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New Study Reveals Localization Practices in Asia-Pacific

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RISMEDIA, Dec. 11, 2008-Localization of international assignees is on the rise through Asia Pacific and companies are increasingly instituting formal localization policies. Results of a groundbreaking survey identify the forms of assistance provided to localized employees in the APAC region and show that flexibility is key in applying these policies to individual circumstances.

Weichert Relocation Resources Inc. (WRRI) and Worldwide ERC®, with assistance from the Hong Kong Institute of Human Resource Management, surveyed 91 companies with international activity and localized employees in the APAC region to determine the reasons why they localize their employees and the methods they utilize. For purposes of this survey, localization was defined as the process by which an employee on assignment in a host country location is transitioned (partially or totally) to that location’s employment terms and conditions.

Among those respondents that localize employees in APAC, 80% follow a formal policy or set of established guidelines.

“This is significant, as it illustrates just how widespread the use of localizations has become,” said Ellie Sullivan, director of Consulting for WRRI. “According to Worldwide ERC®’s 2008 Global Benchmarking Survey, the number of companies with formal localization policies in place has doubled over the past five years.”

As for the reasons for localization, the most common, cited by 53% of respondents, is to control assignment costs, while others include business necessity (30%) and accommodating employee choice or desire (12%). The APAC areas with the highest concentrations of localized employees, according to our respondents, include Mainland China (69%), Singapore (67%), Australia (48%) and Hong Kong (41%).

Localization, however, does not mean complete transition to local terms and conditions immediately. Eighty-three percent of the respondents migrate their assignees to local terms and conditions through a gradual phase-out of expatriate and other home country benefits, with the most popular transition schedule lasting three years. However, some mobility benefits may be cut off immediately, while others may never be discontinued.

Among the top benefits most likely to be retained at least for some period of time are household goods shipment (78%), housing allowance (73%), home country home sale benefits (54%), transportation assistance (48%) and cost-of-living allowances (47%).

“While providing a final household goods shipment to the destination location is not surprising, the fact that 73 percent of respondents who localize employees in Asia Pacific retain the host housing allowance is quite significant,” said Jan Hatfield-Goldman, Worldwide ERC® VP of Research and Education. “This makes sense when looking at the top localization destinations as they include some very costly destination cities in Asia Pacific.”

Another key finding reveals the major challenges of localization to the APAC region, the most significant of which among respondents is finding a suitable and comparable pension program when transitioning employees to local status. Other cited challenges included consistency of policy application and income tax-related issues.

For more information, e-mail solutions@wrri.com.

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