As a thick smog hung over Beijing last year, Stephanie Giambruno and her husband decided it was time for her and their two girls to return to the United States.

Giambruno's husband stayed in China for his job as general manager of a global technology company. He now Skypes with the family twice a day and lives with "constant jet lag" as he travels to Florida once a month to see them, she says.

While it's hard to be apart, Giambruno says Beijing's record air pollution left them no choice. She saw friends' children develop asthma. Their own daughters, at age six and 21 months, were often forced to remain indoors.

"It's not a way to live, to keep your baby inside with an air filter running," she said.

As bad air chokes Chinese cities, some expatriate employees are starting to leave families in their home countries, the latest sign of pollution's rising cost to the more than half a million foreigners working in China and the multinationals seeking to retain them. Smog in Beijing was worse than government standards most days last year, and environment ministry statistics show that 71 of 74 Chinese cities failed to meet air-quality standards.

"We are seeing some companies reverting to 1980s and 1990s hardship packages for executive-level candidates in cities that are hard hit with pollution," said Angie Eagan, managing director for China at the recruitment firm MRIC. "These packages are shaped around executives leaving their families in their home country and receiving an allowance for frequent home trips."

The World Health Organisation said in March that air pollution contributed to seven million deaths worldwide in 2012, with 40 per cent of those coming from the region dominated by China under the WHO's classification system. Outdoor air pollution can cause lung cancer, a WHO agency said last year, ranking it as a carcinogen for the first time.

Panasonic of Japan is considering increasing a living allowance for overseas workers in China by an undisclosed amount based on environmental factors, including air pollution.

Some companies remain reluctant to add to the 5 percent to 10 percent premium they already pay foreign employees in China, preferring to compensate them for pollution through perks such as more time off, paid trips to get away or covering the cost of insulating homes, said Fred Schlomann, managing director at human resources firm AIRINC.

A third of European Union Chamber of Commerce companies in China said air pollution had added to human-resource costs as expats made demands such as better pay and health care, as well as air filters, according to Ioana Kraft, general manager of the chamber's Shanghai chapter.

Two-thirds of the companies identified air quality as the top challenge in attracting foreign talent. Some 48 per cent of respondents to a survey this year by the American Chamber of Commerce for Beijing and Northeastern China said they had difficulties recruiting or retaining senior executives in China because of pollution.

James McGregor, Greater China chairman of consultancy Apco, is moving to Shanghai in May after being in Beijing for 25 years and says his wife spends more time in Minnesota in the US Midwest now, partly because of pollution. To provide a clean workplace, his firm installed air filters every 7.6 metres in its Beijing office, about a dozen devices for 30 staff. Even so, employees need more medical leave than 18 months ago.

"There are a lot of sick days, and sometimes our office in Beijing sounds like tuberculosis wards," said McGregor, 60. "People in our office are complaining they don't feel well, they don't have energy."

Levels of PM2.5, the tiny particles posing the greatest risk to human health, were stuck at hazardous levels for a week this year in Beijing and in 2013 peaked at 35 times the WHO's recommended limit. McGregor's firm is able to retain staff because it mostly hires locally. Even so, some clients have said that it's harder luring new talent.

"We're starting to see families not come," McGregor said. "In some cases, people are coming without their families and they are cutting a deal to go home more often."

Shane McNamara, an American executive who runs a 15-person interior design and construction company in China with his wife, said she may move her home base to Hong Kong because of the pollution. His wife, who is Chinese, has reduced work travel because of the bad air, he said.

While McNamara said he would stay on the mainland for business, he has his own health concerns. At his annual check-up at the Mayo Clinic in the US, the doctor told him that "absolutely with that kind of pollution his health would be impacted".

WHO director general Dr Margaret Chan Fung Fu-chun said in a March interview that "talented people have actually talked to me, and they've changed their decision to settle in China because of the air pollution". But, she said, "I think Chinese authorities understand this and they know what's going on."

Simon Gleave, Beijing-based partner in charge of KPMG's Asia-Pacific financial services practice, has spent US$4,000 for an air-quality monitor, US$15,000 for air filters around the house and has an indoor virtual-reality biking system for days when the air is too bad for him to cycle outside.

"If my daughter develops any health effects, though, we would leave immediately," said Gleave, who has lived in Beijing for more than a decade.

Chinese Premier Li Keqiang has called pollution a major problem and said the government would declare war on smog by removing high-emission cars from the road and closing coal-fired furnaces.

Almost two-thirds of the country's wealthy, those with assets of US$1.6 million or more, have left or plan to leave the country, according to the Hurun Report, a Shanghai-based research firm that tracks the country's rich. Environmental concerns are one of their most frequently cited reasons, according to Kristin Shi-Kupfer, who researches Chinese society at the Berlin-based Mercator Institute for China Studies.

Companies from Nestle to Japan's Sony are handing out masks to employees in China. Some are lining their offices with air filters, or hiring experts to coach executives on battling smog. Qoros Auto, a joint venture between an Israeli company and China's Chery Automobile, said it spent about 150,000 yuan (HK$188,000) for purifiers at its offices and 9,750 yuan on masks for employees.