On May 9, 2019, the State Council issued guidelines encouraging local governments to start pilot childcare leave programmes within their jurisdictions. The policy was designed to provide more support for home-based childcare services, rather than expensive daycares.

In the period following, multiple regions began exploring the implementation of childcare leave, including the provinces of Guangdong, Fujian and Ningxia. At that time, however, employers were only encouraged to grant employees childcare leave until a child reached a certain age, and were not obliged to do so.

Then, China announced the three-child policy in May 2021 and updated its Population and Family Planning Law in August 2021. The Population and Family Planning Law says that the state supports the establishment of childcare leave where conditions permit. In the following months, this suggestion was translated into concrete local policies, as more and more provinces amended their population and family planning regulations and stipulated that both parents who lawfully have a child are entitled to a certain amount of paid childcare leave per year until their child reaches a certain age.

How long is childcare leave in China?

Childcare leave is managed by local governments. Therefore, each province has different regulations. As of December 2021, 20 provinces have amended their population and family planning regulations, of which 18 have set out the exact length of childcare leave.

Beijing and Shanghai both stipulate that each couple can enjoy five days’ childcare leave each year until their child reaches three years. Beijing further stated that the total amount of childcare leave a couple can take each year should be no more than 10 working days.

Some provinces offer longer childcare leave. Heilongjiang, Hebei, Jiangxi, Sichuan, Guizhou, Zhejiang, Tianjin, Ningxia, Henan, Hubei, and Guangdong all offer 10 days of childcare leave each year for couples with children under the age of three. Shanxi, Qinghai, and Gansu provinces give 15 days of childcare leave each year to couples with children under the age of three.

In other provinces, the revised family planning regulations have not yet been adopted, but some have published revised drafts to solicit public opinions. For example, Shaanxi plans for each parent to have no less than 30 days of childcare leave each year until their child reaches three years. Hainan plans to set up two options for childcare leave: employers are encouraged to give 10 days’ childcare leave to each parent per year until their child reaches three years, or to give one hour of childcare leave to either parent every day until the child reaches three years.

How is childcare leave in China implemented?

Childcare leave has been established, but details on how it will be implemented are yet to be clarified in most provinces.

Beijing and Shanghai have made it clear that annual childcare leave is not calculated by calendar years but in ‘anniversaries.’ For example, if a child was born on 19 December 2021, then 18 December 2022 will be the ‘anniversary’ marking the end of the year in which each parent is entitled to five days of childcare leave.

In Shanghai, childcare leave days are calculated according to the number of children an employee has. If the employee has two children both under three years old, then they will be entitled to 10 days of childcare leave for the year. Childcare leave can be taken over consecutively or on separate days and also stipulates that normal wages should be paid in full during childcare leave.

Companies operating in provinces where childcare leave has been established are advised to keep a close eye on further policy developments and to start considering amendments to their employee handbook to adapt to this new form of statutory leave.

A version of this article was first published by China Briefing, which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to info@dezshira.com for more support.

The post Do Chinese companies offer childcare leave? appeared first on Focus - China Britain Business Council.

1. Misunderstanding Chinese consumers

Chinese consumers are not the same as consumers in the UK or the West. Their tastes, styles, budgets and requirements are all different and therefore products and services that sell in the UK might not necessarily sell in China. It is therefore absolutely vital to conduct thorough research about Chinese consumer habits and preferences to find out whether your product will work in the China market.

Nevertheless, many brands have had success when localising their products to the local market. From different clothing sizes to targeted milk products to crab flavoured Pringles – those that understand their consumers will certainly fair better. Also, China’s appreciation of soft skills, consultancy and services is not yet as financially valued as in the UK, therefore market research, competitor analysis, testing and focus groups are all strongly advised before a full-on launch.

2. Underestimating the time involved

Unlike other territories, expanding an existing business into China is not a quick and easy task. The legal, financial and regulatory processes can be complex depending on which sector your company is in. And leaving it all to local staff and partners to manage can be costly in the long term. Allocating appropriate funds, hiring and training local staff and dedicating time for senior staff to get to know the market, the local office and the local staff is essential.

3. Ignoring KOLs and KOCs

Top KOLs can drive brand awareness and sales conversations, but they can also be costly

Key opinion leaders (KOLs) and key opinion consumers (KOCs) are the Chinese equivalent of social media influencers and are instrumental in a brand’s success or failure. While KOLs can be celebrities or other types of influencers paid to promote brands on their social media posts, KOCs are regular consumers, albeit with a large social media following, who are trusted for their reviews and brand preferences. Choosing the right KOLs or KOCs to advertise a brand can be key for foreign businesses when reaching out to consumers.

“It’s essential for brands to be very clear about their objectives for their marketing campaign,” says CBBC’s Demi Ping, Director for retail and e-commerce. “Top KOLs can drive brand awareness and sales conversations, but they can be costly; micro-KOLs and KOCs, on the other hand, can be more affordable for SME brands and can generate decent sales.”

4. Choosing the wrong partners

When spearheading a first foray into the China market, domestic business partners can mean boom or bust. A number of businesses have had bad experiences with business partners who did not share the same vision; or worse, partners who own an illegitimate business. It is thus best not to rush into any partnerships with people or businesses that you do not know and to conduct a proper background check.

5. Misunderstanding the business culture 

D&G’s cultural mistakes cost have them dearly in China

Although business in China is conducted much in the same way as it is in the West, there are a few important subtleties that can make a difference. Preparing appropriate gifts, knowing the holidays and the bonus structure is important, as is understanding the concept of ‘giving face’. Giving face is all about preserving a good image for your team, your counterparts, your partners or your host, and learning about ways to ‘give face’ – as well as avoiding things that can make you or others ‘lose face’ – is vital when conducting business in China.

Likewise, many businesses have also missed the mark in some of their advertising and branding and fallen foul of their consumers, sometimes even causing their China operations to close.

6. Ignoring lower-tier cities

The third-tier city of Yiwu holds one of China’s largest trade fairs

China is the size of a continent and just as companies wouldn’t treat Europe as one territory, nor should China be treated as such. First-tier cities such as Beijing and Shanghai might be household names but they are just one part of a much larger market. Many of China’s smaller cities have huge populations in the tens of millions, and many domestic brands have done very well by specifically targeting third- and fourth-tier cities.

7. Not securing your IP

It may seem self-evident, but having IP protection from your home country does not extend that protection to other countries; IP rights are limited in scope, duration and geographical extent, and foreign businesses often make the mistake of misunderstanding their IP rights in China. Since China uses a ‘first-to-file’ system for patents and trademark protection applications, it is thus highly advised to obtain IP protection for your business in China as soon as possible.

“Before expanding any business in China, it is essential to obtain the necessary rights to ensure that you maintain a competitive advantage in this market,” says Yuan Yuan, director of business environment at the CBBC. “Legislation for IP protection in China has made leaps and bounds in recent years, and the current system now rivals other IP protection systems anywhere else globally. Registration of your IP rights is the first line of defence.”

8. Not getting to grips with China’s local digital landscape

China’s online platforms are completely different from those elsewhere

Navigating the complex digital landscape in China, and capitalising on its innovative sites and platforms, can be a real challenge for businesses as many do not get properly acquainted with its unique characteristics. Facebook, Paypal, Uber and other foreign websites are restricted; instead, China has WeChat, Alipay, Didi and other domestic platforms that cater to Chinese consumers. Foreign businesses would do well to establish themselves on these platforms and ensure they comply with domestic internet regulations, as failure to do so could lead to losing a platform, or worse — getting locked out of the market.

9. Missing frequently changing regulations 

While there are negative lists for market entry and foreign investments – meaning that listed areas and sectors are not open for access and investment – cross-border e-commerce (CBEC) in China uses a positive list, meaning that only items included on the list can be eligible to sell through CBEC. These lists are updated frequently, and so foreign businesses are strongly advised to stay abreast of the newest changes.

10. Getting the legal jurisdiction wrong

Many businesses may want to handle contracts and legal agreements under their home country’s laws or under the laws of the Hong Kong SAR, but in most cases, this cannot be done when doing business in China. Businesses often do not adequately prepare the legal side of business, and it is important for them to use the proper legal jurisdiction and abide by the jurisdictions’ laws and regulations.

In order to mitigate risks, consider using China Gateway, the CBBC’s market advisory service, to help demystify the process of doing business in China, as well as CBBC’s Launchpad service, which provides simple, low-risk, legal means to enter the China market.

The post Top 10 most common mistakes foreign businesses make in China appeared first on Focus - China Britain Business Council.

Sheedy has worked all over the world and was given the opportunity to work closely with Li Jinyuan, the founder and Chairman of Tiens Group – known locally as Tianshi – a large multi-level marketing company headquartered in Tianjin selling everything from traditional Chinese medicines to instant coffee. Sheedy’s time at Tiens and conversations with Chairman Li led him to research and write Unlocking The Emperor’s Door (Nicholas Brealey Publishing), a book that examines, among other things, the path to Tiens’ success locally and internationally, and the methodology behind multiple innovative new products. Paul French caught up with Chris Sheedy to hear more…

We don’t have shelves of books about doing business with Sweden or Canada, but we do for China. China and the West have been doing business for decades now. How come issues like respect, where you sit and how you refer to people are still so important to success?

That’s an excellent observation, and the answer is both extremely simple and terribly complex. First of all, few territories are as culturally different to the West, or indeed are changing so rapidly internally and in terms of their global reach. Successful business in Sweden or Canada, or almost anywhere else in the world, doesn’t rely so heavily on an entirely new set of cultural guidelines being followed.

Then, there’s the fact that more businesses than ever are looking to China as a part of their growth strategy – and what a growth strategy it is if a brand succeeds in China. Where there is demand (in this case for business knowledge) there is supply (in this case, shelves of books).

The more complex answer is something businesspeople in the West should be proud of. That’s the fact that we want to do business well in other territories, and understand how to do business with Chinese companies globally. We’ve moved beyond the idea that everything should work our way, that we can force our own processes and methods of business and ways of thinking and, indeed, our own culture, onto those with whom we do business. We want those we’re dealing with to know that we’ve done our research and that we respect their ways.

That, in fact, is how the best business has always been done – respectfully, with empathy and even with vulnerability. In the Covid-19 and post Covid-19 environment, many thought-leaders agree, this very human approach to business will be more important than ever.

You discuss in detail the highly regulated and hierarchical workplace at Tiens Group. In light of China’s rapidly changing society and new generations coming up through the management structure, will the Chinese workplace become more flexible over time?

The Chinese workplace absolutely will become more flexible – it’s happening right now. Even the most traditional Chinese leaders are recognising the value of diversity of thought and leadership. The clearest examples of this are in the tier one cities in China, where many middle managers have earned qualifications, such as MBAs and other degrees, in the West. They have returned to China with a slightly different point of view on how businesses can be managed, and on their roles within those businesses. Their attitudes are outstanding – a perfect mix of self-confidence, role competence and cultural respect.

Why vocational training is on the rise

On the flipside, during meetings within various organisations in China I witnessed the negative side of the hierarchical structure – younger but highly competent staff sitting silently in meetings, never sensing they had permission to offer their ideas, simply waiting to be told what to do. This creates a bystander culture in which everybody watches and waits for instructions from above. It is the opposite of the engagement and buy-in that drives discretionary effort. But, let’s be honest, this doesn’t only happen in Chinese businesses.

I witnessed the negative side of the hierarchical structure – younger but highly competent staff sitting silently in meetings, never sensing they had permission to offer their ideas, simply waiting to be told what to do.

Chinese workplaces face all of the same challenges as those in the West. The big difference is the level of respect Chinese workforces typically have for senior people, and this comes from somewhere much deeper within the Chinese culture. Depending on the way this respect reveals itself in the workplace, it can be an exceptionally positive organisational trait or one that doesn’t support or encourage new or diverse ideas.

I discovered a country that is carefully balancing centuries of tradition with decades of rampant advancement

Throughout the book, you use the example of Tiens’ Chairman Li Jinyuan. Why do you find his case study so compelling?

I’m unashamed to say I was fascinated by Chairman Li from the moment we met.

This is partly because his story contains all of the hallmarks of a page-turner. He came from almost-rags to create unimaginable riches in a business environment which, for several decades, offered entrepreneurs no support at all.

He failed, then failed again, then failed some more, but continued to adapt and tap into new resources that others simply didn’t identify, during seemingly endless periods of adversity. He is the living embodiment of resilience and persistent vision. If the book was purely about his business story, it would be a great one.

What are the most common mistakes foreign businesses make?

Perhaps most importantly, Chairman Li built his empire on his own, suffering more than his fair share of loss along the way. He didn’t do it with family money. He didn’t take over a business that was already in existence. He didn’t even have an extensive education, but goodness, he could teach today’s young businesspeople a thing or two.

Chairman Li is imperfect. He has made some great mistakes. And he is still consciously attempting to democratise control of his business to encourage diversity of leadership and has not yet succeeded in that endeavour. But I think I’d be right in saying he has never, for even a single day, lost his passion for community and his sense of responsibility to others.

As somebody who has spent his life entirely within and around Western businesses, I found the level of corporate generosity and social responsibility within Tiens Group simply astounding. And he serves a mean Moutai…

The concept of ‘face’ in business in China has been endlessly discussed. Why are we still talking about it? Have we failed to truly understand it?

Of course we have failed to truly understand it, and that’s fine. The concept is so deep and complex. It has developed over centuries and is woven intricately into the fabric of every interaction, every relationship, every belief, every word spoken and every word unspoken in China.

Many Chinese people told me that even they don’t have a full grasp of the idea of face, or at least can’t articulate it in a way that foreigners would easily understand. So, it’s okay for Westerners to lack a thorough comprehension. I found the more I understood of the concept, the more I realised I didn’t understand.

The concept is so deep and complex. It has developed over centuries and is woven intricately into the fabric of every interaction, every relationship, every belief, every word spoken and every word unspoken in China.

Fortunately, there’s a surface level of comprehension that tends to get you through most interactions, and that actually serves as a good model for any relationship, in China or elsewhere. It involves listening more than you talk, always demonstrating respect for those around you, never attempting to paint anybody else in a negative light and never misrepresenting your abilities.

Face, at its most basic level, is about being a good, modest person, and that’s an excellent starting point for anybody, anywhere.

Fortunately, the Chinese people are exceptionally forgiving when a foreigner gets things wrong, as I did constantly…

Tiens Group is into direct selling, which has something of a global image problem. Yet in China, it’s been phenomenally successfully for decades, all the way through to today’s live streaming. Why is direct selling, seemingly in all its manifestations, so massive and intense in China?

Direct selling certainly has an image problem globally, and it’s entirely of its own making. The industry, particularly in the US, created serious problems for itself when it shifted from making money by selling something, to making money by selling nothing.

But most of the direct selling world does excellent business and does it very well. After all, it’s simply a retail model without stores, a good way for salespeople to demonstrate and sell products to interested buyers.

Why cross cultural training is key to business success

Chairman Li pioneered direct selling in China. He learned from the very best and very worst examples in the US. He recognised direct selling as the perfect model for his health products to be explained, rather than languishing on the shelves of corner stores and mini-markets.

The industry did well in China because of a lack of big-brand supermarket chains and an enormous, but geographically dispersed population. However, as you mentioned, many such businesses (including Tiens Group) have in the last few years pivoted their models to look and behave more like online retailers than direct sales outfits. This is partly because of changes in technology and partly because of changing expectations of younger customers in China and worldwide.

You worked in close proximity to Chairman Li at Tiens for some time. Looking back on that time, what were your major discoveries?

Apart from Moutai, you mean? Actually, I’d classify the experience of working closely with Chairman Li, of being given an access-all-areas pass within a Chinese multinational, and of spending such a long period in China, as life-changing.

In the West, we are fed an enormous amount of disinformation about China. This is part of the reason that we are unsure about doing business there, and why some businesses fail on their first few attempts at setting up relationships.

After all he has achieved, and with all they know about what he has built, he still senses a feeling of superiority from some Westerners.

Chairman Li explained to me, in a very Chinese and respectful way, that sometimes he senses Western businesspeople think Chinese business leaders are somehow backwards. After all he has achieved, and with all they know about what he has built, he still senses a feeling of superiority from some Westerners. And of course, that would happen.

Because of the typically negative media reports on China, and because of the fact that in the West we tend to feel our own culture is quite advanced, I was surprised by the level of technology and the depth of cultural complexity in China.

I discovered a country that is carefully balancing centuries of tradition with decades of rampant advancement, cities that made Western centres look positively medieval, a government that has absolute control and that mostly uses that control in a positive way, and generations of Chinese (most of whom deeply respect their government, unlike the way we in the West tend to feel about ours…) struggling to come to terms with the line they’re currently straddling, the one between the old and the new.

The China story over the next few decades will be ever more fascinating, particularly in the twisted and splintered, post Covid-19 environment. I look forward to seeing how it all unfolds.

The post Christopher Sheedy’s book Unlocking The Emperor’s Door appeared first on Focus - China Britain Business Council.

1. Increases your time

Depending on the jurisdiction, managing the payroll can be complex and time consuming. When this task is outsourced, the hours spent on ensuring the company is compliant, keeping up with changing regulations, and training staff on internal systems is eliminated. In return, this time can be spent focusing on the core capabilities that drive your company’s growth.

2. Reduces your costs

Outsourcing payroll tasks is often the more affordable solution for many small to medium-sized business, as related expenses such as personnel, software and training are eliminated. Furthermore, the hidden costs that are linked with incorrect payroll handling should be considered, such as penalties and fines for late filing to authorities.

3. Lets you focus on your core business

Outsourcing is a growing trend. In fact, nearly every business outsources at least one critical function, such as website hosting, accounting, or HR services. Partnering with a professional provider to handle your payroll allows your organisation to focus on core capabilities and invest in strategic resources to increase the value of your company.

4. Mitigates risk

A critical task of a payroll provider is to ensure your company is following local rules and keeping up to date with regulations. Especially in jurisdictions like China, this is not an easy task, as regulations and local laws are complicated and dynamic. With the help of a professional payroll provider, you’ll have the assurance and confidence in your preparation and filing of payroll-related paperwork and tax matters.

A critical task of a payroll provider is to ensure your company is following local rules. In jurisdictions like China, this is not an easy task

5. Improves security

Professional payroll service providers invest significant amounts in specialised staff and software to maintain a robust and fully secure payroll system. It would be detrimental to any business if confidential information were to mistakenly be made available to individuals not meant to see it. By outsourcing the task of calculating and distributing this data, it’s possible to limit risks involving a breach of confidentiality.

CSC offers corporate administration and international expansion services. Their HR and payroll services include preparation of monthly payroll slips, managing required pension contributions, and employment visa applications. To learn more, visit cscgfmapac.com or contact apacbusinessadvisory@cscgfm.com

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Last year, seven regions (Chongqing, Shaanxi, Shanghai, Beijing, Hebei, Fujian, and Qinghai) in China announced an increase in their minimum wage. In 2018, 15 out of the 31 regions in mainland China increased their minimum wages, while 20 provinces did so in 2017.

Local governments in China are required to update their minimum wages at least every few years but have the flexibility to adjust wages according to local conditions. Most provinces set different classes of minimum wage levels for different areas depending on the given region’s level of development and cost of living. For example, a higher minimum wage class for the provincial capital and the most developed cities, and a lower class for smaller cities and rural areas.

A complete guide to China’s minimum wages can be found below.

China’s minimum wage: Understanding regional variation:

Hunan, Gansu, Guizhou, Tianjin, and Zhejiang are among the regions likely to adjust their minimum wages in mid to late 2020, given that they have not done so in the past two years.

Chinese regions often opt to increase minimum wages to keep pace with the cost of living increases, so other regions may also adjust their wage standards later this year.

That being said, 2020 might see fewer wage increases than usual given the coronavirus pandemic, which has shifted the need to reduce the financial burden on enterprise and job stabilisation to the forefront. The reorientation of priorities are also set against the backdrop of an ongoing US-China trade war and an economic slowdown.

Regions may opt to freeze local wages in order to maintain their economic competitiveness amid the uncertainty.

Currently, the highest minimum wages are in parts of Guangdong, Jiangsu, and Zhejiang provinces, which have all surpassed the RMB 2,000 (US$289) mark, as well as in the municipalities of Beijing, Shanghai, Shenzhen, and Tianjin.

Shanghai continues to have the highest minimum wage in China, at RMB 2,480 (US$358) per month, followed by Shenzhen and Beijing, both at RMB 2,200 (US$318) per month.

At the lowest end, the minimum wage in certain rural areas of Liaoning (RMB 1,120/US$162), Hunan (RMB 1,130/US$163), and Anhui (RMB 1,150/US$166) slightly higher.

However, while China is still among the most unequal countries in the world in terms of income inequality, it has made some progress over the past decade.

According to China’s National Bureau of Statistics, the country’s Gini Coefficient dropped from 0.491 in 2008 to 0.465 in 2016, where a higher number denotes greater inequality.

Impact on China’s labour costs

Minimum wages only tell part of the story of labour costs in China. As China’s economy moves up the value chain and transitions to innovation and services, most workers employed by foreign-invested enterprises earn above the minimum wage. For example, workers in Shanghai made an average of RMB 9,723 (US$1,405) per month through the first quarter of 2019 – over four times the local minimum wage.

Moreover, employer social insurance and housing fund obligations add an additional 37.25 percent to an employee’s salary on average. China’s rapidly rising wages are partly explained by the country’s labor pool which, while enormous, is gradually shrinking.

In 2018, China’s employed population declined for the first time ever, falling by 540,000 to a total of 776 million. This trend is exacerbated in China’s wealthy coastal regions – a traditional hotbed of foreign investment and manufacturing – which migrant workers are leaving in favour of inland China.

According to the National Bureau of Statistics, in 2016 the migrant worker population in coastal provinces fell by 0.3 percent, while that of Western provinces grew by 5.3 percent.

For foreign investors, rising wages are an unavoidable feature of doing business in China. Nevertheless, when other factors like productivity, infrastructure, transportation costs and access to a massive domestic market are considered, China may still emerge as the more cost-efficient option compared to countries with lower statutory labour costs.

When comparing locations for foreign investment into China, minimum wages are a helpful barometer to gauge labour costs across different regions.

From there, identifying industry-specific wage levels, availability of talent, and access to regional incentives offer a more nuanced view of ultimate labour costs within a given region.

This article was first published by China Briefing

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Do I have to pay staff full salaries even if my company has had to suspend business or production due to the epidemic?

Yes, you should pay at least up to 30 days in full. Beyond this period, your company can negotiate new payment standards with employees, who will earn their compensation according to the actual work they carry out.

If your company does not require employees to work, you will have to compensate them with a living stipend. This is calculated in percentage to the minimum local wage, as follows:

• Beijing: 70% of local minimum wage;
• Shanghai: 100% of local minimum wage;
• Guangdong, Jiangsu, Hebei: 80% of local minimum wage;
• Wuhan: 70% of local minimum wage.

Your company should pay the living stipend until work resumes or until the expiry of the employment contract.

If your company does not require employees to work, you will have to compensate them with a living stipend

I have an employee who can’t return to work due to controls on public transport or self-quarantine measures. What compensation do I need to pay?

You will have to pay a full salary if your employee was on a business trip during the outbreak of the epidemic, and cannot return to the workplace in Beijing. The same will apply after you and the worker have successfully negotiated that he/she can work from home.

Can I terminate the employment contract of an employee who is quarantined/isolated for medical treatment or observation during the epidemic emergency period?

Your company cannot terminate a worker who has been:

• diagnosed with COVID-19 infection; or
• suspected with COVID-19 infection; or
• classified as a close contact person required for quarantine; or
• unable to work due to the relevant epidemic emergency control measures.

You can refer to article 40 and 41 of the Employment Contract Law for a clear explanation. What if your employee’s contract expires during the quarantine period? His contract should be extended until his medical treatment, observation period, quarantine period, or the epidemic emergency measures are over.

However, you may terminate a worker in the following scenarios:

• the worker commits a serious breach of the rules and policies or code of conduct (i.e. eligible for dismissal with cause);
• the worker fabricates or intentionally spreads false information to cause public panic or other violation(s) of the epidemic emergency measures.

An employee is suspected to have been infected with COVID-19 and is quarantined/isolated for observation and medical treatment, what compensation do I need to pay?

You should pay employees their regular salary if they are:

• Diagnosed with COVID-19 infection;
• Suspected with COVID-19 infection;
• Had close contact person during the quarantine for medical treatment or observation; and
• Unable to work due to the relevant epidemic emergency control measures.

Besides, he or she is entitled to get relevant sick pay If he is diagnosed with the virus and needs medical treatment and/or recuperation after medical observation and quarantine, or after the relevant epidemic emergency control measures are no longer needed.

How do I handle employment dispute cases that arise during the epidemic period?

The epidemic has led many cases to be delayed in the arbitration courts. In case a dispute arises between a company and an employee, they both may find it difficult to apply for an employment dispute arbitration within the statutory time limit. That is why this limitation period for arbitration can be delayed.

At times, you or your attorney may not make it to the hearing at an arbitration institution due to the epidemic. If this happens, you can apply to postpone the hearing.

At other times, the employment dispute arbitration tribunal cannot rule on a case within the prescribed time frame. In this case, too, the deadline may be extended.

Can I refuse to hire job candidates that come from badly affected areas?

No, as an employer you cannot discriminate against job applicants if they come from Hubei, or if they have been quarantined. That will be regarded as employment discrimination, and it is unlawful.

In addition, the Cybersecurity Law stipulates a principle of “necessity” or “minimum necessity” when it comes to the collection and use of information collected for the purpose of epidemic control.

For this reason, employers shall protect their employees’ information.  They should not disclose or disseminate such information, but instead take appropriate confidentiality measures.

For more information on HR issues visit LLinks Law Offices

The post How to handle your human resources during the Coronavirus appeared first on Focus - China Britain Business Council.

As the coronavirus outbreak continues, enterprises in China are experiencing enormous challenges in the management of employee relations. The nationwide implementation of epidemic prevention and control measures has exerted varying degrees of pressure on enterprises, affecting their production, operation and employment arrangements. Some employees cannot return to work, and others are not able to work to capacity. As the epidemic continues, some enterprises may suffer from a partial or complete labour surplus.

In response to these problems, state and local governments have issued a series of policies to encourage enterprises affected by the epidemic to adopt flexible employment arrangements (such as salary adjustment, work shift rearrangement, work hour reduction, and rest day rearrangement), with an aim to avoid or minimise layoffs.

If an enterprise still experiences serious difficulty after adopting flexible employment arrangements, it may have to find a way to deal with the redundancy, to minimize cost of labour. There are mainly two types of plans available: (1) suspend the enterprise’s operation while retaining the employment relationship with employees until operations are resumed, and (2) terminate the employment relationship with some or all employees. In this article, we describe each plan’s conditions, requirements, and practical points.

I. Suspending operations

The current laws and regulations do not provide a clear process or premise for the suspension of operations. Enterprises affected by the epidemic can consider suspending operations as the situation demands. There are, however, certain issues to watch for:

1.              There must be a proper reason for suspension, such as lack of need for production due to decreasing orders or an inability to operate due to traffic restrictions.

2.              An enterprise deciding to suspend operations must explain to employees, in writing, the reason for and length of the suspension, as well as tasks to be fulfilled and compensation standard during the suspension period. The enterprise must also hear the employees’ opinions and answer their questions.

3.              Compensation. For a suspension that is within one pay period, the enterprise must pay the rates stipulated in the employment contract. If the suspension lasts longer, the enterprise may pay based on the amount of work done according to a new rate agreed by both parties (but it cannot be lower than the local minimum rate). For employees without work, the enterprise should pay a living subsidy in accordance with local standards. In Shanghai, the subsidy must not be less than Shanghai’s minimum wage. In Jiangsu and Zhejiang, it should be no less than 80 percent of the local minimum wage.

4.              Though the law does not explicitly require enterprises to send any report to the labour and social security department in advance of a suspension, it is recommended that an enterprise communicate with its local labour and social security department in advance and operate under their guidance.

II. Planning a layoff

If the enterprise still suffers from a labour surplus and experiences a business crisis after taking the above-mentioned measures, a layoff may be inevitable. Under the law, an enterprise can consider the following plans to terminate some or all of its employees:

1.  Termination by mutual agreement

According to Article 36 of the PRC Labor Contract Law, an employment contract may be terminated in writing by the employer and employee’s mutual agreement. The agreement to terminate should contain the date of termination, amount of compensation, settled wages and expenses, and the employer’s disclaimers. An employer is advised to retain all written communications, records, and fully executed mutual termination agreements with its employees.

2.  Termination based on a major change in circumstance

Under the PRC Labor Contract Law, Article 40, Section 3, where there is a major change in circumstance rendering performance of an employment contract impossible, and the two parties fail to agree on an amendment, the employer may unilaterally terminate the contract. In the current epidemic, it is believed that if the epidemic has sufficient impact on an enterprise that it constitutes a major change in circumstance as recognised by common judicial practice, the employer can consider terminating its employees.

However, different local adjudication bodies adopt different standards in assessing what constitutes “a major change in circumstance rendering performance impossible.” Thus, employers must carefully assess whether the epidemic truly presents a serious obstacle to the performance of their employment contracts.

Two types of employees cannot be terminated based on a major change in circumstance: (1) employees that meet the requirements in Article 42 of the PRC Labor Contract Law (for example, female employees undergoing pregnancy, confinement or lactation), and (2) carriers, suspected carriers, and persons having been in close proximity to carriers of the novel coronavirus who are either quarantined or placed under medical observation, as well as employees who cannot work due to quarantine or other emergency measures implemented by the government (collectively referred to as “employees that are not terminable due to the epidemic.”)

3.   Mass Layoff

Under the PRC Labor Contract Law, Article 41, a qualified enterprise requiring a termination of (1) twenty or more employees, or (2) few than twenty but no less than 10 percent of the employer’s workers, may implement a mass layoff. But even with a mass layoff, the enterprise cannot terminate an employee whose termination is forbidden by law (including employees that are not terminable due to the epidemic (as defined above) and employees specified in Article 42 of the PRC Labor Contract Law).

An enterprise planning a mass layoff should first assess whether it meets all legal requirements for such a layoff. But since no uniform standard for determining whether an enterprise conforms to the four situations authorising a mass layoff is seen in today’s legal practice, a decision for mass layoff must be carefully evaluated on a case-by-case basis. In addition, an enterprise must satisfy the procedural requirements for a mass layoff, including giving the labour union or all its employees a 30-day advance notice to explain the situation, hearing the labour union or employees’ opinions, and reporting to the local human resource and social security department after seeking labour union and employees’ opinions.

4.  Ending employment due to dissolution

Article 44 of the PRC Labor Contract Law permits ending an employment contract when an employer decides to dissolve the company. An enterprise needing to close and dissolve as a result of the epidemic may end its contracts with the employees.

III.  Conclusion

Enterprises can reduce the cost of labour and stabilise employee relations by making full use of one or more flexible employment arrangement measures permitted and encouraged by the government. If, after taking these measures, an enterprise still needs to reduce the size of its workforce, it should formulate and implement appropriate redundancy plans to comply with the law and minimise labour disputes.

This article was written by Tracy Liu and Larry Lian of Jingtian Law firm

The post What are the rules on making staff redundant in China following the coronavirus? appeared first on Focus - China Britain Business Council.

China is more affluent and innovative than ever, but also more complex and competitive. In this new reality of “China 2.0”, foreign businesses are under intense pressure to do things differently – starting with the way they structure and run their organisations.

Companies are reshaping their organisational setup and HR strategies to match “China 2.0” and cope with broader shifts happening in the country’s employment landscape, including generational change and a severe skills shortage in high-tech industries.

Agility is key if businesses wish to stay ahead in a market where trends and regulations can change unexpectedly. Other approaches include growing headcount and realising that tough competition calls for an “all in” approach. And many are strengthening their company culture through corporate social responsibility (CSR) and other engagement programmes.

Agility is key if businesses wish to stay ahead in a market where trends and regulations can change unexpectedly

Companies should be embracing change rather than shying away from it, and the potential gains for foreign companies in China have never been higher. But seizing them starts with building the right team.

China 2.0 Through the HR lense

Each organisation is a world of its own. But certain HR challenges and priorities are shared by many companies. These are some of the ways in which “China 2.0” is influencing HR agendas:

China’s Shifting Employment Landscape

Headwinds…

… & Tailwinds

5 HR Trends in China 2.0

There are no “one size fits all” solutions to the problems of finding, retaining, and developing talent, but businesses facing similar setbacks tend to come up with similar strategies. These are 5 common ways in which international companies are solving HR challenges in China:

1. Re-think your candidate profile

Multinationals have traditionally had a clear idea of which positions they want to fill with expats and which ones they need local talent for. Increasingly, however, the nationality of candidates is not specified by employers and recruiters from the outset, largely because the pool of Chinese professionals with international experience has expanded. Identifying cases where traditional assumptions no longer apply is an easy way of broadening your pool of potential candidates.

2. Build a talent pipeline

Searching for talent is becoming an ongoing and proactive effort rather than a reactive action when there’s a vacancy to be filled. Measures such as maintaining a strong industry network and investing in employer branding can help you build a pipeline of potential candidates. In industries where scarce or highly specialised skills are needed, our clients engage Fiducia’s Talent Mapping service to identify and start building relationships with candidates they might one day need.

3. De-centralise decision-making

Foreign companies are increasingly losing top talent to Chinese businesses: 30 percent of leaders crossed over from a multinational corporation to a local company in the last five years, whereas only 10 percent of leader went from a local company to a multinational. One disadvantage leaders face at foreign enterprises is that strategic decisions are made at headquarters, so their authority and ownership is limited. Shifting decision-making power to your China subsidiary is an effective way of increasing motivation and retention among senior executives.

4. Get creative with compensation

China’s economy is cooling, yet living costs keep soaring – especially in big cities. In this context, it’s difficult for companies to give their employees the salary increases they expect. Domestic top employers are implementing ingenious and more cost-effective ways of showing their employees that they understand their concerns. Alibaba, Tencent, and Xiaomi, for instance, are helping employees purchase apartments by offering subsidies or interest-free loans.

5. Invest in upskilling

Developing employees has always been a priority for HR departments, but the resources and effort directed towards it often take second place to hiring new talent. China’s fierce and costly talent wars are driving foreign companies to shift gears and realize that investing in retention and upskilling pays off. We’re witnessing this change first-hand, through the growing demand for Assessment Centres that help clients identify and then develop potential talents.

The post Human Resources and organisational Change in “China 2.0” appeared first on Focus - China Britain Business Council.

For businesses looking to enter the Chinese market, what are the first things they should consider when it comes to hiring?

Without a doubt, employers should ensure they have carried out a background or reference check before taking anyone on. Legally speaking, companies need to ensure they are legally able to employ staff directly in China, which, according to China’s labour law, means a fully registered legal entity in China. This could be a Wholly Foreign-Owned Enterprise (WFOE), a Joint Venture or a representative office. But, hiring staff from overseas or a UK registered firm directly is breaking the labour law. Alternatively, they can choose a licensed HR vendor to hire these staff until they have a legal entity fully established.

How easy is it to hire staff before a WFOE or other entity is established?

It’s illegal to hire staff directly before you have a WFOE or other form of legal entity but it is quite easy for a licensed third party to give support with the hiring and to organise the related paperwork. Talent Spot, as a licensed vendor, has actually helped quite a few UK brands entering the China market with this solution before they have an entity established.

What mistakes do many foreign companies make when recruiting?

Hiring staff without checking references is the most common problem. Staff are often hired directly after meeting people at events but it is essential to speak to their previous employer, especially for candidates who have not worked for international firms or who have come from state-owned companies. Also, it is worth noting that if the foreign company is new to the market they will need to pay around 20 percent above the market average to attract good talent.

Hiring staff without checking references is the most common mistake foreign companies make.

China has different HR laws, customs and cultural rules to the UK. What are the most important things to be aware of?

China’s labour law is very complicated and favours the employee. It is common for staff to have at least a three-month probation period and if the candidate doesn’t pass this probation period then the contract termination period needs to start before the period ends. Otherwise, they are classed as full-time staff and it is very challenging to terminate a full-time contract.

It is best to avoid signing an open-ended labour contract and most should have a fixed-term contract as the termination procedures are incredibly complicated once the probation period has passed. It is very difficult to sack a member of staff, unlike in the UK or US.

For example, I have a British client that had two employees causing trouble over their termination. Luckily, the employees’ labour contract was signed with Talent Spot under the contract staffing service, so Talent Spot was regarded as the legal employer and therefore we could deal with them, arrange compensation and eventually get the paperwork signed peacefully.

Ensure they have a competitive salary, provide regular training, and have transparent rewards and punishment system

What are the current HR challenges in China? 

HR in China has many obstacles but the two points that are important for newcomers to understand are the social contributions and salary management.

Unlike 20 years ago when labour costs in China were relatively affordable, today there is a completely different story. Salary levels and the cost of employment for employers is high by international standards, especially in first-tier cities, and salaries are still very much the main reason top talent will work with a company. Competition is fierce and salaries can be surprisingly high.

The cost of social contributions in China is also very high and shocks many international companies. These vary from province to province so, as the saying goes in China, treat every province like its own country.

Do you think the millennial generation has a different work ethic or expectations to the older Generation X?

The younger generation has totally different expectations than the older one. In China, the ‘born-in-the-80s’ generation, are now considered the ‘older generation’ whereas the ‘born-in-the-90s’ generation are the ones with more free will and are less interested in job security and are harder to train. They may resign at any time for any reason and expect to be promoted with a good title and high salary very quickly. The good traditional values have somehow been lost.

Therefore, recruiting and training the millennial generation is a common headache for HR and business owners – though of course there are good ones out there.

What top tips do you have to keep and retain good staff?

• Ensure they have a competitive salary and are given the opportunity for promotion regularly.
• Provide regular training to ensure the best staff can learn new skills.
• Have a transparent policy or guidelines for your rewards and punishment system.
• Always make sure to enact these policies when goals have been reached or rules have been broken.
• If staff still don’t meet their key performance indicators after a first warning them terminate their contract. Don’t keep them on, regardless of their excuses, because they will be a bad influence on the good staff and drag others down.

How much does a company succeed or fail on its staff in China and do you have any examples of this?

I believe the success or failure of any company is mainly dependent on its staff. After all, people are the major factor; your staff are the core and determining factor of your company. Neither the products or the service you provide, nor the amount of investment you receive, nor any other element is of equal importance as the staff. By hiring good staff from the beginning, you create the right working environment and work ethic, and the company will attract more good staff and grow in a healthy way.

A perfect example is Huawei. The core values and success of Huawei is totally dependent on the staff they have attracted and retained over the years by providing an above0market average pay structure and stock options for employees. The founder has a very limited number of company shares, and he has built a common interest that has united every member of staff inside Huawei to truly work as a team. The success of Huawei is not to be found primarily in their technology, their values, the founder, the products or anywhere else; it’s their staff and their HR policy that constantly attracts good staff, terminates the contracts of low performers and retains the good ones.

Previously in China companies would discuss their headcount as an indicator of size and success of a company rather than profit. Is this changing to become more about efficiency?

Yes, happily there’s a trend now towards efficiency rather than headcount after all, efficiency and profit are the key to success, not the number of staff you have. When I do recruitment for my own team, I prefer a small team with high efficiency rather than a large team with low performers doing not much all day and influencing the motivation of the good staff.

The post Top trends in recruiting in China appeared first on Focus - China Britain Business Council.

It’s increasingly rare to find a worker in the UK who is willing to spend their 40-year career working for ‘the man’. Workers – especially millennials – are demanding more flexibility in work hours and a better work-life balance. And companies are adapting accordingly, providing everything from work at home days to bring your dog to work days in a bid to retain staff and keep them happy.

Employees don’t want to be tied to a desk all day and want the flexibility of working when they want, from where they want. Compared to previous generations, there has been a change in culture and young workers (who often value freedom, excitement and challenges over pensions, insurance and stability) are choosing to work for themselves, as freelancers, setting their own terms.

For many companies, having a lower headcount is also in their interest. It means they can bring people on, as and when they need them, rather than be tied to high fixed staff costs.

In China, the phenomenon is relatively new. A job for life – known as the Iron Rice Bowl (because it could never be broken) – was regarded as a dream career path. Working for the government, a state-run company or a multinational organisation would provide not only a solid regular monthly salary but also pay China’s high cost of social insurances (pension, housing, unemployment benefits, education, medical and maternity).

For a long time, companies in China were graded not on their revenue or profit but on their headcount. However, Chinese companies are being encouraged to become more efficient and for many, that means reducing their number of employees.

This squeeze from both employee and employer side has given rise to a gig economy, where people are more likely to work on a project by project basis rather than a full-time contractual basis.

Professional services such as writing, translation and consulting are helped by technological advancements that allow a translator in Shanghai to work for a client in Peterborough or a designer in Mumbai to work for a client in Chicago. And for many British companies working with China, this has come as a solution to many of their problems.

Recruiting and retaining a full-time member of staff in China is often challenging to manage and costly to employ for many British companies, especially if they don’t have a registered company in China. Therefore, to easily find a person who can translate a document, redesign marketing materials or consult on the local market can be hugely valuable and cost-effective.

It is now easier for a freelancer to self-enrol and pay their own social security contributions ensuring they remain ‘on grid’

According to Jenny Chen, a human resources freelance consultant, the gig economy is a growing trend among three main types of demographic: The older generation who decide to quit the corporate rate race to go freelance; the mothers who, after having children, don’t want to quit work entirely; and thirdly the young post-90s generation who care less about financial interests but want to develop multiple skills and have the flexibility to work when they want.

In China, all employees would traditionally belong to a work unit (or danwei) that was fundamentally responsible for their wellbeing and would contribute to their social insurances. However, by working as a freelancer they do not have access to a danwei, meaning the worker would be out of the system and have to sacrifice these benefits. Nowadays, says Chen, it is much easier for a freelancer to self-enrol and pay their own social security contributions at the social security bureau, ensuring they remain ‘on grid’.

Increasingly young workers are preferring freelance roles as a lifestyle choice rather than a financial choice

The rules regarding tax and social insurances change frequently in China and Chen advises all companies to be up to speed on the most recent rules. However, the tax and social security burden is high to employers, and therefore many companies look for alternative methods to hire staff – with freelance recruitment being an obvious one.

Charlene Li is one such freelancer based out of Shanghai. She provides marketing consulting and brand communication creative services to overseas clients. “It’s a choice of lifestyle, rather than a choice of money,” says Li. “The agile way of working allows me to allocate my time and efforts efficiently,” she explains.

Hugh Chan used to be a full-time translator but now has started working as a freelancer. “I like the freedom and choices of being freelance,” he says. However, the lack of a stable income does sometimes concern him, he says.

Both Chan and Li work via an online platform called Crayfish.io that links freelancers with companies who are looking for help with professional services such as design, copywriting, sourcing and translations.

“At Crayfish.io we provide access to freelancing expertise to support such activities in a novel way by leveraging our global network of Chinese speaking talent on our platform,” says Ting Zhang, CEO and founder of Crayfish.io. “As well as offering bespoke strategic help to enable companies to tackle the Chinese market, we provide access to qualified Chinese speakers in their specific fields.”

This has benefited companies like UK based Argon Design Ltd, who have business clients in China. Crayfish.io has enabled the company to find freelancers who are versed in the technical terminology needed in the electronics and software industry, and who can translate quickly, efficiently and cost-effectively.

“We have occasional need to translate technical documents; either press releases or product documents,” says Argon’s CEO Alan Scott. “The Chinese translators have a strong work ethic because they engage with us directly, the site provides the bid or offer, commercial and contact route, but then we exchange messages directly with the translator. We can use the same the translator for subsequent projects, still via the Crayfish.io online platform, so we can then start to build a relationship with them,” says Scott.

Around the world, the nature of work is changing fast and for companies operating in China that want to maintain a competitive edge, it is important to be aware of these changing trends.

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