Human Resources & Payroll
By Alexander Chipman Koty and Zhou Qian
Labor costs in China continue to rise – 17 regions have increased their minimum wages so far in 2017.
Regional authorities in Beijing, Fujian, Guizhou, Henan, Hubei, Hunan, Inner Mongolia, Jiangsu, Jilin, Ningxia, Qinghai, Shaanxi, Shandong, Shanghai, Shanxi, Shenzhen, and Tianjin have all raised their minimum wages in 2017. In total, these 17 regions are more than the nine that increased wages in 2016, but down from 19 in 2015 and 24 in 2014.
While the growth rate of minimum wages is lower than that of much of the last decade, wages are growing from a higher base than before, and wage increases continue to outstrip increases in productivity.
Minimum wages in parts of China – such as Beijing, Shanghai, and Shenzhen – are now higher than certain areas in the EU, namely Bulgaria. However, at their lowest levels – like in parts of Anhui, Guangxi, and Heilongjiang – wages are more comparable to countries such as India and Vietnam.
By Dezan Shira & Associates
Editor: Jake Liddle
As Asia’s largest economy, China has an established history of serving as the main operational center for many multinational companies’ (MNCs) operations in Asia. Since its economic reform and opening up in the late 1970s, the country started to operate and compete on free market principles, and consequently, more and more MNCs have been able to use China as an operations base.
Since then, the country has continued to liberalize and has developed its infrastructure significantly, easing and facilitating more trade and commerce as a result. With this, China has shifted its focus from being largely dependent on manufacturing, to a more service-based economy.
This means that China’s labor force is becoming more service-oriented, and education levels have followed suit. As of 2015, there was an estimated 32,000 university graduates who specialized in HR management.
By Gidon Gautel
Social insurance exemption for foreigners can be a valuable asset for employers and foreign employees to save on unnecessary costs. However, many companies hiring eligible employees are not aware of the benefits available to them, while those who do are often unsure as to how to go about applying.
China’s social security system consists of five different types of insurance, plus one mandatory housing fund. The five “insurances” are pension, medical, work-related injury, unemployment, and maternity insurances, while housing fund contributions are included because the costs come from both the employer and the employee.
By Zhou Qian
Social security is a complicated but unavoidable issue in employer-employee relationship management for businesses operating in China. With labor costs continually rising and economic growth slowing, it is not uncommon that companies may endeavor to look for ways to circumvent social security obligations.
However, are social security contributions really a burden for companies? Can companies exempt social security obligations by reaching agreements with employees? What are the risks of noncompliance? In this article, we explore the key points of China’s social security system that employers should know.
By Chet Scheltema
Chinese family members entered the offices of the foreign trading firm and refused to leave. A China-based employee on assignment in Southeast Asia had suffered a severe injury in a motorcycle accident and lay hospitalized in a coma. The family sought tangible assurance of financial support.
Evening approached. The employers called Shanghai police, but the police refused to intervene, dismissing the matter as a non-criminal dispute. Around 8 p.m., the employers made a frantic call to advisors: “What do we do?”
By Dezan Shira & Associates
Foreign travelers transiting through China have several options for transit visa exemptions. These transit visa exemptions allow eligible foreign travelers a visa free visit for 24, 72, or 144 hours.
Although requirements for each transit visa exemption are different, each transit visa exemption stipulates that foreign travelers are only eligible when traveling through China between two different countries. Further, onward travel must occur within 24, 72, or 144 hours of arrival.
By Moliang Jiang
The concept of a paperless office is trending in Chinese workplaces. For companies that want to cut costs, and make operations more efficient, electronic contracts seem to be an attractive alternative for traditional paper contracts that can be difficult to organize and store.
However, contract disputes over the validity of electronic contracts have become more frequent. Although some cases upheld the legal validity of electronic contracts, there has not been a consensus on the legal status of electronic contracts in practice.
The use of electronic contracts, albeit convenient, can give rise to nuanced legal implications.
For any companies that want to use electronic contracts in China, it is crucial to understand their legal technicalities. Firms should make sure that they create valid electronic contracts to avoid legal hurdles. A strong understanding of how electronic contracts function in China can help businesses mitigate the potential for disputes.
By Gidon Gautel
China’s new work permit system for foreigners was rolled out nationwide on April 1 this year. The new system has introduced a three-tier talent grading system for expatriates. Expats are placed in either Tier A, B, or C, depending on the number of points they earned under the point scoring system, or by fulfilling a condition that automatically places them in a given tier.