Quick, which is more expensive, Beijing or Shanghai?
Take a taxi in Shanghai and you will pay more than you would for a ride of equal distance in Beijing. Buy a beer at an international bar in Shanghai, and the same holds true. Go out for an Italian, German or French meal and ditto.
And yet, according to a survey released yesterday by Mercer Human Resources Consulting, Beijing is the most expensive city on the Chinese mainland.
"There are some things that might be more expensive in Shanghai, but the index we have is based on a basket of goods," said Ilya Bonick, Mercer's regional head of information services. Mercer's cost of living survey is one of a handful of annual reports produced by international consultants. It takes into consideration such things as housing, food, entertainment, clothing, household goods and transportation.
Meals of noodles or jiaozi are not included in the report whereas products expatriates are likely to buy and are available in all the cities surveyed, such as Coca-Cola and Pantene shampoo, are.
Mercer found Beijing to be the 19th most expensive city in the world.
Shanghai came in at No 30.
The results fly in the face of traditional wisdom.
"It surprised me," said Vanessa Cen, a headhunter with Talent Shanghai, a local company. "My feeling is that, on the Chinese mainland, Shanghai and Shenzhen are more expensive than Beijing."
Every city in the country was lower in ranking than in 2004, when Beijing came in at No 11 and Shanghai 16.
This year, Hong Kong, the most expensive Chinese city, took ninth spot. The top three in the world are Tokyo, Osaka and London.
The good news for multinationals with expatriate employees is that Chinese cities are getting cheaper, driven by a US dollar depreciating in value.
"Chinese cities have dropped significantly in the rankings as the currency is pegged to the US dollar and has therefore been affected by the dollar's depreciation," said Marie-Laurence Sepede, Mercer's research manager, in a release.
"The shift in the China ranking is the most surprising," Bonick said. "We have seen it become more affordable." Another factor for the drop, said Bonick, is the wider availability of products the company uses to measure.
"In Shanghai and Beijing, there's more competition in the market and therefore prices go down."
Other Chinese cities such as Guangzhou and Shenzhen are further down the list and did not make the top 50.
"Beijing is about 10 percent higher than Guangzhou in terms of cost," said Bonick.
Despite the difference between the two cities' ranking, in real terms the difference in the cost of placing an expatriate in Shanghai or Beijing is around the 2 percent mark, he said. According to Mercer, South America is currently the most affordable place, with the capital of Paraguay, Asuncion, coming in dead last.
(Xinhua News Agency June 22, 2005)
