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1、Compiled in partnership withDecodingChinasLabourMarketHR Insights&Recommendationsfor EU SMEsJAN 2024EUSMECentreThis report was written by:Hunter Shi:International Development Consultant,StantecSophia Peng:Supply Chain Manager&Lead Auditor,StantecThis EU SME Centre report is an update and integration

2、 of various existing reports and articles,including:-Chinese labour laws(2019):https:/ an employee handbook in China(2016):https:/ challenges in China(2015):https:/ SME Centre 2023Disclaimer This document is provided for general information purposes only and does not constitute legal,investment or o

3、ther professional advice on any subject matter.Whereas every effort has been made to ensure that the infor-mation given in this document is accurate,the EU SME Centre accepts no liability for any errors,omissions or misleading statements,and no warranty is given or responsibility accepted as to the

4、standing of any individual,firm,company or other organisation mentioned.Publication as well as commercial and noncommercial trans-mission to a third party is prohibited unless prior permission is obtained from the EU SME Centre.This publication was produced with the financial support of the European

5、 Union and its contents are the sole responsibility of the EU SME Centre.The views expressed in this publication do not necessarily reflect the views of the European Union.Decoding Chinas Labour MarketContentsExecutive summary.31.Understanding Chinas Labour Market for EU SMEs.41.1 Chinas Educational

6、 Attainment and Sectoral Employment.41.2 Post-pandemic Impact on the Labour Market.61.3 Understanding Cultural Differences between China and Europe.82.Compliance with Chinas Labour Requirements.102.1 Different Levels of Labour Laws and Regulations .102.2 Social Security and Housing Funds.132.3 Laws

7、and Regulations Relevant to EU SMEs.153.Effective Organisational Structure for EU SMEs.163.1 Organisational Structure.163.1.1 Pyramidal Management.163.1.2 Flat Management.183.1.3 Organisational Structure:Key Takeaways.183.2 Formulating a Suitable Management Structure.194.Essential Factors in Human R

8、esources Management.204.1 Recruitment and Staffing.204.1.1 Different Labour Types.204.1.2 Wage Calculation Systems.224.1.3 Hiring Foreign Citizens.234.2 Labour Relations Management.244.2.1 Formulation of Labour Contracts.244.2.2 Termination of Labour Contracts.264.2.3 Intellectual Property Protectio

9、n.274.3 Active Management of Employees.294.3.1 Employee Training.294.3.2 Grievance Redress Mechanism.305.Sustainable Workforce in China:Opportunities,Challenges,and Outlook.315.1 Challenges for EU SMEs.315.2 Opportunities for EU SMEs.315.3 Outlook on Labour Costs.32Decoding Chinas Labour Market3EXEC

10、UTIVE SUMMARYThe labour market landscape in China remains dynamic,characterised by frequent updates to laws and regulations.Particularly in the post-pandemic era,job preferences among the labour force have dramatically evolved.This report serves as a valu-able resource for EU SMEs aiming to navigate

11、 the details of human resources management in China,offering insights into relevant labour laws,regulations,and best practices to recruit,manage and retain talent.Specifically:The first chapter provides an overview of therecent changes and trends in Chinas labourmarket,highlighting regional and sect

12、oral dif-ferences.Two key sections will focus,first,onthe long-lasting impact of the pandemic,which has resulted in new preferences andneeds of Chinese employees;second,on themain cultural differences between Chinaand European countries that should be fullytaken into account.The second chapter provi

13、des an overviewof Chinas intricate landscape of HR andlabour laws,regulations and rules,at bothnational and local levels.We provide herea detailed overview of the main obligationsfor employers,and relevant social securitycontributions and calculations.The third chapter introduces commonorganisationa

14、l and management struc-tures for companies in China in differentsectors,their pros and cons,including tradi-tional scenarios of pyramidal managementversus emerging forms of flat management.This chapter also provides tips for EU SMEson how to identify the most appropriateapproach.The fourth chapter i

15、ndicates the most essen-tial factors in HR management in China,focusing in particular on different types ofemployment relationships and wage calcu-lation systems for recruiting staff in China including foreign citizens.Two other funda-mental sections target the management oflabour relations includin

16、g formulation andtermination of contracts as well as intel-lectual property protection;as well as tipsfor active management of employees,mainly through training and open communication.The fifth chapter provides a summary of themain opportunities and challenges for EUSMEs,as well as considerations on

17、 the futuretrends of Chinas labour market.Amongthese,EU SMEs should proactively prepareto navigate Chinas impending rise in labourcosts,while adapting to evolving conditionsis crucial to maintaining competitiveness andprofitability in the Chinese market.Chinas labour market is evolving rapidly.Activ

18、e management and development of employees have never been so crucial for EU SMEs in China to increase their productivity,personnel satisfaction and ultimately retention rate.EUSMECentre41.UNDERSTANDING CHINAS LABOUR MARKET FOR EU SMES1Education is Chinas last demographic dividend,Fudan International

19、 School of Finance,Fudan University,https:/ Dec 2023).2China:Overview of the education system,OEDC Education GPS,https:/gpseducation.oecd.org/CountryProfile?primaryCountry=CHN&treshold=10&topic=EO(accessed:5 Dec 2023).3China National Bureau of Statistics:http:/ Dec 2023).Over the past few decades,Ch

20、ina has undergone a remarkable transformation,both economically and in its labour market.While its immense workforce has contributed to the country earning the moniker“the worlds factory”,recent trends in birth rates,employment rates,and many post-COVID effects have sparked discussions of Chinas evo

21、lving labour market dynamics and their implications for its eco-nomic and labour market prospects.This chapter provides insights into Chinas education,employment sectors,unemployment,and cultural differences,to help EU SMEs to grasp Chinas labour landscape.1.1 CHINAS EDUCATIONAL ATTAINMENT AND SECTO

22、RAL EMPLOYMENTEducational AttainmentOver the past few decades,there has been a steady increase in the average number of years of educa-tion among Chinas working-age population(i.e.aged 15-64).Since the beginning of the 21st century,how-ever,the growth rate has visibly decelerated,pointing to a poten

23、tial plateau in educational advancement.A notable observation in China is its gap in edu-cational attainment compared to developed nations.Data from 2022 reveals that only 18.5%of Chinas population has attained higher education,significantly lower than the average in developed countries such as Germ

24、any and France.Chinas educational resources are highly dispersed across regions.Approximately 30%of the popu-lation in Beijing,Shanghai,and Tianjin holds a bachelors degree or higher,1 a figure that closely aligns with the international average for developed nations.Additionally,there is a significa

25、nt difference in upper secondary educational attainment between regions.It is essential for EU SMEs to assess local workforce qualifications,skills,and available edu-cation resources when crafting a region-specific HR strategy.Figure 1 Educational Attainment by Country,2022(in percentage%)2 Overview

26、 of Main Education SubjectsChinas labour market is characterised by a significant concentration of faculties in English and computer science among the hundreds of available undergrad-uate majors,cumulating a record number of 954 and 950 faculties,respectively.This presents a positive employment land

27、scape for companies seeking pro-ficiency in these two fields among their workforce.Figure 2 Educational Attainment by Region,2021 (in percentage%)3 Decoding Chinas Labour Market54China University Ranking,based on the Ministry of Educations Catalogue of Undergraduate Majors in Universities(2023),see:

28、https:/ Dec 2023).5MyCOS,one of Chinas leading firms in higher education data and consulting:http:/ Dec 2023).6Statistical Bulletin on the Development of Human Resources and Social Security,see for 2022:http:/ Dec 2023).7Experts Opinion Article,National Development and Reform Commission,https:/ (acc

29、essed:5 Dec 2023).8China Statistical Yearbook 2022:https:/ (accessed:5 Dec 2023).Figure 3 Chinas Number of Undergraduate Faculties by Major,2023 4In light of the huge pool of computer science graduates,it is noteworthy that the enrolment in computer science majors continues to escalate.5 This trend

30、is underscored by a projected surge in minors,particularly in fields such as artificial intelligence,big data,and smart manufacturing,driven by strategic emphasis on digitalisation outlined in the State Councils 14th Five-Year Plan and other sectoral Five-year Plans.Meanwhile,while the development o

31、f English majors is generally not emphasised,it is expected that the demand for individuals with English skills is here to stay.Sectoral EmploymentChinas labour market is currently undergoing a significant transformation,marked by a notable shift from primary industries to the tertiary sector.From 2

32、011 to 2022,the number of employees in the tertiary sector has surged from 273 to 345 million,a jump of 26%,allowing it to become the dominant sector,while the primary and secondary sectors both saw decreases.6 However,there are significant differences across regions,as illustrated by Figure 4;inter

33、estingly,many provinces such as Shandong,Guangxi and Anhui,are still heavily reliant on the primary and secondary sectors.The gradual shift from the primary sector to the tertiary sector has crucial implications for human resource strategies,including a growing emphasis on recruiting and developing

34、skilled workers.The following figure presents an overview on the sectoral employment situation by region.7 Figure 4 Tertiary Sector Employment Percentage,2021(by percentage%)8EUSMECentre61.2 POST-PANDEMIC IMPACT ON THE LABOUR MARKETA substantial proportion of companies in China,regardless of scale a

35、nd sector,have introduced remote work arrangements for their employees over extended periods during the pandemic lockdowns.This has given many employees their first encounter with remote work.With the lifting of COVID restric-tions,a shift has emerged in job preferences and individual values among e

36、mployees.However,considering the normalisation of the new working model presents challenges related to increased costs in corporate communication and manage-ment,heightened risks to data security,as well as blurring boundaries between work and personal life for employees,it is imperative for EU SMEs

37、 to keep observing the job preference trends within the Chinese labour market.Job Preference ChangeIn late 2022,a survey conducted by PwC among approximately 3,000 participants in China revealed a significant shift towards remote and hybrid work arrangements.9 A notable 64%of the participants expres

38、sed a desire to engage in remote work,and of these individuals,95%stated a clear preference for a remote or hybrid work environment,indicating a strong inclination toward flexible work arrangements.This marks a substantial increase from the previous year,where only 54%of respondents showed an intere

39、st in remote work.When participants were asked about their expectations for the future work environment,a mere 5%expressed a preference for a complete return to the traditional office setting.In contrast,the majority of respondents favoured either fully remote or hybrid work models.However,it is wor

40、th noting that this preference for remote and hybrid work in China,while significant,slightly lags behind the global average,which stands at 11%.Nonetheless,EU SMEs should remain attentive to the potential drawbacks of remote or hybrid work arrangements.A separate survey conducted by the increasingl

41、y popular Chinese investigative reporting platform Sixth Tone,10 revealed that 53%of its 1,500 respondents reported an extended duration of their 9PwC 2022 Global Workplace Survey:China Edition:https:/ Dec 2023).10Sixth Tone:https:/ Dec 2023).11CIIC EAP Centre:http:/ Dec 2023).12FleishmanHillard Inc

42、.:https:/ https:/ accessed:5 Dec 2023).workday due to remote work,particularly affecting individuals in job functions that necessitate frequent communication.Prioritising the implementation of flexible work policies and technologies to facilitate remote and hybrid work environments can not only impr

43、ove employee satisfaction but also increase pro-ductivity;yet,the potential downside experienced by employees when remote/hybrid working should also be carefully considered and inte-grated into the human resource strategy.Personal Value ShiftA recent survey conducted among 25,677 Chinese psychologic

44、al counselling patients by CIIC EAP Centre,11 one of Chinas leading state-owned dis-patched labour agencies(more details in section 4.1.1.of this report),highlights the profound psy-chological impacts that have unfolded over the course of the three-year pandemic.These effects encompass issues relate

45、d to socialisation,job con-straints,diminished income,and heightened anxiety levels.Such factors have contributed to decreased work quality and the potential for staff turnover,posing challenges for many businesses.Notably,the survey underscores that the enduring consequences of the pandemic have le

46、ft 49%of the patients grappling with anxiety,fear,depression,and anger directly attributed to the pandemic.Anxiety about job stability and the unpredictable nature of daily life emerges as one of the most prevalent concerns,cited by 57%of respondents.Depression and anger primarily stem from feelings

47、 of life direction loss and family-related issues.A study conducted during the pandemic by FleishmanHillards TRUE Global Intelligence highlights that of the surveyed Chinese respondents,32%placed greater value on its employer ranking when greater care and support are demonstrated by the businesses,8

48、%higher than the global average of 26%.12 In light of these findings,companies should prior-itise not only the physical but also the mental well-being of their workforce,recognising that the pandemic has taken a considerable toll on employees mental health.It is vital that,while implementing support

49、 measures and promoting a healthy work-life balance,businesses can also seize this opportunity to distinguish themselves within the market.By Decoding Chinas Labour Market7investing in their employees well-being,EU SMEs can not only foster a more productive and content workforce but also position th

50、emselves as socially responsible and employee-centric organisations.Unemployment OverviewAfter the pandemic,the Chinese labour market faces numerous challenges.While its overall labour market unemployment rate has remained relatively stable since 2021,consistently hovering around 5%,the situation fo

51、r youths aged 16-24 has dramatically changed.In June 2023,the youth unemployment rate reached a historic high of 21.3%;13 many are inclined to believe that the figure is still on the rise as the National Bureau of Statistics stopped updating this figure in August 2023.14 This contrasts sharply with

52、many OECD countries like Germany,Austria,and Iceland,where youth unemployment rates have gradually decreased after the pandemic.The high youth unemployment rate can be attributed to several key factors:Chinas economy shifts from traditional to high-tech and services,causing job losses and delays in

53、filling gaps in new sectors.Many companies have reduced production scale and was faced with increased financial pressures 13National Bureau of Statistics:http:/ Dec 2023).14The New York Times,Chinese edition:https:/ Dec 2023).15China Social Sciences Net,a key national-level platform for theoretical

54、and professional work in philosophy and social sciences,managed by the Chinese Academy of Social Sciences:https:/ Dec 2023).16Same as previous footnote.17Monthly data extracted from the database of Chinas National Bureau of Statistics:https:/ Dec 2023).from the pandemic,leading to a rise in unem-plo

55、yment rates.Labour-intensive industries such as electronic technology,construction,traditional manufacturing,catering services,and retail have all been heavily affected.15.Pandemic risk control removal hampers job recovery for some industries.Due to con-tracted consumer spending,limited purchasing p

56、ower from lower supply chain counterparts,and low international demand,manufacturing industries are seeing a slow rebound post-COVID.Additionally,despite strong consumer spending drove growth within traditional service industries such as retail and restaurant and food services,low recovery support f

57、rom govern-mental spending and limited corporate budget across the supply chain negatively affect new employment.In 2022,there were 10.76 million Chinese uni-versity graduates,up by 1.67 million from the previous year.For 2023,there is an additional 0.82 million graduates,where the increase of new g

58、raduates significantly surpassed the number of newly available jobs.16 At the same time,surging highly educated graduates may outpace labour demand adjustments.17Figure 5 Chinas Youth and Overall Unemployment Rate 2021-2023 (by percentage%)17EUSMECentre8 Global economic instability raises the risk o

59、f closures,layoffs,and production stoppages.Combined with policy restrictions in real estate,education,and online industries,these heighten unemployment pressure.These combined factors underscore the challenges faced by Chinas labour market.While opportunities such as the ample pool of young talents

60、 present itself,managers must still be on the lookout for evolving labour trends which are further discussed later in this report to fully capitalise on this opportunity.1.3 UNDERSTANDING CULTURAL DIFFERENCES BETWEEN CHINA AND EUROPEIn todays globalised business landscape,managing a culturally diver

61、se workforce is essential.The Hofstede cultural dimensions(i.e.a structured approach to understanding and comparing cultures based on key dimensions including power distance,individualism,uncertainty avoidance,and long-term orientation)provides useful insights into these dif-ferences,enabling busine

62、ss owners to adapt their strategies effectively.The following figure highligths the cultural differences in these three dimensions among China and selected EU countries.Table 1 Hofstedes Cultural Dimension definition and findingHofstedes Cultural DimensionDefinitionFindingsPower DistanceExpresses th

63、e degree to which the less powerful members of a society accept and expect that power is distributed unequally.China,with a Power Distance score of 80,traditionally upholds a high power distance culture,where authority and hierarchy are highly respected among the workplace.European countries exhibit

64、 varying degrees of Power Distance.Poland and France present similar traits,with high scores on power distance;while countries scoring low,such as Germany and Sweden,emphasise flatter organisational structures,open dialogue,and the preference of frequent communication.IndividualismIndividualism is a

65、 preference for a loosely knit social framework in which individ-uals are expected to take care of only themselves and their immediate families.Chinas score of 43 signifies a leaning towards collectivism,emphasising group harmony and interdependence within the workplace.To some extent,this not far f

66、rom other European countries such as Poland and Italy.While countries such as France,Germany and Sweden,respectively scoring 74,79 and 87,indicate priority of personal success,individual achievement,and work-life balance.Long-Term OrientationLong-term orientation indicates the level of consid-eratio

67、n individuals give to its past and future,where high-scoring cultures indicate the prioritisation to focus on preparing for the future by saving money and empha-sising modern education.Chinas high score of 77 underscores the emphasis on long-term commitment.In practice,this translates into a large p

68、ercentage of Chinese employees leaning towards jobs with high career potential,rather than jobs providing greater short-term benefits.Trends of graduates constantly switching jobs and applying for public servant positions are two most evident phenomena in China.Decoding Chinas Labour Market9Incorpor

69、ating insights from Hofstedes cultural dimensions,EU SMEs should take into consideration the following areas where Chinese work culture dif-fers from that of EU SMEs.Communication styles:Chinese employees often maintain a clear distinction between informal and formal communication channels.Informal

70、exchanges,typically involving internal interactions with colleagues,involve a preference for instant messaging due to the desire for instant replies from the other party.In contrast,during formal communication,e.g.with managers or clients,face-to-face interactions are heavily favoured,often by shari

71、ng meals to build deeper relationships.The use of email,a common communication method in European contexts,is less widespread among employees from the countrys late adoption of emailing.Hierarchy and authority:In organisational man-agement,China often follows a structured,top-down hierarchy where hi

72、gher-ups make most decisions,and day-to-day work is often guided by team leaders.Chinese companies typically use a more vertical and pyramidal structure,emphasising hierarchy and authoritative management.This means a more 18For a comprehensive overview of the main differences of cultural behaviours

73、and modern corporate culture beween China and the West,see a comparative analysis published on Zhihu,Chinas leading Quora-style social blogging platform:https:/ (accessed:5 Dec 2023).19The Culture Factor Group,a cultural analytics and strategy advisory,based on the Hofstedes cultural dimensions theo

74、ry:https:/www.hofstede- Dec 2023).centralised,directive approach where employees are expected to follow and execute orders from their superiors.18 Very hierarchical structures,less favoured by many European cultures,are still pre-ferred by many Chinese workers due to the limited involvement with wor

75、k management and interper-sonal relationships.Section 3.1 of this report elabo-rates on the application areas of different manage-ment structures in China.Work-life balance:China has a strong work ethic,often leading to longer working hours and a less clear distinction between work and personal life

76、.In Chinese companies,workplace competition is common,making workstyles flexible and sometimes chaotic with overtime and frequent schedule changes.Additionally,many workers have a preference for work over personal time when given the option of earning additional wages.This phenomenon is most common

77、among blue-collar workers.However,emphasis on work-life balance has been on the rise in recent years,more details will be provided in section 5.3 of this report.19 Figure 6 Hofstedes Cultural Dimension index:China vs.selected European countries,2023 19EUSMECentre102.COMPLIANCE WITH CHINAS LABOUR REQ

78、UIREMENTS20English version:https:/ (accessed:5 Dec 2023).21English version:https:/ (accessed:5 Dec 2023).Navigating the intricate landscape of human resource management laws and regulations within Chinas legal framework is not an easy task.This section delves into the implications of localised labou

79、r laws in China to provide valuable insights and guidance for EU SMEs in efficiently addressing this complexity and avoiding potential legal pitfalls.2.1 DIFFERENT LEVELS OF LABOUR LAWS AND REGULATIONS National laws such as the Labour Law20 and Labour Contract Law21 are the fundamental legal framewo

80、rks for regulating labour relations.On their basis,administrative regulations are issued by the State Council and departmental rules are issued by the Ministry of Human Resources and Social Security detailing specific requirements to support practical implemention.Local governments also formulate re

81、gulations and rules for translating national-level requirements within their jurisdiction.Finally,judicial decisions by the Supreme Peoples Court also play a crucial role,for instance in handling labour dispute cases.The flowchart below presents an overview on the interrelations between different la

82、bour laws and regulations in China.The complexity of laws related to human resources and labour is not primarily due to hard-to-understand legal rules but more so because of regional differences.Regional policies carry substantial weight,and the absence of a unified set of rules leads to situations

83、where the same kinds of cases can yield different results in different areas and even sometimes opposite outcomes.Taking as example the issue of double wage for employees who commence work without previously signing a labour agreement,the Labour Contract Law provides that“if an employer fails to con

84、clude a written labour contract with an employee within one month to less than one year from the date of employment,they shall be required to pay the employee double their monthly wage”.This provision is relatively vague;local-level regulations thus come into play to ensure the effective application

85、 of the national law,but often resulting in significant variations across regions.Figure 7 Inter-relations of Chinas Labour Laws and RegulationsAt the same time,international labour conventions approved by China have also served as sources for Chinese labour laws.To date,China has ratified more than

86、 20 international labour conventions,including the Convention on the Elimination of All Forms of Discrimination in Employment,the Minimum Age Convention,and the Equal Remuneration Convention,among others.Decoding Chinas Labour Market11For instance,there is a one-month difference in the calculation s

87、tandards of double wages between Beijing and Tianjin:Table 2 Double wage standard differences between Beijing and TianjinCitiesProvisionsBeijingThe calculation of double wages commences on the day following the expiration of the labour contract,with the endpoint being the day before both parties ent

88、er into an amended written labour contract,not exceeding a max-imum of twelve months.TianjinThe payment period for double wages spans from the day following the completion of one month after the labour contract has concluded until the day before the parties execute a written labour contract amendmen

89、t.However,this period should not exceed a max-imum of eleven months.The double wage rule is just the tip of the iceberg,as labour laws cover various disputes,including economic compensation,non-competition clauses,special benefits,overtime pay calculations,and dis-putes related to social insurance l

90、osses.There are significant variations in how these matters are handled in different regions.Major Labour Law Components OverviewChinese national laws and regulations provide explicit provisions regarding various aspects of labour,including labour contract management,wage standards,working hours and

91、 overtime,equal employment,labour remuneration,social insur-ance and benefits,labour protection,and labour dispute resolution.At the local level,regulations provide more details and often serve as extensions of national labour laws.EU SMEs should familiarise themselves with both national and local p

92、rovisions and ensure strict compliance to create harmonious work environment.At the national level,the most applicable laws for SMEs in the manufacturing and service industries are:Table 3 Main laws and regulations related to labour in ChinaName of National-level ProvisionsYear of Implementation/Ame

93、ndmentLabour Law中華人民共和國勞動法1995,Amended in 2018Labour Contract Law中華人民共和國勞動合同法2013Labour Contract Law Implementation Regulations中華人民共和國勞動合同法實施條例2008Labour Protection Law中華人民共和國勞動保護法1994,Amended in 2018Social Insurance Law中華人民共和國社會保險法2010,Amended in 2018Labour Dispute Mediation and Arbitration Law中華人民

94、共和國勞動爭議調解仲裁法2021State Council Regulations on Employee Working Hours國務院關于職工工作時間的規定1995Interim Provisions on Labour Dispatch勞務派遣暫行規定（中華人民共和國人力資源和社會保障部令第22號）2014Regulations on Guaranteeing the Wage Payment of Migrant Workers保障農民工工資支付條例2020EUSMECentre12Below is an overview of the main components of the

95、Labour Law and the Labour Contract Law that SMEs within the manufacturing and service sector will likely encounter:Labour Contract:An agreement must be reached and formalised in writing between a worker and an employer that establishes the employment relationship and specifies the rights and obli-ga

96、tions of both parties.The content of a labour contract should include the contract period,job responsibilities and location,working hours and rest periods,remuneration,overtime compensa-tion,social insurance,labour protection,working conditions,and occupational hazard protection,among other details.

97、Working Hours:The national working hours system for employees should not exceed eight hours per day and an average of 40 hours per week.Employers must ensure that employees have at least one day of rest per week.Employers are also required to arrange for employee leave during statutory holidays.For

98、public institutions or entities that cannot implement uniform working hours,they can flexibly schedule weekly rest days based on the actual circumstances.Overtime Hours:Employers must adhere to labour quota standards and are not allowed to force,even indirectly,employees to work over-time.When emplo

99、yers schedule overtime work,they must pay overtime wages to employees as required by relevant national regulations.In cases where extended working hours are neces-sary due to production and operational needs,employers can negotiate with trade unions and employees.Generally,daily overtime hours shoul

100、d not exceed one hour beyond the stan-dard working hours;in special circumstances,22http:/ Dec 2023).daily overtime hours should not exceed three hours while ensuring the employees physical well-being.At the same time,the total combined amount of overtime work every month should not exceed 36 hours.

101、Wages and Benefits:China implements a min-imum wage guarantee system,and labour laws specify that employers must pay workers no less than the local minimum wage standard.Wages should be paid to the worker in monetary form on a monthly basis,and must not be withheld or unreasonably delayed.Employers

102、are legally required to pay wages during statutory holi-days,bereavement leave,and other applicable periods.Each province,autonomous regions,or municipalities,have three tiers of minimum wage standards for each of their administrative districts,with some having the exception of one or four tiers.The

103、 tiers are divided according to factors such as local economic level,cost of living and population structure of the respective administrative region.EU SMEs can easily find the minimum wage tiers of their respective admin-istrative region through the governmental web-sites;it is also possible to ref

104、er to the Collection of Minimum Wage Standards(October 2023 version)published by the Ministry of Human Resources and Social Security to find out the exact wage standards for each region.22 Employee Benefits:China has established a social insurance and housing fund system,which requires the joint par

105、ticipation of both employers and employees.More details on this regard are provided in the next chapter of this report.Vocational Skills Training:Employees have the right to receive occupational skills training.Employers should establish an occupational Figure 8 Screenshot of the Collection of Minim

106、um Wage Standards,October 2023Decoding Chinas Labour Market13training system,allocate and utilise occupational training funds in accordance with national regu-lations,and systematically provide occupational training to employees based on their actual needs.Employees engaged in technical occu-pations

107、 must undergo training before taking up their positions.Occupational Health and Safety:Employers must establish and improve labour safety and health systems,strictly adhere to national labour safety and health regulations and standards,provide workers with education on labour safety and health,preve

108、nt accidents during work,and reduce occupational hazards.Employers are required to provide workers with labour safety and health conditions in accordance with 23https:/ Dec 2023).24http:/ Dec 2023).national regulations,and necessary labour pro-tection equipment.Regular health check-ups must be condu

109、cted for workers engaged in tasks with occupational hazards.Labour Protection:In the event of labour dis-putes arising between the employer and the employee,both parties can seek resolution through negotiation.If they are unwilling to negotiate,negotiations fail,or if an agreement reached is not hon

110、oured,the concerned parties may apply for mediation,arbitration,or litiga-tion.Resolving labour disputes should adhere to the principles of legality,fairness,and timely pro-cessing,and it should legally safeguard the legiti-mate rights and interests of the parties involved.2.2 SOCIAL SECURITY AND HO

111、USING FUNDSThe“Five Social Insurances and One Housing Fund”(五險一金 in Chinese),comprise mandatory pro-grammes,including basic pension,medical,unem-ployment,work-related injury,and maternity insur-ance,alongside a state-mandated housing provident fund.In accordance with the provisions outlined in the S

112、ocial Insurance Law and the Housing Provident Fund Management Regulations,23 it is mandatory for companies including China-based subsidiaries of EU companies to provide the Five Social Insurances and One Housing Fund for their employees.Specifically,companies and employees are joint contributors to

113、pension insurance,medical insurance,unemployment insurance,and housing provident fund;while the responsibility for contribu-tions to work-related injury insurance and maternity insurance lies solely with the employer.Calculation methods of the total contribution amount between the employer and emplo

114、yee are summarised in table 4.However,significant differences exist across various regions in China in terms of specific percentage of the employers contribution:com-panies can readily ascertain the specific contribution percentages for different regions by accessing the respective Bureau of Human R

115、esources and Social Security in the given area.In the calculation of the companys contribution obligations,the contribution base is determined as the employees wage from the corresponding month in the previous year.If in situations where the wage deviates by 60%lower or 300%higher than the regional

116、average salary,the contribution base is capped at 60%and 300%of the regional salary,respectively.24 Generally,regions with better economic develop-ment,which often translates to higher average salary,have higher contribution bases.See Table 5 on the next page for an overview of the contribution base

117、 in tier-one cities such as Beijing,Shanghai,Guangzhou and Shenzhen.EUSMECentre14Table 4 Five social insurances and one housing fundTypeUsageContribution calculationPension養老保險Following retirement,employees are eligible to receive a monthly pension,with the amount received being directly correlated

118、to the extent of their contributions.Employer:(12 22%)*contribution baseEmployee:8%*contribution baseMedical Insurance醫療保險Reimbursement of medical expenses for healthcare consultations.Employer:(6-12%)*contribution baseEmployee:2%*contribution baseUnemployment Insurance失業保險In the event of company ba

119、nkruptcy or termination of employment leading to unem-ployment,employees are eligible to receive a certain amount of unemployment benefits.Employer:(0.5-2%)*contribution baseEmployee:1%*contribution baseMaternity Insurance剩余保險Reimbursement is available for various expenses related to childbirth,such

120、 as prenatal examinations,delivery fees,and maternity allowances.Employer:(0.5-2%)*contribution baseEmployee:does not contributeWork Injury Insurance工傷保險Employees would become eligible for various financial support upon sustaining work-re-lated injuries or contracting occupational diseases.Employer:

121、(0.5-1%)*contribution baseEmployee:does not contributeHousing Provident Fund住房公積金The primary purposes of the housing prov-ident fund are for renting and purchasing properties.Interest rates on loans for property acquisition,facilitated through the housing provident fund,tend to be significantly lowe

122、r than those associated with commercial loans.Equal amount for both employer and employee:5 12%of the employees average monthly salary for the previous year.There is no hard limit on the housing provi-dent fund contribution,as long as an equal amount is contributed during each payment term.For situa

123、tions where both employer and the employee agree to pay beyond the 12%threshold,additional payment is sub-ject to taxation as per national regulations.Table 5 Lower and upper threshold for contribution base in tier-one cities in 2023,CNY 25CityContribution base minimumContribution base maximumBeijin

124、g6,32633,891Shanghai7,31036,549Guangzhou5,28426,421Shenzhen6,12330,61525Official figures from local-level departments of taxation or human resources,see e.g.Beijing:http:/ Dec 2023).Decoding Chinas Labour Market15Foreign EmployeesForeigners working in China are required to participate in the five in

125、surances(i.e.pension,medical,work-related injury,unemployment,and maternity insurance),but are exempted from participating in the housing provident fund,eliminating the mandatory need for the employer to pay for the housing fund as well.26 Furthermore,foreigners with the nationality of one of ten de

126、sig-nated countries that have signed a bilateral agree-ment on social insurance with China(including Luxembourg,Spain,Netherlands,and Denmark),may be eligible for more favourable social insurance terms in line with the provisions of the agreement.27 Common PitfallsA common audit issue for SMEs invol

127、ves insuffi-cient social insurance payments for employees,exploiting the minimum contribution base.For instance,if an employee in Shenzhen earned a monthly wage of 20,000 CNY in the corresponding month of the previous year,falling within the 60-300%range of Shenzhens regional average salary,some SME

128、s opt to use a reduced contribution base,such as the lowest threshold of 6,125 CNY.This manoeuvre allows the employer and the employee to reduce a significant portion of their respective insurance contributions.This issue is particularly hard to find within larger companies due to the time constrain

129、t to audit every employees insurance payment.It is essential to note that while a small portion of employees may lack the understanding of long-term benefits of the insurance payments,Chinese employees generally prefer higher insurance and housing fund payments,and would often place heavy emphasis o

130、n the amount of social insurance and housing fund contributed when selecting jobs.Employers engaging in such practices,regardless of size,industry,nationality of ownership,would directly expose themselves to legal ramifications,as employees stand a high likelihood of prevailing in legal proceedings

131、if they choose to contest the employers actions in a court of law,regardless of any written document stipulating an agreement to lower the insurance contribution.26Interim Measures for Participating in Social Insurance for Foreigners Employed in China:https:/ (accessed:5 Dec 2023).27More details on

132、each bilateral agreement can be found on the website of the Ministry of Human Resources and Social Security:http:/ Dec 2023).28http:/ 5 Dec 2023).29Chinas National Laws and Regulations Database:https:/ 5 Dec 2023).2.3 LAWS AND REGULATIONS RELEVANT TO EU SMESAll companies operating in China are oblig

133、ed to operate under the countrys labour law system.Currently there are no national laws and regula-tions solely focusing on foreign businesses human resource activities such as hiring and employment termination;however,certain provinces/cities may have more detailed regulations for foreign compa-nie

134、s on certain aspects,such as:Regulations on trade unions of foreign-in-vested enterprises,such as the Shandong Province Regulations on Trade Unions of Foreign-Invested Enterprises,and the Shanxi Province Regulations on Trade Unions of Foreign-Invested Enterprises.Regulations on the management of for

135、eign-in-vested enterprises,such as the Measures for the Administration of Foreign-Invested Enterprises in Jiangsu Province,and the Wuhan Municipal Regulations on the Administration of Foreign-Invested Enterprises.EU SMEs may also refer to the Foreign Investment Guide released by the Ministry of Comm

136、erce,28 to gain quick understanding on labour and other operation-related topics.Additionally,the Chinese government provides a platform disclosing all laws and regulations across all regions and departmental level.29 For instance,if a person was to search for labour provisions in Zhengzhou,Henan Pr

137、ovince,keywords such as Zhengzhou and labour can be used to filter out the most relevant provisions.Figure 9 Chinas National Laws and Regulations Database EUSMECentre163.EFFECTIVE ORGANISATIONAL STRUCTURE FOR EU SMEsEffective human resource management and labour compliance in China not only hinge on

138、 legal under-standing but also rely on the establishment of a suitable organisational structure within a company.The right organisational structure is not just a matter of business efficiency;it is also critical for ensuring legal compliance and effective human resource management.This section explo

139、res the common and effective organisational structures that can help businesses navigate HR and labour law requirements in China.3.1 ORGANISATIONAL STRUCTURE3.1.1 PYRAMIDAL MANAGEMENTThe pyramidal organisational structure,character-ised by a narrow span of control and multiple hier-archical levels,i

140、s a traditional design that enforces strict functional divisions and well-defined layers within an organisation.It boasts a well-structured hierarchy primarily relying on a direct line of func-tional reporting and also offering employees a clear path for career advancement.Due to limited lateral com

141、munication and challenges in cross-depart-mental collaboration,this structure is particularly common in production-oriented companies and those with minimal cross-department communi-cation requirements.The main benefit is its narrow span of control,allowing managers to oversee and guide their team m

142、embers effectively.However,the many levels of hierarchy can slow down information flow,potentially causing workflow inefficiencies.This structure is also the most popular among Chinese SMEs,due to the strong hierarchical and more workforce control preference from the com-panys upper management.Gener

143、ally,three types of pyramidal organisational structures are vastly adopted in China:linear,functional,and product-/market-based.The first two are found mainly in manufacturing companies;the third is found mainly in service companies.Linear StructureLinear management is one of the earliest and sim-pl

144、est organisational forms,characterised by a ver-tically structured chain of command,where each department operates from top to bottom under the guidance of superiors.What sets linear management apart from flat management structure is the addi-tion of intermediate managers that help to facilitate man

145、agement and operation processes for the top management,thereby minimising production risks with added supervision.Linear structures are well suited for situations in which managers are actively engaged in daily operations.This is particularly applicable to job shop operations,characterised by the ne

146、ed for extensive skill sets and the production of small quantities.The figure below illustrates the organ-isational structure of a Chinese chemical produc-tion company comprising 80 employees.In this model,the three workshops with three production teams each engage in shift rotations,ensuring that o

147、ne workshop is operational at all times.This approach works well for manufacturing companies.Experienced team leaders oversee a small group of workers who need frequent technical support and safety checks due to the jobs hazardous nature and high-technicality demand.The structure also simplifies shi

148、ft rotations and product tracking for the company since each production team has its designated and traceable responsibility.Figure 10 Organisational Structure of a Linear Structured CompanyDecoding Chinas Labour Market17Functional StructureThe functional structure involves the establishment of func

149、tional departments at various management levels within the organisation.Each functional department holds the authority to issue commands within its specified scope of operations.However,in contrast to traditional Western structures,in China managers at each level are also expected to adhere to the d

150、irectives issued by corresponding functional departments,operating under a multi-tiered leadership structure with multiple reporting lines.This model is very commonly adopted specifically by manufacturing companies where job overlap between departments is high and frequent communication is required,

151、as well as the strong emphasis on hierarchical order within Chinese corporate culture.The flowchart below illustrates the organisational structure of a Chinese water supply company com-prising 100 employees.Notably,the workshop man-agers,while reporting directly to the general man-ager,also hold a p

152、ivotal role in providing support and fostering collaboration across various departments,including HR,customer service,and maintenance.This dynamic is a result of the significant interdepart-mental functional overlaps within the organisation,and has functioned well for the company given the immediate

153、 line of reach across departments and the narrow span of management structure.Product-/Market-based StructureProduct-/Market-based structure involves the divi-sion of the company into multiple business units based on geographical locations or product/service categories.These business units operate i

154、nde-pendently,with the corporate headquarters retaining authority over human resource decisions,budgetary control,and oversight.Control over the business units is maintained through the monitoring of key performance indicators,including profitability,by the corporate headquarters.This approach is co

155、mmonly observed within Chinese SMEs operating in the service industries.These companies often organise their units based on distinct service offering categories.The subsequent figure illustrates the structure of a typical company following this model.Figure 11 Organisational Structure of a Role-base

156、d Structured CompanyFigure 12 Organisational Structure of a Product-/Market-based CompanyEUSMECentre183.1.2 FLAT MANAGEMENT30On company structure,see a recent case study by the EU SME Centre:https:/ organisational management involves reducing the number of management layers and streamlining function

157、al departments and structures.The primary objective is to minimise the intermediary manage-ment levels between the decision makers at the top and the operational staff,leading to potential advan-tages such as faster information dissemination,greater transparency for top-level executives,and enhanced

158、 problem-solving capabilities.The adoption of flat management structure is more commonly observed among emerging companies,typically with a workforce of fewer than 100 employees.30 Such organisations tend to have fewer intermediary management layers,fostering direct interaction between decision make

159、rs and operational staff,and encouraging extensive cross-functional collaboration and cooperation.The following figure illustrates a Chinese company operating in the garment processing industry.The company employs 100 individuals and is structured into three management hierarchies.Within this organi

160、sation,more than 70%of the workforce are production workers,all overseen by the production manager.Notably,all production workers work during regular working hours.High-level managers may find it challenging to oversee their subordinates effectively due to a wider span of control,which can lead to m

161、anagerial dispersion.For example,in situations like assembly-line production,where workers need minimal guidance and sup-port from upper management,a flat management structure can be efficient.It is particularly useful in smaller companies that require frequent employee communication,as it eliminate

162、s hierarchical barriers and promotes more effective communication.In the Chinese workplace culture,hierarchical orders are heavily emphasised.Adopting a flat management structure where senior employees are at the same hierarchical rank as newer ones may result in dissatisfaction among employees.This

163、 can lead to issues related to requests for wage increases and more authority from senior staff.Additionally,due to the lack of supervision imposed on employees,flat management tends to encounter inefficiencies when employees are not highly moti-vated and lack guidance.Therefore,when hiring managers

164、 for SMEs,it is essential to consider the fit between their leadership style and the organisations needs.In assembly line settings,such as the example demonstrated in the above figure,it is advisable to avoid managers with a laissez-faire attitude.3.1.3 ORGANISATIONAL STRUCTURE:KEY TAKEAWAYSUpon the

165、 establishment of a management frame-work,Chinese SMEs would rarely switch organisa-tional structure.This stems from a combination of limited necessity as well as the already-established preference and habit from both the management and employees.It is important to highlight that while each structur

166、e serves its unique benefits,companies can also benefit from adopting various management structures to address specific business activities.Companies should not confine themselves to a single management structure.An illustrative example is a quality control team within manufac-turing companies,where

167、 it is often observed that companies do not maintain a dedicated department for this purpose.Instead,a pyramidal manage-ment structured company for a toy manufacturing Figure 13 Organisational Structure of a Flat Management CompanyDecoding Chinas Labour Market19company may regularly draw individuals

168、 from rele-vant departments,such as production and mainte-nance,to implement a flat management structure for the ongoing execution of quality review activities.This adaptability allows companies to optimise their resources and adapt to changing operational needs.3.2 FORMULATING A SUITABLE MANAGEMENT

169、 STRUCTUREPrior to determining which organisational structure suits best each company,it is vital for the top man-agement to understand the companys positioning within the following four structures:Functional Structure:The successful operation of a company requires multiple functions to a joint fash

170、ion.It is essential to determine which specific functions the companys operations necessitate and then establish the proportions and interrelationships between these functions.Hierarchy Structure:This component pertains to the composition of various management levels within the organisation,specifyi

171、ng the number of management tiers needed vertically.Departmental Structure:The departmental structure concerns the composition of various management departments,specifying the number of departments required horizontally within the organisation.Authority Structure:This encompasses the allo-cation of

172、powers and responsibilities between different levels and departments,defining their roles and interrelationships concerning authority and responsibilities.To ensure a smooth establishment of a working struc-ture,companies should consider the opinions of its workers,engage in open communication,and a

173、nalyse the pros and cons of each structure with respect to the specific nature of the SME and industry,company culture,and employee preferences.Figure 14 Four Structures to Achieve Organisation SynergiesEUSMECentre204.ESSENTIAL FACTORS IN HUMAN RESOURCES MANAGEMENT31Common agencies used by foreign c

174、ompanies in China include CIIC,FESCO,ManpowerGroup and ADP.More agencies are available at:https:/ Dec 2023).32http:/ Dec 2023).33For a practical overview of the main pros and cons of dispatched labour,see an analysis published on Zhihu,Chinas leading Quora-style social blogging platform:https:/ Dec

175、2023).When striving for effective human resource man-agement,it becomes crucial to identify the key ele-ments within HR practices.This section highlights three critical domains highly relevant for EU SMEs:recruitment and staffing,labour relations manage-ment,and active HR management.The report offer

176、s a deeper insight into the crucial considerations that must be taken into account in each domain.4.1 RECRUITMENT AND STAFFING4.1.1 DIFFERENT LABOUR TYPESThere are several employment types within the Chinese labour market.The following three types most relevant to EU SMEs will be discussed in this s

177、ection.Direct labourDirect labour involves the signing of labour con-tracts between employers and employees,where employees,under the management of the employer,provide compensated labour.It is the primary employment model for most Chinese companies:the employer is responsible for salary payments,so

178、cial benefits,and daily employee management.This mode of employment typically applies to both white-collar and blue-collar workers.Dispatched labourLabour dispatch agencies31 and employers enter into agreements to supply workers based on the employ-ers needs.Dispatched workers are then assigned to w

179、ork for the employer,where the dispatch agencies are responsible for providing salary and social secu-rity to the workers.Employers choose dispatched workers due to primary factors such as cost savings and reduced legal liabilities.By out-sourcing the entire recruitment process,including onboarding,

180、legal screening,and contract signing,employers can save considerable resources if the dispatched workers meet their requirements.Furthermore,avoiding the responsibility of providing wages and social insurance simplifies administrative tasks.Dispatched workers can be found among both white-and blue-c

181、ollar employees,from functional department hires to production team members.Compared to other forms of employment,dis-patch labour is the least common.This is mainly due to restrictions on the number of dispatched workers,which should not exceed 10%of the total employer headcount according to the Mi

182、nistry of Human Resources and Social Securitys Interim Provisions on Labour Dispatch.32 Furthermore,improper management and con-tract writing can result in low-quality work from dispatched employees,as there are no specific pro-visions requiring them to work under the employers human resource manage

183、ment system.Unequal work distribution and holiday benefits are also common issues that may lead to discrimination and reduced job satisfaction among dispatched workers.33Still,dispatched labour remains relatively frequent among foreign companies operating in China.It is also the only permitted optio

184、n for foreign compa-nies established in China as foreign Representative Offices.Figure 15 Inter-relations between Employer,Worker and Third-party Agency for Dispatched LabourDecoding Chinas Labour Market21Outsourced labour for companies with legal entities in ChinaThe process entails the employer an

185、d a labour ser-vice provider signing an outsourcing agreement.The employer delegates specific aspects of its operations to the service provider,who,in turn,arranges for workers to fulfil the agreed tasks.Compensation is provided by the employer to the service provider for these services.Outsourced l

186、abour is prevalent among blue-collar workers,especially in man-ufacturing,construction,and labour-intensive industries.Companies often opt for this method to hire large groups of production workers in a cost-effective manner,avoiding the need for indi-vidual recruitment and legal screening.Outsource

187、d labour is generally more budget-friendly compared to hiring direct employees,as some companies offer enhanced benefits to direct employees,making them a costlier option.However,outsourced labour presents challenges.Contract disputes between the labour ser-vice agency and the employer are common,of

188、ten stemming from ambiguities in the contrac-tual work areas.Inadequate human resource management by the labour service agency can lead to significant issues,including workplace accidents,theft,community disturbances,and injuries,jeopardising the employers reputation.34 InternshipsInternships are fa

189、voured by many companies due to reduced costs and simplified labour relations.Unlike other types of employment,companies are exempt from paying social insurance,housing funds,and salaries for interns,as internships fall outside the scope of the Labour Law and Labour Contract Law.Instead,an internshi

190、p agreement must be signed,constituting a civil contractual relationship between 34For a practical overview of the main pros and cons of outsourced labour,see an analysis published on Zhihu,Chinas leading Quora-style social blogging platform:https:/ Dec 2023).35Various chambers of commerce from EU M

191、ember States operating in China may offer the possibility of hiring individuals who are then seconded to another company which often has no presence in China.In return,the company is responsible for remunerating the chamber of commerce for the individuals salary,social security,and service fee.the e

192、mployer and the intern.This agreement can be crucial in resolving conflicts of interest between the employer and intern.Salary and work hours should be mutually agreed upon and explicitly stated in the internship contract,as these are common sources of disputes.A general,unwritten rule highly diffus

193、ed in China is that,if an intern performs well,the company may hire them as a full-time employee upon graduation.For companies intending to only hire seasonal interns without plans for additional full-time staff,they should explicitly communicate this intention to the interns prior to hiring:Ignorin

194、g this responsibility could lead to interns publicly criticising the company online after their internship,posing a risk to the companys brand image.Options for foreign companies without a legal entity in ChinaForeign business entities seeking representation or network development in China without a

195、 Chinese legal entity may enter entering a service agreement with an outsourcing service provider including sometimes national chambers of commerce.35 Another option is to engage with freelance workers,paying a service fee to deliver work based on a ser-vice agreement,rather than a labour contract.T

196、he contracted freelancer will then be responsible for paying their own social security contributions(which are usually incorporated in the service fee,so the latter will result relatively higher).ConclusionsTo proactively address potential risks associated with dispatched and outsourced labour,a goo

197、d practice is to harmonise management processes across all employee categories,thus establishing and implementing uniform human resource manage-ment standards although this is not mandated by Figure 16 Inter-relations between Employer,Worker and Third-party Agency for Outsourced LabourEUSMECentre22g

198、overnmental regulations.Employers can reinforce this approach by engaging in proactive communi-cation with third-party agencies and incorporating an additional contractual clause stipulating that dispatched or outsourced workers must adhere to the employers management protocols.The employer also cle

199、arly outline specific responsibilities of the outsourced or dispatched workers within the contract with third-party agencies to safeguard the employers interests in the event of any disputes.To ensure quality output,employers may opt to enlist the services of a third-party supervision com-pany to co

200、nduct regular workplace inspections and quality control assessments.This step ensures that the quality of work delivered by all workers,including those dispatched or outsourced,consistently meets established standards.4.1.2 WAGE CALCULATION SYSTEMSEU companies in China generally use three wage calcu

201、lation systems.While the standard work hour system is the most common,understanding the other systems helps maximise resources.Standard Work Hours System（標準工時制）:A fundamental working hours arrangement expected to be universally followed by all employers and reg-ular employees.Under this system,emplo

202、yees are required to work a maximum of 8 hours per day and a maximum of 40 hours per week.Employers are also obligated to ensure that employees receive at least one day of rest every week.Comprehensive Work Hours System（綜合工時制）:Employees have the flexibility for their daily(or weekly)work hours to ex

203、tend beyond 8 hours(or 40 hours)within a defined comprehensive calculation period.However,it is crucial that the cumulative actual work hours during this calculation period do not surpass the standard working hours.Any addi-tional hours are categorised as overtime and must be remunerated in accordan

204、ce with relevant provi-sions,but the total combined amount of overtime hours in one month should not exceed 36 hours.Furthermore,in cases where employees work on statutory holidays,they are eligible for supplemen-tary compensation.This system is notably prevalent among blue-collar workers,particular

205、ly in the manu-facturing sector,where around-the-clock production operations are the norm.Irregular Work Hours System（不定時工時制）:This system comes into play when job roles do not neatly fit within the constraints of standard working hours or when employees lack fixed daily schedules.Unlike conventional

206、 systems like standard or com-prehensive calculation working hours,the system does not measure labour input by the hours but by the employees workloads.This approach primarily suits specific employee categories,including senior management,field operatives,sales representatives,select on-call personn

207、el,and individuals whose work defies evaluation within the conventional boundaries of standard working hours.Regarding the adoption of comprehensive and irreg-ular work hours system,EU SMEs should consult local regulations as both systems would require additional application and filing for the use o

208、f those two wage calculation systems.Figure 17 Chinas Wage Calculation SystemDecoding Chinas Labour Market23Selection of Labour Type and Suitable Wage System for HiringEffective wage calculation system determination requires multiple considerations.In addition to individual consultations with employ

209、ees,employers should assess local hiring trends and salary levels,aligning the chosen wage system with regional pref-erences.This regional context is crucial for harmo-nious labour relations.When enlisting the services of third-party HR agencies for dispatched or outsourced labour,due diligence is p

210、aramount.The first step is to request for evidence and verify the agencys operational credentials.This involves checking the agencys legal operating scope to ensure its align-ment with the services.Prior to contract signing,companies are also advised to request and examine copies of the agencys empl

211、oyee training records,salary documentation,social security payment records,and contractual agreements to verify the compliance of the agencys internal human resource procedures.Fostering open communication with workers,regardless of their labour type,is highly recommended.Regular consultations provi

212、de a plat-form for employees to voice concerns,addressing any potential misconduct or issues stemming from the employer or third-party agency.Furthermore,this collaborative approach may lead to the imple-mentation of Grievance Redress Mechanisms(GRM),which will be further explored later in this repo

213、rt.4.1.3 HIRING FOREIGN CITIZENSThe entire workforce in China,regardless of nation-ality,is subject to both national and local-level laws.Nevertheless,engaging a foreign national entails certain complexities.Required DocumentationWhen foreigners initiate direct employment with employers in China,it

214、is imperative to notify the relevant governmental authorities responsible for labour affairs.To engage in employment in China,foreign individuals must secure two essential documents:Foreigner Employment Permit(or alternatively other letters from government authorities or applying to foreign experts)

215、,which is obtained through the local human resources and labour 36More details on the evaluation criteria can be found in an article produced by China Briefing:https:/www.china- Dec 2023).37For practical examples of common disputes between foreign employees and employers,see an article written by a

216、local lawyer specialised in the field:https:/ Dec 2023).38For more details see a dedicated FAQ on the EU SME Centres website:https:/ in the province where the employer is registered.Therefore,having secured an employment agreement with the employer is a pre-requirement.The Permit must be obtained be

217、fore the foreigner can enter China,as it is a required document for applying for a Z visa in the Chinese consulate in the future employees home country.The Permit is specifically tied to the employer,and must be cancelled/transferred to a new employer upon termination of the labour contract.Foreign

218、Residence Permit(for work purposes),which is obtained by converting,through the local Public Security Bureau,the 30-day Z visa used by the foreign employee to enter China.In order to be allowed to work,foreign employees must meet certain conditions,including being at least 18 years old,in good healt

219、h(i.e.absence of infectious diseases),possessing the necessary professional skills and relevant work experience,and having no criminal records.Foreign employees are catego-ries under three tiers(A,B,and C)depending on their educational attainment,work position,years of experience,salary,work time in

220、 China,international competition recognition,etc.36 Category A foreigners enjoy preferential treatment on areas such as work permit application time and validity period,as well as preferential treatments in certain cities.Foreigners without these requirements and holding other categories of visas(e.

221、g.tourism,visit to relatives,or business affairs),are not allowed to work in China:Doing so may lead to a fine,detention and deportation.Furthermore,another common pit-fall is that some companies do not diligently complete the employment procedures for their foreign hires.This results in labour disp

222、utes where the employ-ment relationship between the foreign employee and the employer cannot be determined,ultimately leading to legal liabilities for the foreign businesses.37Foreign students may also intern in China,pro-vided that they obtain an internship remark on their residence permits(for stu

223、dy purposes)from the local Public Security Bureau.38EUSMECentre24Employment Contract and SalaryEmployers and foreign employees must legally sign employment contracts based on the proce-dures outlined in section 4.2.1.The contract may be renewed with approval after following specific procedures.Regul

224、ations on components such as employment conditions,salary,work time,holidays,occupational health and safety measures are all identical to local employees,governed by relevant national regulations.EU SMEs can refer to the Rules for the Administration of Employment of Foreigners in 39English version:h

225、ttps:/ Dec 2023).China for additional details on the process of hiring foreigners.394.2 LABOUR RELATIONS MANAGEMENT4.2.1 FORMULATION OF LABOUR CONTRACTSThe following are the essential clauses for employment contracts,in which EU SMEs need to accurately complete based on the work conditions,benefits,

226、and other outcomes discussed with the hires.Table 6 Labour contracts key components OverviewContract clausesDescriptionContract TermA specific term must be specified for labour contracts:Fixed-term contracts:The contract sets a specific end date upon mutual agreement between employer and employee.Al

227、though there are no boundaries on the lower and upper contract term limit and actual difference between the different contract period,the most common contract term used is two years.This is the most used among both white-and blue-collar workers.For open-ended contracts:The contract contains no prede

228、termined termination dates,which can be established through mutual understanding between the employer and employee.An open-ended contract should be established if:o The employee with a decade of continuous service for the same employer;o The employer renews the contract twice consecutively,and no gr

229、ounds exist for termination as specified by labour contract law.Task-based contracts:Refers to an agreement between the employer and the employee in which the contract period is determined by the completion of specific work tasks.Did you know?Foreign citizens legally working in China enjoy a prefere

230、ntial individual income tax policy,namely deductions from their taxable income of various categories of expenses,including housing rental,childrens education costs,language training expenses,etc.The policy has recently been extended to the end of the year 2027.Decoding Chinas Labour Market25Job desc

231、ription and place of workJob description refers to the specific type or nature of work that an employee is engaged in.In this context,the job description primarily pertains to the job position,tasks,or responsibilities.The place of work refers to the location where the employee is designated to work

232、(if the place of registration of the company differs from the employees workplace,then the contract should say the actual location of the employee)per agreement prior to contract signing.Relevant salary regulations,such as minimum wage standards,are applicable based on the work location stipulated i

233、n the labour contract.Should the work description and place of work change from the original description,employers must sign again the labour contract based on updated information.It is extremely common for employees to sue employers based on the difference between actual work or loca-tions.Should s

234、uch related issues appear in court,it is highly likely that the decision is to favour the employee.Working hours,rest,and vacationIn line with the wage calculation system(section 4.1.2 of this report).It is recommended to also stipulate in this section of the labour contract any additional benefits

235、provided by the employer,such as additional paid annual leave,marriage and funeral leave,maternity leave,and other types of quantifiable benefits to the employee.Labour remunerationLabour remuneration mainly consists of three types of remuneration:1)monthly fixed salary;2)Piecework wage;3)wage distr

236、ibution that combines basic salary and performance-based pay.Employers should select one of the three types to calculate the remuneration.Additionally,this section should also stipulate payment date of the monthly salary.Employers should strictly follow the salary distribution date and is recommende

237、d of having a uniform salary distribution date across all employees.40https:/ Dec 2023).The aforementioned contract clauses are integral elements that necessitate individualised determina-tion for each contractual agreement.Furthermore,there are additional mandatory clauses,which do not require modi

238、fication from the template version offered by government agencies apart from filling out individual information based on different hires:Name,domicile and legal representative or the principal leading person of the employing unit;Name,address and the number of the ID card or other valid identity doc

239、uments of the worker;Social insurance;Occupational protection,working conditions and protection against occupational hazardsEU SMEs can access labour contract templates from official local government websites.Should the local government have not released templates,compa-nies may refer to the standar

240、d contract template published by the Ministry of Human Resources and Social Security.40EUSMECentre264.2.2 TERMINATION OF LABOUR CONTRACTS41Organisational regulations refer to the governing policies established by a company.Each company has the autonomy to develop its own regulations within legal bou

241、ndaries.While having such regulations is not mandatory,it is highly advisable.These regulations play a crucial role in specifying the scope of employee responsibilities and negligence and safeguarding the companys interests in case of conflicts between the company and its employees.It is imperative

242、that all employees have ready access to these organisational regula-tions,often provided through the companys employee handbook,ensuring transparency and clarity in understanding the guidelines set by the organisation.42For detailed compensation settlement,see an article published on China Court,an

243、online platform under the supervision of Chinas Supreme Peoples Court:https:/www.chinacourt.org/article/detail/2021/12/id/6406171.shtml(accessed:5 Dec 2023).There are three primary categories of labour contract termination:termination process initiated by the employer or employee.Alternatively,an ag

244、reement can be reached between the employer and the employee.The table on the following page provides an overview of each scenario.Table 7 Labour contract termination scenario overviewTermination by EmployerTermination by employee negligenceFailure to meet employment criteria during the probationary

245、 period,serious violations of organisational regulations,41 or severe misconduct resulting in significant harm to the employer.Termination without faultWhen an employee,due to illness or a non-work-related injury,cannot return to their original job or any other provided by the employer after the pre

246、scribed medical period;when an employee remains incapable of performing their job even after training or reassignment;or when significant changes in the objective circumstances at the time of contract formation render the contract unenforceable even upon additional negotiations.Termination by Employ

247、eeVoluntary terminationEmployees may voluntarily terminate labour contract with the employer.The termination process must be only initiated based on the employees will and must not be affected by pressure from the employer.Termination by employer negligenceA labour contract can be terminated for var

248、ious reasons,including the employers failure to meet contractually agreed labour conditions or pay remuneration,viola-tions of legal regulations in workplace rules,or circumstances leading to contract invalidation.Other instances for termination may be specified by applicable laws and regulations.Te

249、rmination on AgreementContract termination upon agreed conditionsWhen both the employer and employee have stipulated conditions for termina-tion in the labour contract,the contract shall be terminated when these condi-tions are met.Termination by EmployerTermination process initiated by the employer

250、 is categorised by negligent dismissal and dismissal without fault,and must follow the following orderly steps:1.Trade union,if applicable,should be notified by the HR department regarding reasoning for con-tract termination.Opinions from the trade union should be considered,and a finalised termina-

251、tion notice must be delivered to the trade union.2.Work handover:The employer shall arrange work handover process from the employee.3.Salary Settlement:The employer shall settle and disburse the employees salary.42Decoding Chinas Labour Market274.Termination of the Employment Contract:Following the

252、completion of the work handover and the settlement of salary,the employment contract is then immediately terminated.5.Issuance of Dismissal Certificate:The human resources department shall issue a certificate confirming the termination of the employment contract and complete the employees file and t

253、ransfer of social insurance within fifteen days.6.Record Keeping:Records of terminated employ-ment contract shall be kept for a minimum of two years for future reference.In the case of termination by employee negligence,the employer does not need to provide prior notice to the employee prior to cont

254、ract termination.The employer must still carefully consult to detailed description outlined in the labour contract law to avoid any wrongful cases of contract termination,which may lead to legal issues.In the case of termination without fault,the employer must notify the employee 30 days in advance,

255、and provide necessary employment dismissal subsidies according to local regulations.Termination by EmployeeTermination process initiated by the employee is categorised by voluntary termination and termina-tion by employer negligence.The employer should follow the same steps-to-take outlined in above

256、(Termination by Employer),but instead of notifying the trade union in the first step,the companys employing department should instead submit the employees written notice of contract termination to the human resource department.In the case of voluntary termination by the employee,the employee is requ

257、ired to provide a formal written notice to the employer 30 days in advance of the dis-missal date.Additionally,should the employee vio-late legal conditions,such as the violation of 30-day notice period and written notification,the employer may seek compensation from the employee for the financial d

258、amage from this event according to the Compensation Measures for Violations of Labour Contract Provision of the Labour Law.4343https:/ Dec 2023).44For more practical examples and recommendations on trade secret protection from the perspective of corporate compliance,see an article published by Chine

259、se law firm ZhongLun:https:/ Dec 2023).In the case of termination by employer negligence,if the employer uses force,threats,or unsafe orders to compel work,employees can immediately terminate the contract without prior notice,and the employer must provide necessary employment dismissal sub-sidies ac

260、cording to the Compensation Measures.For instance,in case of a work-related injury for female workers,the employer is obligated to cover all med-ical treatment fees.Additionally,the worker is enti-tled to receive compensation amounting to 25%of the total medical expenses from the employer.Terminatio

261、n on AgreementWhen conditions for contract termination stipulated in the labour contract have been met,no formal written notice is required from the employer nor the employee,and the contract termination procedure start immediately from step 2 of the termination by employees outline.4.2.3 INTELLECTU

262、AL PROPERTY PROTECTIONDespite many improvements,intellectual property(IP)theft remains a very popular issue across China.One of the most common forms of IP infringe-ment involves former employees after they leave a company,specifically including unauthorised duplication of materials containing trade

263、 secrets,such as copying blueprints,codes,etc,as well as unauthorised disclosure of confidential informa-tion to non-relevant personnel.44 Non-disclosure agreements(NDAs),or alternatively non-use,non-disclosure and non-circumvention(NNN)agreements,are common tools that should be used by EU SMEs to p

264、revent the leakage of com-pany confidential information,and should be used for all employees who can possibly be in the position to perform IP theft and harm the company.A typical NDA should consider all the aspects included in the following table to maximise its protection for the company.EUSMECent

265、re28Table 8 NDA/NNN key components Overview ComponentDescriptionScope of Confidential InformationOutline objects,scope,content,and duration to avoid disputes.Regular updates for the scope of NDA may be required depending on the nature of the job.Confidentiality partiesInclude obligations for non-sen

266、sitive roles and extend responsibility to the employees family and friends of employees with potential access to trade secrets.Confidentiality periodDefine start and end dates of the NDA.There are no relevant provisions that stipulate the period of confidentiality obli-gations.In some cases,a long a

267、s the companys secrets have not been disclosed to the outside world,the employees confidentiality obligations will always exist,making an indefinite agreement.However,most NDAs have a confidentiality period of 3-5 years.Rights and ObligationsConfidentiality agreements should explicitly specify how t

268、o use,store,and destroy confidential information.Additionally,establishment of liquidated damages in confidentiality agreements is not allowed.However,the NDA can include calcula-tion methods for compensation in case of an NDA breach.Determination of dispute jurisdictionSpecify a dispute resolution

269、mechanism with one arbitration court.Cases such as selecting multiple courts in various locations should be avoided.Often complementary to NDAs,non-competition agreement(NCAs)are used to prevent former employees from working for competing companies or conduct competitive business activities during t

270、heir employment or for a certain period after their resignation.The advantage of NCAs is that they are easier to determine compared to breaches of NDAs.A stan-dard non-competition should include non-competi-tion compensation to the employee and should not exceed the three-year limit.Did you know?The

271、 China IP SME Helpdesk is a EU-funded project that provides free-of-charge,confidential technical assistance to EU SMEs on IP-related issues in China.A team of experts is ready to answer any questions and share insights on NDAs,NCAs as well as other IP protection measures for EU SMEs in China.More i

272、nformation:https:/intellectual-property-helpdesk.ec.europa.eu/regional-helpdesks/china-ip-sme-helpdesk_en The project regularly produces guides and articles on various IP-related issues.One of these,“Guide to using contracts to protect your intellectual property rights in China”,has specific section

273、s on NDAs,including a sample of a NDA.See:https:/op.europa.eu/en/publication-detail/-/publication/95003496-a0b7-11eb-b85c-01aa75ed71a1/language-en/format-PDF/source-201414106.A less recent article focuses on employee NDAs/NNNs specifically for EU firms in China:https:/ Chinas Labour Market294.3 ACTI

274、VE MANAGEMENT OF EMPLOYEES45National Bureau of Statistics:https:/ Dec 2023).4.3.1 EMPLOYEE TRAININGEmployee training is a common pitfall within SMEs,including domestic ones,when conducting onboarding as well as regular training programmes.Data indicates that China still recorded 20,963 deaths in 202

275、2 from manufacturing-related incidents.45 Although this number has decreased drastically in recent years,however,workers are facing new occupational safety risks each day.Due to inadequate coverage of safety training or protective measures in some regional policies,many companies still prioritise ef

276、ficiency and profit over production safety.As regional regulations differ on employee safety training,it is crucial for employers to take active measures to mitigate work-related incidents.The three-level safety training is a safety-oriented training model for labour-intensive job roles,typically wi

277、thin manufacturing companies.It refers to the factory-level safety(company level),workshop-level(department level),and job-specific(team level)safety education for workers within workplaces that contain safety threats including cyber and privacy-related aspects which are becoming increasingly crucia

278、l in China.The three-level safety education system serves as the educational framework for corporate safety education and as a foundation to ensure employees are equipped with adequate knowledge to mitigate any unnecessary workplace risks.Company-level training:At the company level,the training,whic

279、h can be delivered in a work-shop session,emphasises labour protection and safety.It should cover components including safety principles,company-specific information like safety history and equipment usage,relevant labour laws,internal warning signs,and exam-ples from workplace accidents.The trainin

280、g,typ-ically lasting 4 to 16 hours,is conducted by the companys health and safety department,com-bining lectures,visuals,and handbook learning methods.Departmental-level training:At the depart-ment level,workshop education covers more in-depth safety aspects,including an overview of workshop operati

281、ons,specific safety regulations such as fire and hazard prevention,and precau-tions related to machinery,tools,and hazardous materials.The head of department or safety inspection personnel should typically be respon-sible for this training in a 4-8 hour class fashion.Team-level training:At the team

282、level,safety education covers the teams production charac-teristics,potential hazards,and typical accidents.It emphasises safety protocols,responsibili-ties,and the importance of a safety-conscious mindset,while also addressing the proper use of protective equipment and maintaining a civilised work

283、environment.Demonstrations by experi-enced workers are also showcased.This training may be conducted in a workshop or on-site fashion.EUSMECentre304.3.2 GRIEVANCE REDRESS MECHANISMTo address the challenge of employees voices frequently going unheard due to unclear lines of communication within the c

284、ompany,it is essen-tial for employers to establish a robust internal Grievance Redress Mechanism(GRM).This mech-anism should serve as a platform for employees to raise their questions and concerns,thus preventing dissatisfaction among the workforce.A well-struc-tured GRM should encompass multiple ch

285、annels of communication,ensuring that employees can easily access and utilise it,demonstrated in the example in the following figure.Ensuring the effective communication of the GRM to employees is paramount.This can be achieved through various means,including inclusion in the employee handbook,addre

286、ssing it during company meetings,and incorporating it into training sessions.Furthermore,employers should implement a multi-tiered GRM system,enabling employees to escalate concerns if they remain unresolved in the initial phase.This escalation process may involve consulting higher management,such a

287、s departmental managers,heads of human resources,or even the CEO.Such a hierarchical approach serves the dual purpose of preventing potential legal actions by dissatisfied employees and fostering a transparent and responsive work environment.Ultimately,it contributes significantly to enhancing emplo

288、yee satisfaction and engagement.A common mistake found particularly in SMEs with a limited number of employees is the reluc-tance of workers to utilise available grievance mechanisms.Despite the existence of compre-hensive grievance systems within some companies,employees often refrain from using th

289、em due to concerns about retaliation from the companys management.It is crucial to establish a sincere and transparent relationship between top management and employees to facilitate the effective functioning of grievance redress mechanisms,having it serve in the overall interests of both the compan

290、y and its employees.Figure 19 Sample Grievance Redress Mechanism Channels of CommunicationDecoding Chinas Labour Market315.SUSTAINABLE WORKFORCE IN CHINA:OPPORTUNITIES,CHALLENGES,AND OUTLOOKLooking ahead,the dynamic labour market landscape is continuously influenced by external factors,espe-cially d

291、uring times of uncertainty.Within this evolving landscape,there lies untapped potential for EU SMEs to leverage Chinas labour force.When formulating human resource strategy for the long term,EU SMEs should adopt a holistic perspective and evaluate the current challenges and opportunities.5.1 CHALLEN

292、GES FOR EU SMEsHigh Labour CostsThe issue of higher labour costs in China poses a challenge for EU SMEs.Foreign-owned companies attractive corporate culture and enhanced employee benefits,such as salaries,annual leaves,insurance and compensation,where similar job offerings can often result in much h

293、igher labour cost compared to its China domestic industry peers.Intellectual Property TheftA common problem encountered by many EU SMEs is IP theft.Without proper legal protection tools,such as NDAs and NCAs,instances have occurred where employees disclosed confidential information,resulting in subs

294、tantial losses for EU SMEs.There have also been cases where,despite breaches of signed NDAs,employees are not held accountable due to the lack of supervision from EU SMEs.This lack of oversight has the same impact on the company as not having the protection of NDAs.Poor Employee ManagementIn the Chi

295、nese corporate culture,a hierarchical management structure is predominant,with top management making most decisions.Although it is common in Europe to allow employees significant workplace freedom and authority,in China this can often lead to employees exploiting such benefit if not managed properly

296、.Balancing hierarchy with clear guidelines is crucial for efficient operations in such settings.Unfamiliarity with the Chinese marketRecently established SMEs often encounter issues of low internal trust and limited employee benefits.Additionally,their lack of familiarity with the Chinese labour mar

297、ket can lead to misinformed hiring decisions,resulting in non-effective allocation of resources.Differences in qualifications and experiences between Chinese and EU employees pose challenges in candidate selection.Using third-party headhunting agencies without due diligence can compromise candidate

298、quality.Therefore,thorough market research and recruitment strategies are vital for successful HR practices when entering the Chinese market.5.2 OPPORTUNITIES FOR EU SMEsOversupply of Qualified CandidatesThe oversupply of qualified candidates in China presents significant opportunities for EU compan

299、ies.Notably,the vast pool of bilingual candidates within the workforce allows EU companies to tap into a rich talent reservoir.By strategically enhancing their brand exposure,companies can attract and engage with this substantial talent pool effectively.Additionally,the surge in candidates with post

300、-secondary edu-cation reached a record high,where it tilts the bargaining power in favour of employers,offering additional advantages to EU companies in the Chinese labour market.EUSMECentre32Attracting Foreign Talent to ChinaChina has extended its preferential individual income tax policy for forei

301、gn professionals residing and working in the country,extending it until 31 December 2027.This includes the various preferential exemptions and allowances,such as those for housing rental and childrens education.46 Furthermore,the State Council as well as other departments such as the Ministry of Sci

302、ence and Technology and local govern-ments have introduced a series of measures geared towards attracting foreign talents to China.This involves facilitations in obtaining long-term residence permits,increased financial support,simplified cross-border transactions,support to spouses and chil-dren,et

303、c.EU SMEs and foreigner employees can actively check with their local Human Resources and Social Security Bureau for new incentive schemes.Sustainable Workforce Through Good Management PracticesEffective human resource management plays a pivotal role in achieving a sustainable workforce for EU SMEs.

304、Addressing the challenges mentioned,including cultural differ-ences,legal complexities,and talent retention,can be successfully mitigated through strategic approaches.By efficiently managing aspects like labour costs,daily employee supervision,and intellectual protection with NDAs and non-competitio

305、n agreements,EU SMEs can establish a robust foundation for sustainable growth in their workforce.Such a well-managed human resource strategy not only fosters a stable workforce but also helps maintain a competitive edge within their respective industries,ensuring long-term success and resilience in

306、the market.5.3 OUTLOOK ON LABOUR COSTS46See e.g.the extension of Chinas Individual Income Tax preferential policy for expats:https:/ Dec 2023).47Data extracted from the National Bureau of Statistics,and from Trading Economics,https:/ Dec 2023).48Peoples Daily:http:/ Dec 2023).At present,there is a c

307、oexistence of increasing labour compensation and operational challenges for businesses,even leading to a phenomenon of rap-idly rising labour costs in specific industries.The current question pertains to whether the continuous increase in labour costs is the fundamental cause of business difficultie

308、s.Available data illustrates a significant increase in Chinas per capita disposable income and annual manufacturing wages since 2013.During this period,both indicators have more than doubled,rising sharply from 2013 levels of 18,311 and 46,431 CNY to 2022 levels of 36,883 and 97,528 CNY,respectively

309、.This noteworthy transformation can be attributed to several key contributing factors:Rapid aging of the population results in a shrinking working-age labour force and increased demand for many industries such as the healthcare and social services,thus impacting overall productivity and economic gro

310、wth.Regional imbalances create labour shortages in some areas while oversupply exists in others,particularly in coastal regions.Automation and technological advancements lead to skill gaps,job displacement in low-skill roles,and a demand for high-tech skills.Additionally,Chinas shift from labour-int

311、ensive to high-tech industries has hiked labour costs due to increased demand for skilled workers,resulting in higher wages.48 China is currently grappling with several key employ-ment challenges.These issues include the effects of its aging population and a rural labour force whose skill levels do

312、not align with the demands of modern industries.Moreover,specific demo-graphic groups,such as recent graduates and migrant workers,face challenges stemming from a mismatch between their skill sets and the requirements of available positions,resulting in heightened employment pressure.However,even if

313、 these challenges were to be addressed successfully,Decoding Chinas Labour Market33other factors like the rising level of education within the population and the widespread adoption of industrial automation are expected to drive an increase in Chinas labour costs.The following chart presents an over

314、view of regional disposable income,presenting more detailed insights into Chinas current labour cost landscape.In eight provinces,namely Shanghai,Beijing,Zhejiang,Jiangsu,Tianjin,Guangdong,Fujian,and Shandong,are coastal regions that spearheaded Chinas reform and opening up initiative,where the per

315、capita disposable income surpasses the national average.Still,considerable income disparity pres-ents between the central and western provinces in comparison to their coastal counterparts.The current trend of southeast China experiencing 49China Statistical Yearbook 2022:https:/ Dec 2023)greater pro

316、sperity is anticipated to persist in the near future.49EU SMEs should proactively prepare to navigate Chinas impending rise in labour costs,where adapting to these evolving conditions is crucial to maintaining competitiveness and profitability in the Chinese market.At the same time,they should commi

317、t to active management of employees and on regular training of their talent,to increase their productivity,satisfaction and ultimately retention rate.Figure 20 Chinas Per Capita Disposable Income and Annual Wages in the Manufacturing Sector 44Figure 21 Chinas Per Capita Disposable Income by Region,2

318、021 46EUSMECentre34-Do you want to know more details on human resources and mobility in China?Try our brand-new Self-Diag-nosis Tool!It will allow you to gauge your readiness in entering the Chinese market in an easy and interactive way:https:/ any questions or free-of-charge consultations,EU SMEs m

319、ay contact the EU SME Centre via our Ask-the-Expert tool:https:/ EU SME Centre has over 200 reports,guidelines,webinars and case studies in its Knowledge Centre,the following may be relevant to you:WEBINAR RECORDINGS Build a Strong Team in China:Mastering the Art of Hiring and Training Talent(June 2

320、023):https:/ Machinery Sector:Entry Strategy,Localisation and Talent Recruitment(June 2022):https:/ Attraction and Retention for SMEs in China(May 2022):https:/ resourcesEUSMECentreAbout the EU SME CentreThe EU SME Centre helps European SMEs get ready for China by providing them with a range of info

321、rmation,advice,training and support services.To find out more,visit: Ask one of our in-house experts and receive practical and confidential advice within seven working days.We can provide information and advice relating to business development,market access,legal issues,and human resources.To submit your enquiries directly to our experts go to Ask-the-Expert: contact us at Do you have a question about doing business in China?