| BEIJING, March 19
BEIJING, March 19 China's smog is making it
harder for foreign firms to convince top executives to work in
the country, the American Chamber of Commerce in Beijing said on
Wednesday, offering some of the strongest evidence yet on how
pollution is hurting recruitment.
Some 48 percent of the 365 foreign companies that replied to
the chamber's annual survey, which covers businesses in China's
northern cities, said concerns over air quality were turning
senior executives away.
Pollution is "a difficulty in recruiting and retaining
senior executive talent", said the report. The 2014 figure is a
jump from the 19 percent of foreign firms that said smog was a
problem for recruitment in 2010.
China's slowing economy, however, remained the top risk for
companies, the report added.
Foreign executives increasingly complain about pollution in
China and the perceived impact it is having on the health of
themselves and their families. Several high-profile executives
have left China in recent years, citing pollution as the main
reason for their decision to go.
Almost all Chinese cities monitored for pollution last year
failed to meet state standards, but northern China suffers the
most. It is home to much of China's coal, steel and cement
production. It is also much colder, relying on industrial coal
boilers to provide heating during the long winter.
The capital Beijing, for example, is surrounded by the big
and heavily polluted industrial province of Hebei. It is also
choked by traffic.
By contrast, China's commercial capital Shanghai, in the
south, suffers less air pollution. Indeed, a similar survey
conducted by the American Chamber of Commerce's Shanghai branch
did not ask if pollution was affecting recruitment.
Premier Li Keqiang "declared war" on pollution at the
opening of the annual session of parliament this month, part of
a push to wean the world's second biggest economy from
credit-fuelled growth to more sustainable development.
China also pledged on Sunday to make 60 percent of its
cities meet national pollution standards by 2020.
Lulu Zhou, associate director of the Beijing Office of
international recruitment agency Robert Walters China, said some
foreign executives were using pollution to negotiate higher
"We have seen some senior level professionals ... who are
concerned about relocating to Beijing because of the pollution,"
In a sign of the growing corporate concern over pollution,
Japanese electronics firm Panasonic Corp has told its
unions it will review the hardship allowance paid to expatriates
in China because of the air quality, a spokeswoman said on
And a state-owned Chinese insurer said this week it would
offer Beijing residents insurance cover against health risks
caused by air pollution, promising to pay out 1,500 yuan
($240)to policy holders hospitalised by smog.
The policy, available for people aged 10 to 50, will also
pay out 300 yuan when the city's official smog index exceeds 300
for five consecutive days, a level considered "hazardous",
according to a notice posted on the People's Insurance Company
of China (PICC) website (www.epicc.com.cn).
Beijing's official air quality index (AQI), which measures
airborne pollutants including particulate matter and sulphur
dioxide, routinely exceeds 300, and sometimes hits levels higher
SLOWING ECONOMY THE BIG CONCERN
Despite the concerns over pollution, China's cooling
economy, which government leaders project to grow this year at
about 7.5 percent, posed the greatest risk to companies,
according to those polled in the Beijing survey.
Firms increasingly reported a stagnation or contraction in
operating margins compared with previous years, it said.
As a result, more foreign firms saw China "as just one of
many investment possibilities", the report said.
Nevertheless, a majority of companies surveyed remained
optimistic about the business outlook for the next two years.
"This optimism is driven by our membership's confidence in
their own ability to adjust and deal with the challenges," said
Mark Duval, China president of the American Chamber of Commerce.
Many members had high expectations that recently announced
economic reforms might deliver, Duval added.
But two in five respondents to the Beijing survey said the
business climate had become less welcoming for multinationals,
with a similar number saying foreign firms were being singled
out in a series of pricing and corruption investigations.
Those investigations have targeted various sectors,
including pharmaceutical and milk powder multinationals, as well
as American technology companies.
Most recently, China's anti-monopoly regulator said Qualcomm
Inc. was suspected of overcharging and abusing its
market position. The U.S. chip giant has said it was cooperating
with the investigation by the National Development and Reform
Respondents also chafed at perceived state enterprise
favouritism, with 77 percent believing policies benefiting
state-owned firms had negatively impacted their business.
"My judgement is that the biggest area that drives (this
response) would be market access," said Duval.
Protection of trade secrets and company name theft were
among other issues worrying businesses. Half of all respondents
said that protecting confidential company data was a concern.
Other difficulties were a lack of clarity and inconsistency
in the application of laws and regulations, the survey said.
($1 = 6.1920 Chinese yuan)
(Additional reporting by Ritsuko Ando in Tokyo. Editing by Dean