Emerging markets – relocation issues for multinational enterprises

By Steve Marshall, President, Primacy Relocation EMEA

By definition, all multinational companies are now familiar with the globalisation phenomenon, and few organisations have yet to consider the benefits of internationalising their production and sales operations. Now this interest has spread to the emerging markets of Africa, the Middle East, and Eastern Europe. In these regions deregulated or liberalised economies and improvements in communications technology are encouraging foreign direct investment programmes in heretofore ‘exotic’ locations.

The argument for relocating personnel to these locations, from a business perspective, is clear. The transfer of experienced or expert employees from established locations to new markets strengthens the bonds between developed and less developed economies, facilitates investment, and promotes the sharing of knowledge, business principles, and corporate culture.

Most of the issues facing HR managers are practical, requiring pragmatic solutions: security, finding appropriate housing and schooling, sourcing reliable quantitative data on the host location, and updated immigration procedures.*

Security: In many emerging markets, personal security is the primary concern for assignees and HR alike. Common perceptions of a host location may be overly negative, but complacency is equally damaging. Specialists' security briefings for assignees and their families relocating to potential ‘danger zones’ ought to be compulsory. This is simply down-to-earth counselling on how the assignee can manage or modify their behaviours: varying the daily routine; maintaining a discreet profile; awareness in public transport, bars and restaurants; dealing with the police and other authorities; and perceived threats from crime (organised or otherwise), racism and terrorism.

Housing: The scarcity of appropriate housing is an early obstacle to relocating employees, particularly where budgets are tight. In environments with lower general standards of housing, there often arises a ‘compound culture’ where complexes and buildings are developed specifically for expatriates. These are often subject to long waiting lists and high costs. They also promote an artificial living environment, divorced from the day-to-day life of their local colleagues.

The quality that most emerging markets share is constant change, so a successful relocation programme requires managers (or an outsourced provider) with extensive experience proactively tracking and reporting property market trends in emerging markets. Relocation managers must also consider the question of housing from a holistic standpoint, with special emphasis on security features, including access to secure parking, the quality of utility networks and communal areas, the legal status of the landlord and the lease, the residential neighbourhood, and commute times to work and schools, according to the transport to be used.

Schooling: The availability (and affordability) of international schools still has a sizeable impact on the choice of candidates for assignments – who are still predominantly single men or couples with no children. Such schools, offering languages and curricula compatible with the home location have long waiting lists. Moving to the top of these lists require carefully groomed relationships and well placed assistance to the assignee in promoting their applications.

Cost of Living data: As HR Managers are often painfully aware, in certain newly emerging markets, the reputable providers of cost of living data have yet to collate sufficient information to allow HR to confidently calculate allowances and benefits. A relocation provider is often called upon for its on-the-ground partnerships and experience in constructing a benefit package as further data becomes available.

Where good data is already available, the HR Manager is still likely to receive ‘additional’, or contradictory, information from assignees in the host location. The range of benefits can appear bewildering and is often subject to ‘peer inflation’ – as expatriates from different companies compare notes.

Some global relocation companies offer regular qualitative assessment and review of allowance trends in the host location, to assist the HR Manager in constructing a competitive but reasonable relocation package. For example, Primacy Relocation facilitates knowledge-sharing between its clients by organising location-specific ‘roundtables’, enabling HR professionals from different companies to compare notes and experiences in a ‘neutral’ environment to the benefit of all participants.

Immigration: Legislation and regulation, especially as they apply to inbound workers, are often in a state of flux, as administrative practices and even whole legal systems are either swept away or developed from scratch. At the same time, relatively common relocation destinations may cling to the bureaucratic, corrupt or cost-intensive immigration procedures of their pre-liberalised past. The consequences of missteps can be serious: foreign employees of the most respectable multinationals can, and do, get fined or even deported, for breach of immigration requirements.

Global HR managers require comprehensive and detailed information on the immigration process in a timely fashion. Where the legal situation is uncertain, consultants and service providers must state this clearly and offer pragmatic guidance with the best legal interests of the corporate client in mind. Where immigration is concerned, the HR manager is best advised to get expert advice, get it ‘legal’, get it early and abide by it.

Steve Marshall, GMS, is President of Primacy Relocation's EMEA business unit. Primacy offers a wealth of experience and practical advice in ascertaining the viability of the assignment of employees to an emerging market, facilitating the transition itself, and then supporting the assignee throughout the assignment. View more of our position papers and case studies at www.primacy.com.

*There are myriad other issues associated with relocations to emerging markets, including cross-cultural awareness, issues around transportation of goods and customs clearance, health and environmental questions, galloping inflation and local taxation.