Wednesday, March 16, 2011

Expatriate Spotlight on Hong Kong

Hong Kong is a semi-autonomous, special administrative region of China, a population of over 7 million people. The climate is extremely diverse; tropical in the south to subarctic in the north. The terrain is mostly mountains, high plateaus, deserts in west; plains, deltas, and hills in east.

The official languages are Chinese (mainly Cantonese) and English. The most prominent religions are Buddhism and Taoism.

The economy of Hong Kong is characterized by the principle of one country, two systems, whereby Hong Kong runs on economic and political systems different from those of mainland China. Hong Kong is one of the world's leading international financial centers, with a major capitalist service economy characterized by low taxation, free trade and minimum government intervention under the ethos of positive non-interventionism. Inflation is generally low.

Hong Kong's excellent communications network, favorable strategic geographical location, well developed infrastructure, low taxation, stable currency and free port status has helped attract significant investment. Hong Kong is increasingly doing business with the Chinese mainland, therefore expats who are fluent in English, Cantonese and Mandarin, have an advantage when it comes to employment.

The expatriate communities in Hong Kong are extremely diverse. British and American expatriates, mainly in the financial sector, tend to socialize in the highly westernized districts of Lan Kwai Fong and Wan Chai, the two major entertainment areas on Hong Kong Island. There is a significant Japanese community, many of whom choose the expensive hotel bars and discotheques as their meeting places. A number of large multinationals choose Hong Kong as the base for their Asian headquarters. As a result there are many affluent expatriates living in the expensive mid-levels area above Central district.

Living in Hong Kong is safe and it is a well organized place. The shopping is not as cheap as it used to be, but electrical/electronic goods are usually good value. Shops are usually open from 10am to 7pm daily. Office hours in Hong Kong are generally from 9am to either 5.30pm or 6pm on weekdays. Local attractions include tasting the stinky bean curd and shredded jellyfish, experiencing the city centre horseracing and the dawn tai chi. Everything you could want can be found in Hong Kong, from cinemas to theme parks, with numerous restaurants serving food from all over the World.

After remaining stable or even falling in 2009, housing costs for expatriates rose significantly in 2010, and are rising again. Hong Kong saw rents for upscale accommodation surge 22% in 2010. The shortage of land is a major factor in the high property prices, particularly on Hong Kong Island. Healthcare is also very expensive. Public transport is reliable and extensive. Many people prefer not to have a car and prefer to rely on the public transport network. The best way to keep costs down is to live as the locals do. They know where and how to find a bargain and avoid the tourist areas.

Below is a comparison of Hong Kong and New York based on a professional expatriate lifestyle:

Basket Group
Cost of Living in China, Hong Kong
Alcohol & Tobacco
more expensive
Furniture & Appliances
more expensive
more expensive
more expensive
Personal Care
Recreation & Culture
Restaurants Meals Out and Hotels

The overall weighted cost of living difference puts Hong Kong at 29% more expensive than New York, primarily due to the heavier weight attached to household accommodation, groceries and healthcare. However many of the baskets are in fact significantly cheaper in Hong Kong compared to New York.

Hardship is the relative difference in quality of living/lifestyle a person and their family are likely to experience, assessed in global terms, when moving between different locations. Hardship measures the relative quality of living conditions between locations, and assesses the level of difficulty that will be experienced in adapting to a new location.

New York is ranked as a “minimal hardship” location with a hardship premium of 10% while Hong Kong is ranked as a “some hardship” location with a hardship premium of 20%. The relative difference in hardship therefore puts Hong Kong 10% higher than New York.

Based on all the above factors, a person would require a salary of 1,084,084 Hong Kong Dollars (HKD) in Hong Kong to have the same standard of living as currently enjoyed in New York on a salary of 100,000 US Dollars (USD). This salary compensates for the overall cost of living difference of 29%, the hardship difference of 10%, and the exchange rate.

Steven is Chief Instigator at a website that provides cost of living index information and calculates what you need to earn in a different location to compensate for cost of living, hardship, and exchange rate differences. The complete cost of living rank for all 300 locations for all 13 baskets is available  here

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