The Asia Expat: Expatriate Spotlight on Hong Kong

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Hong Kong is a semi-autonomous, special administrative region of China, with 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 mountainous, with high plateaus, and deserts in west; changing to 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 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. It 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. It 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 its’ 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 here is safe and it is a well organized city. The shopping is not as cheap as it used to be, but electrical/electronic goods are usually of good value. Shops are usually open from 10am to 7pm daily and office hours 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 center horse racing and the dawn Tai Chi. Everything you could want can be found here, 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. The city 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 -11.46%: Cheaper

Clothing 3.93%: More expensive

Communication -3.29%: Cheaper

Education -61.76%: Cheaper

Furniture & Appliances -28.16%: Cheaper

Groceries 13.76%: More expensive

Healthcare 55.86%: More expensive

Household 110.74%: More expensive

Miscellaneous -14.27%: Cheaper

Personal Care -34.84%: Cheaper

Recreation & Culture -17.54%: Cheaper

Restaurants Meals Out and Hotels -24.85%: Cheaper

Transport -6.27%: Cheaper

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 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 http://www.xpatulator.com 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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