Shanghai world's 10th-costliest city for expats
Shanghai Daily, July 17, 2014
Shanghai soared four places to become the world's 10th most-expensive city for expats, according to Mercer's 2014 survey on cost of living released last week. Beijing closely followed at 11th, also with a 4-place jump from last year.
At the same time, Shenzhen of Guangdong Province moved up 12 places to No. 17 while Guangzhou (also in Guangdong) leaped 11 spots to No. 24.
The survey, designed to help multinational companies and governments determine compensation for their expatriate employees, covers 211 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.
A pair of African cities — Luanda (Angola) and N'Djamena (Chad) — emerged as the two most expensive cities in the world for expats.
"Rankings in many regions were affected by recent world events, including economic and political upheavals, which resulted in currency fluctuations, cost inflation for goods and services, and volatility in accommodation prices," said Ed Hannibal, partner and global leader for Mercer's mobility practice.
"While Luanda and N'Djamena are relatively inexpensive cities, they are quite costly for expatriates since imported goods come at a premium," he said. "In addition, finding secure living accommodations that meet the standards of expatriates can be challenging and quite costly, as well. This is generally why some African cities rank high in our survey."
Currency fluctuations and the impact of inflation on goods and services have influenced the cost of expat programs as well as the city rankings.
"Chinese cities jumped in the ranking, including Shanghai, Beijing and Shenzhen, mostly due to the strengthening of the Chinese yuan," said Nathalie Constantin-Métral, principal at Mercer who compiled the survey ranking.
"It's definitely increased a lot," said Katherine Lo, from the US, who's been in Shanghai for six years. She rents a two-bedroom apartment in the downtown area at about 11,000 yuan (US$1,770) per month. "My rate has almost doubled since I came. I mainly eat out and I can see my monthly bill getting higher every year, especially last year."
Katsunari Okura, a 25-year-old Japanese living in the city for three years, agreed with Lo. "I find Shanghai not cheap at all," he told Shanghai Daily. He has high expenses from clothing and playing golf. On weekends he likes to take excursions around the city.
"I don't spend much because my girlfriend doesn't allow me," he said.
In fact, Shanghai has been the country's spending capital not only for expats, but also for locals.
Last year, the Economist Intelligence Unit's "The Worldwide Cost of Living" survey showed that Shanghai rose nine spots to rank No. 21 overall, a reflection of higher wages, rising prices and the appreciation of the yuan.
The study tracked the prices of a basket of goods and services, such as food, transport, utilities, alcohol, tobacco, private schools and domestic help. It then compared them across 131 cities around the world to form an index.
The baseline of the index is New York, which has a score of 100. The survey doesn't take into account the price of real estate or income taxes.
Shanghai's score of 101 meant it was 1 percent more expensive than New York. Prices from housing to an ice cream are not cheap.
A basic cup of Starbucks coffee costs 17 yuan in Shanghai but just 11 yuan in New York; the taxi initial rate is 14-16 yuan and 16 yuan in New York; a liter of gas is 8 yuan in Shanghai, but 7 yuan in New York.
While prices are close, there is a huge disparity in wages. Shanghai residents' average disposable income is only 40,000 yuan, while it is about 300,000 yuan in New York.
So while Shanghai's absolute cost might not be as expensive as some other cities such as London and Tokyo, its relative cost (taking income into account) is among the tops in the world.
In April, many of China's provinces increased their minimum wage. Shanghai tops the rankings with 1,820 yuan (US$293) per month and 17 yuan per hour, followed by Shenzhen with 1,808 yuan and 16.5 yuan an hour.
