Air Today, Gone Tomorrow

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Foreigners are not fleeing China in droves over bad air quality but recruiters say it’s getting tougher to lure foreign executives here.

Last year, after Gwen Martin rushed her 7-year-old son, Chase, to a hospital emergency room in Shanghai for the second time, the doctor delivered an ultimatum to her: if she wanted the boy to avoid another pollution-induced chronic asthma attack, she needed to take him back to America right away.

It was a tough, heart-wrenching decision because she had to leave six months earlier than planned and leave her husband behind.

Her husband, a partner with an American consulting firm which brought the family to Shanghai two years earlier, had to stay in Shanghai to finish his assignment before reuniting with the family in Pittsburgh, Pennsylvania. While it was difficult to be apart during that period, Gwen said they had no choice. She recalled the moment when the child’s pulmonologist told them Chase could not live in Shanghai any longer.

“We were at the doctor’s office because of a lung infection late one night and she said we couldn’t leave because there wasn’t enough oxygen in his blood,” Martin says in an email response to questions. “He ended up on antibiotics and all sorts of breathing treatments. It was horrible. He was so ill.”

She explained that the decision was a last resort. “We had one too many scares with his asthma and too many ER visits. He was missing school because I couldn’t send him with his nebulizer machine [a device used to administer medication in the form of mist]. We really tried, but I didn’t want him to die if we couldn’t get him to an ER fast enough,” she says.

While Gwen could not consistently link Chase’s lung infections to the bad air days, his asthma was clearly worse in China than anywhere else. Since the family returned to the U.S., Chase has not had to visit the ER and has had no new lung infection cases. While the Martins’ experience in China is not the norm, stories of American families cutting short their time in China because of air pollution are not all that rare. While few reliable statistics exist, executives at large companies, private and foreign schools and human resources consulting firms concur that even though China is an increasingly important market for international firms, Beijing and Shanghai are losing their charm for foreign employees.

Air pollution in China remains a major problem and contributes to some 1.6 million deaths annually here, according to a study released in 2015 by Berkeley Earth, a pollution research center in California. The data shows that about 80 percent of the Chinese population breathes air that would be rated “unhealthy” by United States standards. The most dangerous of the pollutants studied were fine airborne particles less than 2.5 microns in diameter, which can find their way deep into human lungs, be absorbed into the bloodstream and cause a host of health problems, including asthma, strokes, lung cancer and heart attacks, according to the report.

Recruiters face challenges

As air pollution chokes almost every major Chinese city, anecdotal evidence shows more executives are making decisions about coming or staying, partly because of the air, while an unspecified number are choosing not to come at all. In 2015 the American Chamber of Commerce in China underscored the issue in a survey from their annual China Business Report. For the first time in the survey’s 17-year history, nearly half of respondents reported having trouble recruiting executives because of air pollution. One question asked: “Have you or your organization experienced any difficulties in recruiting or retaining senior executives to work in China because of air quality issues?” Responses from 365 members in and around Beijing underlined a trend with 48 percent answering “yes” in 2015, versus only 19 percent in 2008 in response to the question.

Marc van der Chijs, co-founder of the video sharing website Tudou, moved to China in 1999 but left in 2013 after air quality index levels rose above 600 and made international headlines. Originally from the Netherlands, Marc decided the pollution in Shanghai wasn’t worth the cost on his young children’s health, so they left. “It was hard, because I love China and it’s the best place in the world for business. I just felt that my health, and especially that of my kids, was more important in the long run,” says Chijs. He now lives in Vancouver, B.C. as a partner with investment firm CrossPacific.

James McGregor, chairman of APCO Worldwide’s Greater China unit, moved to Shanghai from Beijing in 2014 to flee the air pollution. He says that compared to Beijing, living in Shanghai feels “like the Rockie Mountains.”

“We had industrial air filters every 15 feet across the office in Beijing. Although I brought my air purifiers from Beijing, I’ve never turned them on. Shanghai is how Beijing looked 10 years ago,” says McGregor.

Nathan Li, China country general manager at international recruiting firm Kelly Services, said his job has gotten harder because of air quality. He told Insight that he’s noticed a number of executives turning down China assignments in recent years and pollution continues to be a bigger factor every year. Asked to give a specific case, he recalled one that stands out in his mind.

“Last year, we worked with a European company that was looking for a country general manager in China and they wanted an expat,” Li says. “The final candidate they spoke with was offered the position in Shanghai but refused to come if he could not be based in Hong Kong. The main reason he refused to come to China was because of bad air. He didn’t want his children to grow up in a polluted environment.”

Others shared similar stories.  Kevin Harris, international consultant with Russell Reynolds Associates in Shanghai, has also seen executives turn down assignments in China due to bad air; however, he recognizes a significant improvement in employee retention once controlled indoor air quality is addressed. “I’ve seen a number of people refuse positions in Beijing or ask to be relocated. This is not an overwhelming trend though, and I do think China has done a good job at enforcing LEED certification [a worldwide green building certification program] in office space. That is increasingly becoming important for people coming over here,” says Harris.

New incentives

Associates for International Research INC (AIRINC), a human resources advisory firm, conducted a survey in 2015 to see how bad air affects employee retention and recruitment at multinational corporations in China. They found a majority of multinational corporations across Beijing and Shanghai are not seeing a significant loss of talent, although companies are offering monetary or non-monetary incentives to aid employee retention.

Many leading MNCs now offer environmental hardship allowances, also known as “hazard pay.” While this practice is not widespread, six percent of respondents to the EU Chamber’s 2014 China Business Climate survey said they had increased employee pay in response to concerns about air pollution. Most notably, Japanese electronics giant Panasonic Corporation publicly announced in April 2014 that it would offer financial incentives to its expat employees working in China. Additionally, Coca-Cola China now offers a 15 percent bonus on top of salary, according to a report by the Australian Financial Review in 2015.

Non-cash incentives are more common, however, and they come in the form of installation of indoor air purification systems, and ongoing maintenance of air filters, according to AIRINC’s survey.

Sam Li, General Manager of air purification company Blueair China, said he’s been getting more business since 2013. “We saw a doubling of corporate demand for our air purifiers over the course of 2014 and have been on a steady rise ever since. We see that people want clean air wherever they go now: home, office or in the school for their children,” says Li.

Fred Schlomann, managing director at AIRINC, says that it is now standard for major MNCs to ensure that homes have air filtration before someone is relocated to China. “Our clients are now demanding clean space in the home and it has become HR policy [amongst the company’s Fortune 500 clients]. Air filtration is the key focus for the non-monetary benefits. There is both the demand for an environmental screening of the home and the installation of air purifiers,” says Schlomann. He also noted that the demand for home air purification has increased since 2013, when the air quality index soared to 800.

Although the issue of air pollution is increasingly a problem for employee retention and recruitment, many executives believe that the raised awareness and monitoring has improved matters and the benefits of living here still outweigh the negatives.

Dan Whitaker, an executive in the IT industry and long-time Shanghai resident, expressed optimism towards the Chinese government’s “war on pollution,” as proclaimed by Xi Jinping in 2015. “The Chinese have shown an ability to get things done. We’ve hit rock bottom in China and things can only get better. This issue is different because pollution affects everyone.”

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