Employee management solution for new companies in China
In this article, we provide the overall summary of employee management solution for new companies in China:
- How to manage your local employee in China
- How to manage your expat employee in China
- Language Barriers
Over the past years, China’s economy and environment have experienced some drastic changes. More and more companies wish to enter China to participate in its booming economy. While Western companies have been experiencing slow growth, foreign enterprises started to realize that entering the Chinese market is a wise decision. Listed below are some concerns related to managing human resources that new small-sized or medium-sized enterprises have in China.
How to manage your local employees in China
There are a set of rules and laws that every employer in China has to abide by while considering the recruitment of local Chinese employees. The Employment Contract Law is the most important law in China relating to an employer and employee relationship. To protect employee rights, it specifies several employment rules. Payroll in China involves the employee’s salary, mandatory insurances, Individual Income Tax, Annual Bonus, Overtime Payment (if applicable), etc.
Social Security in China consists of 5 mandatory insurances and a housing fund. The employer has to contribute the social security on a monthly basis. The employer is also responsible for deducting the Individual Income Tax on a monthly basis and the tax declaration to the tax authority. What is significant is that different cities in China have different social security and housing fund policies, and the contribution rates and the base are adjusted every year, which makes compliance a challenge for foreign companies while handling their employees’ payroll. Thus, outsourcing their payroll and mandatory benefits to a local human resource service provider is very common among foreign SMEs.
If you are interested to learn more regarding the employment issues in China, the below articles might be helpful for you.
How to manage your expat employees in China
You may feel the need to hire expat employees for your company in China. They need to have an understanding of Chinese business culture and understand the Chinese market. The hiring of expat employees brings more paperwork to the table. If your company is empowered to hire expatriates, it is the responsibility of the company to get a work permit and residence permit for its expat recruits, manage the expat relocation, management of their residential leasing, etc.
The new work visa application policy has been implemented in China since April 2017, which makes it challenging for expat employees to gain a work visa in China. If you are interested in knowing more about the new visa application policies please refer tot he following article: China’s New Work Permit Policy Updates
Foreign companies often struggle with documentation in China. The government bureaus for the residence permit, work permit, social insurance, housing fund deal with a lot of documentation. Some documents have to be filled in the local language. The policies and procedures have to be strictly adhered to. The process of acquiring certain permits and licenses tends to become cumbersome and time-consuming. Because of this complex legal framework, 31% of foreign companies entering China list this as their primary concern.
Some other legal documents that are significantly important to new companies in China are Employment Contract, Employee Offer Letter, Non-Disclosure Agreement, Employee Handbook, etc.
It is vital for your company to find the right vendors or service providers for your company in China. To avoid any communication barriers, it is important for you to find a service provider which can offer bilingual (both English and Chinese) customer service, consultation, contracts, reports etc.
How HROne can be beneficial to your business
HROne’s offers Employee Leasing/Talent dispatching services for companies not having a legal entity in Mainland China, Taiwan4 and Hong Kong. HROne fulfills all essential responsibilities as that of a legal employer for the local employees in Mainland China, Taiwan, and Hong Kong. Once your legal entity has been established in China, HROne can provide Payroll and Individual Income Tax Service, Employee Benefits, Legal documents like Employment Contracts and Employee Handbook, Commercial Insurance, Foreigner Visa, Tax & Accounting Services, etc. More importantly, HROne can provide bilingual service to its clients – both in English and Chinese.
The information contained in this article is valid on April 20th, 2017. For updated information, please contact us via email at [email protected]