For ambitious auto executives, an international assignment can be the first step up the corporate ladder. But the high cost of living can be a nasty shock. Naturally, some of the most prestigious locations also are the most expensive.
According to the consulting firm Runzheimer International, the most costly cities to live in last year were Seoul, Tokyo and London. The least expensive cities were Johannesburg, Turin and Detroit. Runzheimer, of Rochester, Wisconsin, based its conclusions on a comparison of expatriate housing costs, transportation, food and other factors. The firm assumed that a Detroit-based employee earned a base salary of $100,000, then calculated the amount the employee would need to earn to maintain a similar standard of living in each city. We asked a number of executives to compare the cost of living in their locations with that of their home countries.
Christian Claussen is a senior manager _of sales and marketing for Volkswagen. He lives in Beijing.
I have been living in the center of Beijing for the past four years. The standard of living has been excellent, although the cost of living is out of all proportion. My two-bedroom apartment costs $5,000 a month. In China, apartments for overseas personnel, along with the hotels, are seen purely as moneymakers. They know companies will pay for it, whereas local people will not. Westerners are used to paying such prices.
Apart from that, the city is easy to get around and is full of excellent bars and restaurants. There is great entertainment as well. Many of the world's top performers want to come to Beijing, and you can get to watch them for very small amounts of money. There also are many cultural things to see, as well as nice parks where you can go to relax.
Judit Grubits works for Ford Motor Co. in Singapore.
Singapore is the most expensive car market in the world. The government is trying to control traffic and pollution, so it sets quotas. To own a car, you must bid for a Certificate of Entitlement, which can cost as much as $30,000. This, plus a 200 percent tariff on imported cars, means that a Ford Focus Ghia costs nearly $70,000!
Housing is expensive, too. Prices went down after the Asian economic crisis, but they are picking up again. In 1997, it was easy to spend $6,000 to $7,000 a month for a 180-square-meter condominium. Nowadays, it is about half of that level. Alcohol is extremely expensive. A glass of beer costs about $5 everywhere.
Nihar Patel works for Ford Motor Co. in Seoul.
Korea certainly is a costly place. From rent to food, the prices are higher. Rent for a four-bedroom house can cost $9,000 a month in the key districts of Seoul. Something as simple as potato chips can cost $3 to $4 per bag. A package of toilet paper costs $7. A package of paper napkins costs $5.
Clearly, the black market thrives when it comes to Western packaged foods. (Black marketers) get their food from the military base and resell it to foreigners at two to three times the original cost. You can get anything you want from the black marketers - at a price.
Richard Baker is executive director for marketing and sales for Ford Japan Ltd. He lives in Tokyo.
The first time my wife Katie went grocery shopping, she was so shocked at the prices that she actually wandered around the store for nearly an hour and put nothing in her cart. She just was so overwhelmed by the prices. After a while, she realized that we must eat something. She did buy a few items, and we have not starved to death.
We are finally over the shock. I say that because it actually seems normal now to pay $5 for a really nice apple and $30 for a melon. A trip to the grocery store for about three days' worth of groceries runs about $180. It is almost cheaper to eat out, although a typical dinner for two at a mid-priced restaurant in Tokyo is about $150. But, at Starbucks, you can get a great cafe latte for only 336 yen, or $3.20. Yeah!
Ulrike Hartick is an assistant manager of pre-production for DaimlerChrysler at its assembly plant in Vance, Alabama. Stefan Jonas is an assistant manager of quality audit.
Hartick: My two little boys were 8 months old and just under 2 years old when we came over in 1998. I was worried about what I had read about the milk here having hormones in it. I spent a lot more on milk at first. After a while, I was able to find out where to buy it cheaper without hormones, but it still costs more than in Germany.
Jonas: You end up spending more at first until you learn your way. We found that the shopping took much longer. One of the differences is that the distances between places are much greater here. In Germany, you would just go out of your house and walk to the shops for what you need. Here, you have to drive everywhere. So it takes much longer.
Jonas: The house we have here in Alabama costs about the same as the one I had in Germany. But the energy costs are much lower here, and other things, such as trash collection, are much lower.
Hartick: But we have found that, even though energy costs are lower, you use a lot more, so it's not so different. The cost of water is less here, but if you want a green lawn in the summer, you have to use a lot of water on it.
Jonas: The same with gasoline. It is cheaper here, but you have to drive more.
Hartick: And you have to have two cars instead of one because the distances are so great.
Stephen Keeney is a senior associate in communications for Honda Motor Co. He lives in Tokyo.
One of the things that strikes an American going to Japan is not just the $8 orange, but really that you have to readjust the relative value of a product to yourself. Since everything is more expensive, do you pay the price or do without?
The people who can adjust are those who quit thinking they could get that orange for 50 cents in America. They start realizing it is less here than the store down the street, or they end up just saying, `I'm gonna have an orange and I don't care what it costs.'
A lot of executives do not do their own research and entrust it to the company. Then they get over there, and discover that if you want to buy furniture, a $500 bed costs $2,500. For years, I used a futon, but then I said to myself that I want a bed, and it doesn't matter what it costs. When I purchased items overseas, I began to look at them as investments that allowed me to perform well at work by keeping me happy in my private life. It is no longer a consumer item; it is an enhancement to your life. It is more than a $2,500 bed. It is giving you a good night's sleep and a feeling of being back in the States.
A lot of people go overseas and try to re-create their lives. But you cannot get that obscure hobby magazine in Tokyo, because even if you find it, you are paying $30 for one issue. This can be a good thing because then you can explore the country and make relationships with people rather than try to re-create your American life.
Chiaki Yamaguchi is a senior vice president and treasurer for Toyota Motor Sales, U.S.A. Inc. He lives in Southern California.
Japan is the most expensive country to live in. In Nagoya, a 90-square-meter condominium can cost $800,000. In the United States, I have a 315-square-meter house that is worth about $1 million. For an extra $200,000, I have a house that is three times as large with a nice yard.
In Japan, we tried to save money by using company-owned facilities such as hotels and golf courses. A round of golf can cost as much as $500, including food and services. Excluding food, a round usually costs about $200. In the United States, you can spend anywhere from $20 at a public course to $300 at a high-end course such as Pebble Beach. There are more golf courses to choose from.
Fortunately, I also like jogging and hiking in the mountains, which are inexpensive.
Car ownership is much more expensive in Japan. It is not so much the purchase price as the price of ownership. Gasoline costs $4 per gallon, compared with $2 in the United States. There are strict inspections that are mandatory when your car becomes 3 years old. Every two years, the inspection fees and taxes cost about $1,000.
Christopher Tipton is director of human resources for GM do Brasil. Tipton lives in Sao Paulo.
The cost of living in Brazil is high, but not as high as before the recent devaluation. Expatriate housing remains very expensive, with an average cost of $3,000 to $4,000 per month for an apartment. Schooling for the children of executives is a major expense. A year in a private, international school typically costs $12,000 to $15,000. Prices for locally produced food items such as fruits and vegetables are normally quite reasonable. Imagine a kilogram of prime beef filet for $3. But those with a taste for brands from home will find they have to dig deeper.
A wide variety of imported foods - everything from Campbell's soups to Kellogg's Corn Flakes - can be found at upscale grocery stores. But you should expect to pay three to five times more than at home. Because of high import duties, virtually all imported goods, such as appliances or clothing, will be twice as expensive as it is in the country of origin. The same fancy chrome Italian espresso machine that sells for around $600 can be found in Sao Paulo for $1,200.
Wine is a heavily taxed import. A bottle that sells for $20 in the United States or Europe will easily cost $50 or $60 in local wine shops. Regional imports are not exempt. Top wines from Chile - normally considered a bargain in the world of wine - will exceed $100 per bottle in Sao Paulo. Executives living in Sao Paulo can take advantage of the city's reputation as one of the most diverse dining capitals in the world. But dinner at one of the city's many top restaurants often costs more than $100 per person.
Dieter Schek, aftersales director, BMW Thailand.
Housing prices are quite cheap compared with 1995. As far as the cost of living is concerned, it has risen in the last two years because of the stronger currency, but overall, it still is a little cheaper than in Germany. However, I must say the supermarkets are somewhat expensive, especially compared with the markets where the Thais shop and foreigners tend not to go.
Hans Christian Maergner is the managing director of Volkswagen South Africa. He lives in Port Elizabeth, where the cost of living is similar to Johannesburg.
I first lived in a house in an upmarket suburb in Port Elizabeth and have subsequently moved to a small house with a magnificent view over the Indian Ocean. The cost of rent is high, although buying a house in Port Elizabeth is relatively cheap for a person used to European prices.
Generally, the cost of living is reasonable, and for those who love the great outdoors, Port Elizabeth is close to a paradise. A car is a must, as there is little in the way of public transport. The infrastructure in terms of roads, rail and air traffic are outstanding, however. The quality of life is good here, and the country offers everything from the best cuisine, great wines and everything else you would find in Europe and the United States.
Vince Reardon, 36, is communications manager for Vauxhall Motors. He lives in London following previous assignments in Zurich and Frankfurt.
I thought Zurich was the most expensive place in the world after Tokyo, but I was stupefied by the rents charged in London. I pay over $3,000 a month for a two-and-half bedroom flat. I struggle to figure out how locals manage. There seems to a culture that landlords can do the minimum and charge the maximum.
London is great for its amazing cultural mix and the way people get along in a very civilized way. I was pleasantly surprised by the quality of the food. You can get anything you need in local supermarkets, even more so than in Boston, where I come from. But eating in restaurants is as stupefyingly costly as the rents. Dinner for two in Zurich with wine cost about $70. The equivalent standard in London in $150. That really shocked me and changed my lifestyle.
You can e-mail Editor David Sedgwick at [email protected]