Zhang San had two choices: he could move his family’s “hukou” from Beijing to Guangzhou. This takes a long time and is a bureaucratic nightmare. Also the “hukou” benefit package varies from municipality to municipality so Zhang risked losing some of his family’s benefits. In the event that our client later decided to relocate its head office from Guangzhou to, for example, Shanghai, Zhang San would have to go though the headaches of moving the “hukou” again.
Zhang’s second option was to request reimbursement from the hiring company for the lost benefits. He negotiated an education allowance for each child as well as health care insurance. This is how most multinational companies handle the “hukou” problem: they pay their way out of it with additional benefits or higher salaries.
These days, younger Chinese professionals have more “mobility-oriented” mindsets. They understand that relocation is a pre-requisite for management success in the private sector. Nevertheless the “hukou” system continues to inhibit internal mobility in China. We have even seen instances where a senior-level employee relocates with an employer but his/her family stays behind to take advantage of “hukou” benefits. While the Chinese government is looking at replacing “hukous” with simpler residence permits, the relocation issues in China probably will not be fixed for five years or more.