SHANGHAI - The top three main challenges foreign companies face when posting employees in China are compliance issues, elevated compensation and immigration issues, a survey by Ernst & Young has indicated.
As companies try to compete in rapidly growing economies, postings to developing markets such as Brazil, Russia, India, China and Africa are increasing, and companies are adapting their policies to attract employees to these locations, according to the survey.
"It's a very competitive market, so it's difficult to keep employees in their positions without losing them," said Nick Pond, Asia Pacific Area Leader, Human Capital, Ernst & Young, one of the largest professional services firms in the world.
The survey also found that 74 percent of companies distinguish between policies for employees they bring in and those they send abroad, and they are paying more attention to attracting employees into growth markets such as China.
Pond said that compliance issues are always companies' biggest global mobility concern, and most make efforts to properly train staff assigned to these posts, provide healthcare subsidies for them and take care of their families.
In 2011, 47 percent of companies reported that their international human resources are understaffed.
"I'm not surprised it was a challenge for organizations to recruit certain amounts of high-quality employees to fit their specified positions while there were not enough experienced potential resources available for them to choose from," said Pond.
In addition, countries' different income tax reporting and withholding systems have been considered as a major challenge, according to the survey.
"Due to the different income tax systems in countries employees are sent to, we have to adjust our withholding systems and possibly the compensation to comply with the tax systems of those countries and to meet employees' local expenses," said Norman Yu, Partner, Human Capital, Ernst & Young.
Yu added that local branch offices have to regularly report on the tax situation to make sure that the employees receive fair compensation. More than 60 percent of companies reported that they had seen an increase in the number of employees posted in growth-market countries over the past 12 months, and 68 percent expect to see their numbers increase in the next two to three years.
