The continual smog affecting the country's major cities has created problems in terms of recruiting workers at foreign-invested companies as expatriates fear to put their own and their families' health at risk, industry insiders said.
The biggest issue is not so much investment or business decisions but recruitment, according to Roland Decorvet, chairman and chief executive officer of Nestle for the Greater China Region.
"We are really struggling to persuade people to move to Beijing - especially people with children," he told China Daily.
"We certainly don't want to increase our offices here. We'd rather increase them in places other than Beijing."
Decorvet said the company has made an effort to clean the offices' air and has given subsidies to employees for air cleaners at home.
But what employees worry about most is their children, said Decorvet, who as of May 1 is leaving Nestle to take a position at Mercy Ships, a charity organization.
The Swiss native will be succeeded by John Cheung, who is from Hong Kong.
For its part, Panasonic Corp of China said that it is paying a "hazard bonus for those foreign employees located in a challenging environment".
In negotiations this spring, revisions of salaries and labor conditions were discussed based on the air quality in China, the company's communication office said. But no decision was made.
The Financial Times reported on March 12 that the Japanese electronic company would offer air pollution compensation to their workers in China.
Panasonic is not the first to subsidize expats living in smog-affected cities, but it is the first to acknowledge that the allowance is specifically related to smog, according to Max Price, partner of Antal International China, a recruitment specialist based in the United Kingdom.
Price from Antal called it a dangerous precedent, which could be seen as putting a price on the health of individual workers.
Employers already are offering extra health insurance for foreign workers in China, with some companies "pollution-proofing" their buildings with air filters and window sealing, he said.
Such situations have become more prevalent. Some foreign professionals have decided that enough is enough and have asked for repatriation or an assignment away from China, according to Price.
"It is becoming more of a factor as time progresses. Polluted air is a major issue for foreign professionals, especially those looking to move to China with families," he said.
The pollution issue used to be offset by significantly higher salaries, but with the cost of living rising in expat areas, the salary benefit is not as attractive, Price noted.
Della Peng, human resources director for ManpowerGroup China, a workforce solution provider, said she is aware of the issues surrounding smog.
"Some enterprises could find it hard to recruit foreign employees if the air situation is not improved," said Peng.
Several managers have been transferred out from China due to the problem, she said.
But she said that, overall, the allure of working in China - one of the most crucial markets for international companies - still outweighs environmental issues, which are likely to be improved in the future.
In addition, she said, employers are making efforts to balance the costs and opportunities. For example, despite the concerns over smog, the number of inbound visitors last year has increased, she said.
Measures taken by foreign-invested companies to lure more expatriates include subsidies to those assigned to smog-affected regions or implementation of flexible working hours, she said. Many companies have moved expatriate professionals to less-polluted cities.
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