school in the UK or US, I would base their compensation on their qualifications, experience AND how much I think the are worth to the company, and THEN finalise a number based on what I think we can get them for. While not race or nationality based, there WILL be a difference because their needs are different AND their expectations are different.ShanghaiExpat :: View topic - Should foreigners get paid more than locals (split)

Between bouts of childish flaming banter, there were lots of posts explaining this is nothing more than supply and demand. As long as there is a need for foreign expertise then they will continue to come to Shanghai and enjoy high salaries. I chimed in with the following post:

Foreigners are on better packages than locals, because there is no way you could recruit skilled workers from overseas if they were being paid local salaries. If they are relocating their families then they expect good accommodation, access to Western education, healthcare and flights home. They have no security so they will be told to relocate to another city at a moment’s notice. Imagine how disruptive this is for families, especially if their children are at school in the middle of exam programmes. OK, someone get out the violins lamenting the fact that expats chose their difficult lives!

The cost of living is higher for foreigners. It is not about being ripped off by a trader in the fake market. If your Mandarin or Shanghainese is limited then there are huge sinkholes that you can only get out of by spending money. For example, how many of us can read bus timetables so we save money on taxis if our destination is not on a metro route. It is fairly normal to want to eat food from your own culture or country every now and again, but you pay a premium for that. Someone in your family gets sick and you have to fly home to see them. That costs money too. If you buy a home in Shanghai then you have to pay extra tax.

Unless you speak excellent Chinese, have a partner who is from Shanghai or have been here long enough to know how it all works then you are going to miss all the shortcuts or hacks that are going to save you money. A case in point is buying a desk. I’m sure some of you would go straight to IKEA and pay 1000 RMB for a piece of furniture that would cost you 300 RMB in Gansu Lu. I wouldn’t know about this unless I had been here for nearly four years and had Shanghainese family that know how to make 3000 RMB seem like 10000 RMB.

That doesn’t make it morally right to pay locals less, but it helps to explain why foreigners with families will tell you that they need a decent package to make coming here worthwhile.

The pay gap will not always be so extreme. The main reasons for buying in foreign expertise were to achieve inward investment, technology and skills transfer. How close is China to getting this done? Give it a few years and there will be tens of millions of western educated Chinese professionals returning home with PHDs and MBAs to offer a broad range of skills and leadership in technology, science and commerce. Why would a company employ an American on a package costing $500000 a year when it will be possible in the future to hire local talent for a quarter of that amount? I’ve spent too much reading The World Is Flat.
ShanghaiExpat :: View topic - Should foreigners get paid more than locals (split)

Nobody said they liked the fact that locals are paid 2000 RMB while foreigners get 30000 RMB a month or more, but expats benefit from it. At the moment, it means that eating out, using taxis and everyday expenses are relatively affordable. What will happen after 2010? Will local salaries continue to increase? Will expat packages fall towards local norms or will the number of foreign workers start tailing off? What will happen to the legions of migrant workers who come to cities to work for 1000 RMB or less? Shanghai has an interesting future ahead. Let’s hope that it is not too much of a bumpy ride for those of those of us who intend to stay here for the long haul.

After Thought: So far, the thread has largely been discussing this from the point of view of a foreigner on an expat package. This is a sensitive issue that makes it difficult to discuss this with colleagues and our contracts prohibit such candid discussion about the specific details of packages. I am thinking about general trends for Shanghai and China, but would we like it if we were local employees doing the same job who were being paid a lot less? Companies get round this issue by paying local staff more than the going rate and by offering other benefits such as free transport and lunches. Still, I used to know a Shanghainese engineer in his mid twenties who found it irritating that he was paid 2500 RMB a month whereas Japanese employees earnt more than 5000 RMB everyday. We are very good at giving reasons why our circumstances entitle us to privileges as this post and the Shanghaiexpat thread confirm. I am not advocating a return to the iron rice bowl where everyone was poor, but the big pay gap would make you think that the 1949 Communist Revolution never happened.

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