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BUSINESS & TECH

Doing Business in China: Pollution Puts Chokehold on Business Owners

By Doug Young

(Beijing) — Last week’s massive sandstorm in Beijing got me thinking about the 1974 Hollies song The Air That I Breathe before I moved to the more-serious matter of my own health and whether China is the best place for my physical well-being as I advance in years.

Clearly the Hollies weren’t living in 2017 Beijing when they released their classic song, or they probably would have at least added “surgical mask” to the list of things that they needed to survive, in addition to love and the air they breathed. But on a more serious note, China’s poor air quality has been having a serious impact on people doing business here these last few years, most obviously in terms of recruitment, but also in other ways you might not necessarily expect.

I polled a number of friends and contacts on the matter, from people working here to business owners and consultants, and a couple of recurrent themes came up in almost every conversation.

First and foremost, China’s pollution seems to be a deal killer for any expat with young children considering whether to come here for work. Second, Shanghai is rapidly becoming the city of choice for expats, and to a lesser extent local Chinese who have a choice of where they want to live in China, and pollution is a major part of that consideration.

I was aware of Beijing’s famous sandstorms even before the latest one blew in last week, sending our Air Quality Index (AQI) as high as 896 at one point, on a scale where below 50 is considered good and anything above 300 is deemed severely polluted. I experienced a few such storms while living in the capital in the 1980s, when they were China’s original form of serious air pollution. Back then, the city’s constant dusty air was the next worst thing, along with the soot created by do-it-yourself coal-burning heaters used in older homes each winter.

But those problems were minor compared to the Beijing that greeted me when I returned last fall to live for the first time in 25 years. Most upsetting were the two weeklong smog spells in December and January, in which the heavy pollution lasted for multiple days without ever easing.

That’s a nice opener for one of the lesser-known effects of pollution on businesses here in China — namely, low morale caused by the problem. In my various conversations, it became clear that recruiting foreigners has become significantly harder for companies in the era of heavy pollution, even though finding qualified Chinese was less affected.

But there were fewer differences when it came to morale, which affects everyone. One business owner said low morale affected his entire Beijing office, and that during periods of heavy pollution, people would frequently come to him saying they didn’t feel well and weren’t happy. His business partner from nearby Hebei province would tell him how he hated life in Beijing. With that kind of attitude, it’s hard to imagine feeling proud of what you do or coming to work each morning prepared to give it your best.

That same business owner, who provides outsourced services for golf course operators, was one of the repeated voices I heard saying China and especially Beijing weren’t suited to raising young children. Oddly enough, no one seemed to have any opinions on bringing older children to Beijing, perhaps because they’re more worldly or less innocent. But this particular business owner said he recently had a son, and as a result is actively looking to leave the city after living here for seven years.

Younger people in earlier stages of careers seemed less put off by the problem, at least based on some comments from one of my former students, a 20-something who has been here for four years and works at an education company. He said that while the pollution bothers him, it’s not a reason to leave. But he added the problem has prompted him to wear masks on bad-air days, install air purifiers at home and become one of the legions of people who now track the AQI on a constant basis.

From the purely business perspective, the business owners and one human resources professional I surveyed said other hidden costs include providing more vacation time to attract expats, and also the need to provide perks like air purifiers both at the office and at home.

Another less-obvious effect was flight delays and cancellations, as I discovered when my plane from Shandong to Beijing was suddenly canceled in early January during one of the weeklong smog bouts. And then there’s the chaos that gets heaped on manufacturers when they or their suppliers are suddenly ordered to halt production when pollution gets really bad, or when the government wants to clear the air for big events like APEC and G20 summits.

One of the biggest sub-themes in the pollution debate has been the recent acceleration in Shanghai’s growing appeal for expats versus Beijing. It used to be just the opposite, since Beijing was the more-international city in the early days of opening-up, when most foreign companies wanted to be close to the central government. But Shanghai has wasted no time playing catch-up, and probably equaled Beijing in terms of life quality about a decade ago.

As someone who has lived in both places, I can confirm that Shanghai pollution was bad, but Beijing is worse. I never considered using surgical masks in the former, but felt compelled to during the weeklong smog bouts during my first winter here. I also quickly regretted my decision not to bring my air purifier from Shanghai to Beijing, a move I made because I seldom used the device in Shanghai.

At the end of the day, one of the few positive elements in this story came from the human resources consultant, who noted the number of heavy pollution days is showing definite signs of improvement, and indeed the statistics do bear that out. But that’s not much reason for optimism from business owners or ordinary workers who are here now, and experience the daily costs that pollution takes on both their personal and work lives.

Doug Young has lived in Greater China for two decades, including a 10-year stint at Reuters, where he led China corporate news coverage. Send your questions or comments to DougYoung@caixin.com.

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