I’ll start by saying that I love living in China. The people are incredibly nice, the food is great, travel opportunities are abundant, etc… I would recommend China to anyone that is looking to move into international teaching. However, I fear that the good times may not last.
I’d love to hear anyone else’s opinion on some of the things I’ve written about below.
I’ve seen a bunch of recent posts on jobs in China and whether an individual can live off of x amount of dollars. I would definitely keep in mind when figuring on whether a salary is sufficient the rapidly increasing cost of living in China and whether you are paid in RMB or Dollars. Most local items such as fruits and vegetables have risen in price over the past year but not dramatically. Street food is still cheap but a meal at a cheaper Chinese restaurant is getting spendier. The price of what I consider essential imported goods, milk and cheese, has gone up a lot. A year ago an 8oz block of cheese was about $5 and now it is $6.50 (30% increase and appears to be getting worse). Also, the RMB continues to appreciate against the dollar which makes it tough. When I got here it was about 6.9 RMB to the dollar and is now around 6.3. The decline in the dollar and the increased food prices make it tough. I can still save about 50% of what I make but it isn’t as easy as it used to be.
I foresee things getting worse here too. The government has guaranteed massive wage hikes in the city I work in (10% per year for next few years; not sure if this is country wide) and the appreciating RMB are going to kill manufacturing. I know some people in manufacturing and they told me that they won’t be able to make a single product in their current catalog at a profit with the rising wages and rising RMB. This could drive manufacturing out of China and cause some serious issues for the economy. Not sure what will happen then. Discontent amongst the “have notsâ€
Issues in China
Perspective
The price of imports isnt really an accurate reflection of local costs. You dont know if the increase is due to internal factors such as wages, or external costs such as increase in transportation to import.
All that aside id still have a hard time caring since at any real IS in China compensation packages include housing and utility allowances. At the end of the month what do you HAVE to pay for: Food, mobile, maybe DSL, and transportation? A huge amount of your salary is still largely discretionary. You couldnt get that back home. What would a mortgage, car payment, gas, and insurance cost you?
The 1K RMB tax also doesnt phase me, I mean its a pain, but I pay really high taxes here in Denmark, about 40% So whats 1K of a 25K a month salary, 4%? Sorry Im not trowing a pity . for that.
Just because the government promises something doesnt mean its going to happen, but even if they get a 10% wake hike they are still making a fraction of what an IT makes. The average salary in disposable income in Beijing is only $615 USD. So a 10% raise is a whole what $60?
I guess if its really an issue, you could eat slightly less cheese....
All that aside id still have a hard time caring since at any real IS in China compensation packages include housing and utility allowances. At the end of the month what do you HAVE to pay for: Food, mobile, maybe DSL, and transportation? A huge amount of your salary is still largely discretionary. You couldnt get that back home. What would a mortgage, car payment, gas, and insurance cost you?
The 1K RMB tax also doesnt phase me, I mean its a pain, but I pay really high taxes here in Denmark, about 40% So whats 1K of a 25K a month salary, 4%? Sorry Im not trowing a pity . for that.
Just because the government promises something doesnt mean its going to happen, but even if they get a 10% wake hike they are still making a fraction of what an IT makes. The average salary in disposable income in Beijing is only $615 USD. So a 10% raise is a whole what $60?
I guess if its really an issue, you could eat slightly less cheese....
Obviously, most teachers in China will do significantly better than they would in the states. That’s the reason many of us are abroad. All my expenses are covered and I do have a ton of discretionary income. The point is that China isn’t nearly the cheap place to live that it used to be. Prices are going up very quickly. I guess a 10% increase in the value of the RMB against the dollar doesn’t bother you, but it’s a major concern to me the longer I stay in China. Also, the price of imports is pretty important to most expats as just about everyone picks up a few imported items. I just brought up cheese because it is one of a very few imported items that I can’t live without.
I’m not sure where the other person got the 1K RMB a month for the new tax. The new tax is going to be 9-12% on foreign workers and then their companies must contribute an additional 16-37% for their foreign workers. Now, if you don’t think that will affect foreign workers in China, please enlighten me. That is a considerable amount. For teachers that have to pay this, it will be a considerable expense and if a school is going to pay this it will definitely cause them some issues. They will have to pass this increased expense along to the parents or cut costs somewhere else. I will be interested to see how this tax is applied to schools in China as much of the mention has been about corporations in China. More expensive foreigners means fewer foreigners which means fewer kids for international schools.
I think you missed the entire point of what I was saying about rising wages. I’m not saying that the increased wages will affect me directly but they will absolutely affect manufacturing in China. In Guangdong province, a 10% increase in wages would put most manufacturers out of business. So, they will push those costs on to their consumers whether they are people or other foreign companies manufacturing in China. If Nike then looks and says they don’t want to pay that they will look elsewhere to manufacture their goods (i.e. Vietnam, Cambodia, India, Africa). I have a close expat friend that is an executive at Nike in Guanghzhou and he has said Nike does not see itself in China 5 years from now due to the rising wages and increasing RMB.
I’m not sure where the other person got the 1K RMB a month for the new tax. The new tax is going to be 9-12% on foreign workers and then their companies must contribute an additional 16-37% for their foreign workers. Now, if you don’t think that will affect foreign workers in China, please enlighten me. That is a considerable amount. For teachers that have to pay this, it will be a considerable expense and if a school is going to pay this it will definitely cause them some issues. They will have to pass this increased expense along to the parents or cut costs somewhere else. I will be interested to see how this tax is applied to schools in China as much of the mention has been about corporations in China. More expensive foreigners means fewer foreigners which means fewer kids for international schools.
I think you missed the entire point of what I was saying about rising wages. I’m not saying that the increased wages will affect me directly but they will absolutely affect manufacturing in China. In Guangdong province, a 10% increase in wages would put most manufacturers out of business. So, they will push those costs on to their consumers whether they are people or other foreign companies manufacturing in China. If Nike then looks and says they don’t want to pay that they will look elsewhere to manufacture their goods (i.e. Vietnam, Cambodia, India, Africa). I have a close expat friend that is an executive at Nike in Guanghzhou and he has said Nike does not see itself in China 5 years from now due to the rising wages and increasing RMB.
@ Danda your in southern China. Are people finding it different in other parts of China? What do people think of the general inflation in China? Certainly the RMB is well under-valued (perhaps by as much as 30 percent) which bodes well for sending money home.
I'd like to hear some other opinions since I'm headed to ward that region.
I'd like to hear some other opinions since I'm headed to ward that region.
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wrldtrvlr123
- Posts: 1173
- Joined: Sat Feb 06, 2010 10:59 am
- Location: Japan
[quote="Danda"]
I’m not sure where the other person got the 1K RMB a month for the new tax. The new tax is going to be 9-12% on foreign workers and then their companies must contribute an additional 16-37% for their foreign workers. [/quote]
Approximately 1K per month is what our school has told us they will begin deducting this month (based on my salary). They are also deducting those payments from back to October (divided over the remaining months of our contract).
I do think that the contributions for employers (in the 30 to 40% range for teachers) will have a negative impact on the school industry and expat business in general in China.
I'm not an economics expert, but at the moment the increase in the value of the rmb does not seem to be a personal issue as long as you are being paid in rmb.
I’m not sure where the other person got the 1K RMB a month for the new tax. The new tax is going to be 9-12% on foreign workers and then their companies must contribute an additional 16-37% for their foreign workers. [/quote]
Approximately 1K per month is what our school has told us they will begin deducting this month (based on my salary). They are also deducting those payments from back to October (divided over the remaining months of our contract).
I do think that the contributions for employers (in the 30 to 40% range for teachers) will have a negative impact on the school industry and expat business in general in China.
I'm not an economics expert, but at the moment the increase in the value of the rmb does not seem to be a personal issue as long as you are being paid in rmb.
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wrldtrvlr123
- Posts: 1173
- Joined: Sat Feb 06, 2010 10:59 am
- Location: Japan
[quote="Danda"]
I’m not sure where the other person got the 1K RMB a month for the new tax. The new tax is going to be 9-12% on foreign workers and then their companies must contribute an additional 16-37% for their foreign workers. [/quote]
Approximately 1K per month is what our school has told us they will begin deducting this month (based on my salary). They are also deducting those payments from back to October (divided over the remaining months of our contract).
I do think that the contributions for employers (in the 30 to 40% range for teachers) will have a negative impact on the school industry and expat business in general in China.
I'm not an economics expert, but at the moment the increase in the value of the rmb does not seem to be a personal issue as long as you are being paid in rmb.
I’m not sure where the other person got the 1K RMB a month for the new tax. The new tax is going to be 9-12% on foreign workers and then their companies must contribute an additional 16-37% for their foreign workers. [/quote]
Approximately 1K per month is what our school has told us they will begin deducting this month (based on my salary). They are also deducting those payments from back to October (divided over the remaining months of our contract).
I do think that the contributions for employers (in the 30 to 40% range for teachers) will have a negative impact on the school industry and expat business in general in China.
I'm not an economics expert, but at the moment the increase in the value of the rmb does not seem to be a personal issue as long as you are being paid in rmb.
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HoraceMann
- Posts: 55
- Joined: Thu Dec 08, 2011 12:58 pm
Reply
My time in China was also in GZ. I got the tax quote from wrldtrvlr123.
I've followed the economic and class explosion in China for a long time. I know what the talk is, but I dont say everyone in China "making it" yes cost of living and wages are rising in the cities but there is still a lot of rural country out there. I was reading the apple report and an entry level engineer makes $200 USD a month, even after a 10% raise, well Im not worried. One assumption is that while cost are increasing in China, they are staying the same elsewhere. Thats not the case, India, Africa, and other parts of asia are undergoing increases as well. These companies are going to hit the end of the cheap labor line eventually, and all those areas are seeing increases in costs.
I'd ask your friend if he doesnt see Nike in China in 5 years WHERE does he predict will be cheaper then China? India's getting more expensive as well. That only leaves Africa, and no one know whats going to happen there in 5 years.
Danda no offense but I think youve been there too long. No where is it the cheap place it was X number of years ago. A few imported items a month might be important (like if you couldnt get them anymore) but a $1.50 difference in cheese, Id offer to send it to you myself, but it would cost more then that in postage. Really, I kept a change jar with all the coins I would get that would EASILY cover a couple extra bucks here and there. I know you used that as just and example, but its a pretty tiny example.
I hear your pain on the tax's 1000 RMB is a noticeable chunk, thats something to complain about, but world wide the number of places you would want to go that you dont pay any taxes is getting VERY VERY VERY small. You know the saying about taxes and death, but you could lump all the cost of living (import) increases in your life and it would still be a very small fraction of that 1000 RMB tax.
I've followed the economic and class explosion in China for a long time. I know what the talk is, but I dont say everyone in China "making it" yes cost of living and wages are rising in the cities but there is still a lot of rural country out there. I was reading the apple report and an entry level engineer makes $200 USD a month, even after a 10% raise, well Im not worried. One assumption is that while cost are increasing in China, they are staying the same elsewhere. Thats not the case, India, Africa, and other parts of asia are undergoing increases as well. These companies are going to hit the end of the cheap labor line eventually, and all those areas are seeing increases in costs.
I'd ask your friend if he doesnt see Nike in China in 5 years WHERE does he predict will be cheaper then China? India's getting more expensive as well. That only leaves Africa, and no one know whats going to happen there in 5 years.
Danda no offense but I think youve been there too long. No where is it the cheap place it was X number of years ago. A few imported items a month might be important (like if you couldnt get them anymore) but a $1.50 difference in cheese, Id offer to send it to you myself, but it would cost more then that in postage. Really, I kept a change jar with all the coins I would get that would EASILY cover a couple extra bucks here and there. I know you used that as just and example, but its a pretty tiny example.
I hear your pain on the tax's 1000 RMB is a noticeable chunk, thats something to complain about, but world wide the number of places you would want to go that you dont pay any taxes is getting VERY VERY VERY small. You know the saying about taxes and death, but you could lump all the cost of living (import) increases in your life and it would still be a very small fraction of that 1000 RMB tax.
I'm a teacher and my husband works in the textile business. After 5 years in china , we are now in HK. The business in china is getting tough with the prices going up on the mainland. The solution for my husband's company is to start looking elswhere to other Asian country like Indonesia and back to Bangladesh. And of course, IS will lose expat kids as the companies will not post expats in china any more. Already now sending an expat with his dependents because the packages are getting too high.