Remote Control: What to Expect When Sending Assignees Abroad

Contents:

• Health Matters
• Playing by Different Rules
• Home Away from Home
• Buildiing a New Life

Do challenges really remain for relocating professionals in a world where a Starbucks cappuccino can be bought using virtually any currency? Could it be true that in this time of multi-media and around-the-clock access to the Web, potential candidates for relocation understand the nuances of the unique, niche culture to which they are about to enter? Perhaps not. To help identity considerations regarding the challenges that still exist when sending your assignees to remote locations, Primacy Relocation’s Steve Marshall, President EMEA, discusses the not-so-small world in which we live and move.

We certainly live in a time of globalisation: A globalised economy, global companies and global brands. So it would seem that the challenges of relocating key staff anywhere in the world are dwindling. What were once considered by many (Westerners) to be remote, hardship or undesirable locations are now mainstream destinations, replete with all the facilities, infrastructure and commodities to make life more than just bearable, but also comfortable, stimulating, and, above all, familiar.

However, the ubiquity of Starbucks, imported food and wine, and mobile telephony across great swathes of what was once executive hinterland (Central and Eastern Europe, Central Asia and Africa) belies the enduring challenge of moving to locations outside capital cities. Scratch beneath the foam on your latte, wherever you are, and discover some familiar themes for the individuals on the move and the companies seeking a successful and profitable placement.

The world of course has changed. The fall of communism across Eastern and Central Europe, and Central Asia, has led to the liberalising of economies and inward investment, creating both new markets and opening up previously unreachable sources of minerals and labour. The rapid expansion of the European Union (EU) has brought a number of former communist bloc countries into the fold and accelerated the adoption of Western business practices and standards. The result is that life for Western expatriates in cities like Moscow, Warsaw, Prague and Budapest can now boast many of the same characteristics as life in the cities they have left behind. In truth, these can no longer be regarded as remote or hardship locations – especially because the availability of air travel now means they are within two hours of Western Europe’s major cities. That’s not to say that moving people to these locations is now routine, but that executives making these trips are at least now following a well-trodden path, with the experience and expertise in place to help find their feet quickly.

Africa has also seen a dramatic rise in foreign direct investment, by more than 250% from 2002 to 2007, to a total of $53 billion. Thanks to their enormous oil and mineral reserves, and the rapid expansion of telecommunications, countries such as Nigeria, Angola, Egypt, Morocco and South Africa are attracting increasing numbers of expatriates and emerging as significant destinations in relocation terms. The numbers, however, are still relatively small for the companies opening operations in these territories. As a result, one of the major challenges is finding a destination service provider with real, on-the-ground presence. Some countries may be serviced by just one company, with a single consultant delivering a limited range of core destination services.

China and Central Asia are also more familiar as a combination of economic and political liberalisation and the presence of vast oil reserves and potentially huge local markets have driven inward investment. Shanghai and Beijing are well established as destinations with vibrant international communities, with amenities on a par with any major Western city. However, investors are increasingly turning to China’s comparatively untapped second-tier cities such as Dalian, Qingdao, Shenyang, Yantai, Fuzhou, Xiamen, Liuzhou, Chongqing and Chengdu. Across Central Asia, “the Stans” – Turkmenistan, Tajikistan, Kazakhstan, Kyrgyzstan and Uzbekistan – are now attracting growing numbers of assignees and are no longer “the middle of nowhere” they once seemed to be – even if most Westerners will still struggle to identify and distinguish them.

Remote location is therefore a relative term and, with few exceptions, must refer to locations outside the capital cities. It is, however, also a subjective term as it relies on the availability and accessibility of comparable housing, schooling, medical care and business and social amenities to determine how remote a place feels to an assignee and his or her family.

back to topHealth Matters

Historically, access to healthcare except in emergencies, for example, was much more closely related to the availability of air travel than to local provision. If you were unwell or needed to see a specialist, you would simply fly home or to a location in Europe where you could be assured of medical standards and, critically, an English-speaking doctor. Today, an assignee would need to make a strong case for travelling far for healthcare. Across the region, capital cities boast hospitals and clinics of the highest standards that serve wealthy locals and expatriates. In Budapest, for example, there are four modern, clean, well-equipped private health clinics where you can find English-speaking specialists. Similarly, the existence of first-class facilities in Almaty in Kazakhstan, or Ashgabat in Turkmenistan, contradict perceptions of these locations as remote backwaters. Language, however, remains a problem and assignees may still want to access translation assistance in such locations where English-speaking doctors are rare and where the lingua franca is Russian.

For most assignees, comprehensive healthcare coverage is part of the package, and in many locations will work as smoothly as it would at home. But companies and individuals in some Eastern European and Central Asian destinations may find they have to pay directly, usually by credit card, for medical support as direct billing arrangements with insurance companies are not yet the standard.

Looking forward, it’s possible to envision a time where individuals are asked to make permanent moves to these locations. Under such circumstances, healthcare provision is likely to be just one part of a larger policy challenge for employers who will have to decide how they rationalise what’s available to expatriates with what they support for local employees. Maintaining a consistent mobility policy and corporate culture across regions and into emerging destinations is one of the enduring challenges for employers. With mobility policy documents at larger international companies running to several hundred pages and covering all aspects of a placement for every level of assignee, maintaining consistency in the face of wildly divergent local service provisions is virtually impossible. Theoretically, a Managing Director (MD) should have the same package, in terms of allowances, in Paris, Rome or London. But what about an MD moving to Moscow, or Bratislava, or a provincial city such as Cluj in Romania? An MD in Paris wouldn’t expect a driver to be provided, but in Moscow or Cairo, such provision is perfectly routine. And in Africa, home water delivery would form an essential part of a relocation package. Similarly, allowances for trips home and internal travel, as well as big ticket items such as housing, household goods moving (HHG) and schooling, cannot be dogmatically enforced across territories where cost, availability and custom vary to such an extent. Flexibility and a pragmatic approach are required and, short of personal experience, can only be informed by the expertise and advice of relocation professionals on the ground.

back to topPlaying by Different Rules

With legislative and administrative regimes in a constant state of flux, companies operating in these emerging locations must also adapt quickly and learn to live with a greater degree of ambiguity in their operations. Some countries, for example, still do not have a fully articulated process to handle secondees because incoming secondments have simply not occurred until recently. In Russia, technically speaking, foreign nationals may only be employed by a Russian registered entity that is itself registered to import talent, and they must be employed on a permanent basis and paid locally in roubles, not the kind of arrangement most assignees are hoping to achieve. Similarly, some jurisdictions such as Dubai make it very difficult for payments to be processed from outside the country rather than via a Dubai bank account, which makes using expense administration services challenging at best.

But, with the advice of an expert relocation partner, companies can achieve a workable balance between the letter of the law and their own operating requirements. Likewise, different standards of business ethics, local customs and the malign presence of institutional corruption in some territories also present companies and individuals with significant, but not insurmountable, challenges. As ever, the key to negotiating such obstacles is local expertise, a dash of pragmatism and a lot of patience.

In China, for example, the legendary “fa piao” (Chinese invoice) system is the principal vehicle for the calculation and collection of business taxes. But the translation “invoice” fails to capture the complexity and bureaucracy surrounding the fa piao process. When a rental payment is made by a tenant to the property owner, the owner has to pay the relevant property taxes to the tax bureaus in order to obtain a fa piao. But a fa piao is required before a tenant can make the rental payment by bank transfer. In some instances, landlords may insist on being paid before releasing a fa paio, while the corporate client may insist that in the absence of a fa piao, the rental payment cannot be released. Provincial governments and local authorities interpret such policies, regulations and customs in their own highly individual and subjective way. It is not uncommon to receive five different answers to five enquiries on exactly the same issue. The room for negotiation, deviation and exception varies according to the relationship with the executing officer, a particularly acute trend in the smaller cities.

For individuals moving to emerging locations, the concerns and challenges are predominantly about accessing the core building blocks of a familiar lifestyle, including suitable housing, schooling where appropriate, a social network and medical support. The level of priority given to each depends to a large extent on the individual, and whether they are moving with a family.

back to topHome Away from Home

The availability of housing is a key issue for most assignees, and is the point of greatest friction for many as they come to terms with differing standards and levels of provision. Broadly speaking, capital cities in all the emerging locations have housing stock and apartments to meet Western expectations. However, many of these countries don’t have the same kind of homogenous, affluent neighbourhoods to which most assignees are accustomed. In many former communist bloc countries, city living means an apartment (not a house), and even the most luxuriously appointed apartment may be situated in a tired-looking building with unmodernised apartments above and below. “Why have you brought me here?” is a question many Relocation Consultants hear from clients as they stand in a dingy hallway waiting for a shabby lift to arrive. But at least the housing is available and there’s an established market.

In provincial cities, it’s a different story. There may be very limited availability of suitable housing and, in some cases such as Eastern Europe and Central Asia, there may not even be a rental market. It’s not unknown for destination services companies to have to approach realtors and property owners and present the concept of letting properties rather than selling them. Not surprisingly, in such markets, different rules apply and landlords may have a different perspective on their obligations. Equally, where properties are in short supply, they can move very quickly so assignees must be prepared to make decisions accordingly. In China, as in Eastern Europe and “the Stans,” the selection of a second- or third-tier city as a cost-effective alternative to a more mature location can lead to a rapid hike in rents, hotel charges and other business-related costs. It is also the case in China that new properties may be finished only to a bare-shell standard and that the decoration, fixtures and fittings featured in the brochure or show home are not included in the price. In Eastern European destinations, it may be very hard to secure unfurnished properties simply because it is not the norm, and there is nowhere for landlords to store unwanted furniture. The payment of rent may also pose some problems for companies and assignees as landlords in many countries will require payment in advance, as much as six months in some cases, and very possibly in cash.

Schooling typically is less of an issue simply because it’s either available, or it isn’t. High-quality international schools are now found throughout Central and Eastern Europe and Central Asia, In fact, Tashkent in Uzbekistan boasts one of the top international schools in the world. However, choice is likely to be limited and places may be in short supply. Where it is not possible to accommodate a family in a genuinely remote location, such as Siberia, some companies have opted to house the assignee in the destination and find other accommodation for their family in the capital city, a situation that is far from ideal for everyone.

back to topBuilding a New Life

Finally, the success of an assignment is likely to rest on the ability of the transferee and their family to build a life beyond work. This will come down to the availability and accessibility of social activities and networks, as well as creature comforts. Cities with large expatriate populations can offer a rich and varied social and cultural life, and it’s typical for established expatriates to reach out to new arrivals and help them settle in. Typically, social networks revolve around work and school, and international clubs in major cities throughout the region. Off the beaten track, however, it can be more difficult. Away from the capitals, assignees are unlikely to encounter English speakers in shops and restaurants though they will still find familiar brands in the supermarkets. They will also find that day-to-day life is less convenient. Credit cards, for example, pack little punch in some countries, and you could walk a very long way to find an ATM anywhere in Central Asia or to find Western-style cutlery in China. Russian is more useful than English in “the Stans.” In China, outside the major cities, it may be extremely hard to communicate without at least some Mandarin. The fact is that every country has its own peculiarities. Some of those peculiarities are appealing, such as the informal taxi system in Uzbekistan (hitch-hiking by another name), and some are more frustrating, such as the total absence of the concept of personal space in Russia.

All of which leads to a view that the term “remote” can no longer describe countries, but instead, locations within them. Relocating is as much about what an assignee takes in terms of attitude and personality as it is about what’s available when they get there. Moving to an emerging location is a major undertaking, and individuals have to confront linguistic and cultural challenges, as well as logistical hurdles. For an assignment to work, the assignee has to go in with an open mind and be prepared to accept that “different” equates with “new” rather than “wrong.” They must also be able to adapt to local customs and understand that their arrival may be met with complete ambivalence by the local population.

Destination service providers and their Relocation Consultants say they can spot an assignment that will fail within minutes of meeting the transferee at the airport – so for companies sending their people abroad, the message has to be to choose your assignees, and assignee families, carefully. That first decision is likely to be the single most important factor in the success of an assignment to a remote location.