How to hire employees in China
Once you have made the decision to expand your business and begin hiring in China, you need to carefully consider the best way of hiring employees in China. This means thinking about unique Chinese cultural considerations, how the interview process works, how to recruit the best local talent and how to ensure full compliance with China’s employment laws.
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Guide for hiring in China
While utilizing job interviews for successful hiring in China has some similarities with the process of interviewing in North America or Europe, there are a few differences worth keeping in mind:
- Greeting each other. It is common for both sides to introduce each other with a handshake. However, it is also not uncommon for both parties to make a brief bow to each other;
- Stating names. When each side introduces themselves, note that it is common to state the surname first. In addition, the interviewers/employers should also state their titles (e.g., ‘Managing Director’). Note, it is perfectly acceptable to check with an applicant what the correct pronunciation of their name is;
- Questions. It is common for interviews to begin with general questions (e.g., what brings the applicant to China, if from outside the country). This ‘breaks the ice’ before moving on to questions relating to the role itself. Note also that it is not uncommon for personal questions to be asked in interviews;
- Conclusion. At the conclusion of the interview, interviewers should indicate when they can expect to communicate a decision and both sides should shake hands.
If the interview has gone well, and you wish to proceed to hiring the candidate, some matters you should take into account include:
- Standing offers. The candidate might be interviewing with other companies as well, and might already have some offer/-s on hand. You should be aware of that, because if you think that it is the right candidate for your company – you would be wise to have an efficient interviewing process, and offer an attractive job offer to convince the candidate to make “the right” choice in your favor.
- The notice period of the candidate. In some companies it could reach 6 or more months, depending on the job position. If you are urgently looking to fill in the job opening at your company a candidate with a long notice period may need to be ruled out.
- Non-competition/non-compete agreement. It often happens that candidates have a non-compete agreement with their current company, meaning they cannot be employed by a competitor. Where you are such a competitor, you will need to tread carefully if seeking to employ such a candidate.
- Be efficient with the job-offer issuing process. Be prepared for a counteroffer. After the candidate receives the job offer – he/she will give a resignation letter to his current company, and there is a big risk that his/her current company will try to convince him/her to stay.
General workplace etiquette
- Punctuality. Workplaces in China expect punctual attendance at work and work meetings. However, at the same time, there is general recognition that traffic and complicated addresses can mean that individuals are legitimately late. Employers need to be aware of this and should be reasonably tolerant of excusable lateness;
- Dress. As modesty is emphasized in Chinese culture, it is important to dress conservatively. In an office environment, this usually means a dark suit and tie for men and standard business attire for women;
- Saving ‘Face’. Maintaining one’s ‘honor’, and the respect of one’s family and community is hugely important for hiring in China. This means maintaining an air of competence and remaining in control of one’s emotions at all times while in the workplace.
- Working hours. Working hours should be state in a legally-compliant employment contracts and should not exceed the maximum hours stated under the law (usually 44 hours). Employers should be aware, however, of a tendency for some employees to stay in the office until their superiors have left for the day;
- Lunchtime. Lunch breaks can go from one to two hours. After lunch, it is common for Chinese colleagues to take a short nap.
How does recruitment in China work?
- WeChat. The social networking site WeChat caters to cosmopolitan areas and often lists local job openings.
- LinkedIn. LinkedIn is used by the majority of international companies to help find qualified candidates. It is especially popular in China since it is not restricted like Facebook and Google. Its use has skyrocketed over the last few years, jumping from 4 million account owners in China in 2014 to 41 account owners in 2018.
- Career events and job fairs. You will often find students who have just graduated at such events. Therefore, they can be a useful forum for hiring junior staff.
Attracting the best talent
In China, there exist certain “seasons”, which indicate a tendency of people to be open for a new job.
The “rush time” for “job movers” will be in the April-May period. This is after people receive their annual bonuses, which usually happens in March-April.
The hardest timing to look for employees will be from December to February, just “before the bonus time.” Unsurprisingly, employees do not want to lose their bonus.
But there are some solutions available if you can’t wait until May.
Global expansion partners are used to dealing with this kind of situation on a regular basis, and can offer you the most suitable solutions for every particular case.
At any time of the year, there is a big competition between companies to recruit the best talent in the market. To “win” the right talent you should consider the following matters:
- A competitive pay package.When putting together an attractive salary package, you need to understand the average market salary for the role you are hiring for, taking into consideration the city where the employee will be based. You also need consider the current compensation package of the candidate. The average salary increase for an employee joining a new company will be 10-20% more than his current package. Note that pay needs to be benchmarked against similar roles to be competitive when hiring China.
- Benefits packages An important part of acquiring the best employees for your firm will be ensuring that employee benefits (such as paid vacation and insurance) are as good as, if not superior, to the competition.
- Bonuses and incentives As bonuses are commonly included in contract negotiations during the process of hiring in China, consider whether or not you will make pay bonuses part of your overall remuneration package.
- Career development opportunities As titles and seniority are important in China, potential employees are interested to know how much room for development they have in their negotiating with a potential new employer. This includes promotion opportunities and potential future pay rises.
- Brand identity Well-known brands can have important cultural cachet in China. This can be a significant selling point for new employees.
- Your development plans, including outside of China As with brand identity, employees in China often see it as a positive to work for internationally established enterprises.
- Company reputation and culture If the company has a poor reputation as an employer in China, this can make hiring much more difficult.
- Work/home-life balance As anywhere else, Covid-19 has meant that employees place more emphasis on workplace flexibility, to support their life outside work.
- Office location Highly populated cities with huge populations means that the location of the office is of crucial importance to potential employees. If far away, they may ask how you will support their transport to and from work.
Standard compensation packages in China
When working out what would be an attractive compensation package for an employee in China it is important to understand how compensation is traditionally structured in China. Normally the elements of a compensation or remuneration package in China are:
- Base salary This is the main monetary component of the compensation package, expressed in yuan renminbi (RMB).
- Bonuses These can be can be fixed, guaranteed, and variable, depending on the company and/or personal performance. It should be clear to the candidate when he will be considering your offer.
- Social benefits and allowances This includes contributions to the housing fund, social insurance, supplemental insurance. It could also include allowances for business expenses, phone, meal, transportation, etc., as well as shares and/or stock options.
Annual leave entitlements in China
Annual leave entitlements in China depend on the employee’s length of service, and are provided as follows:
|Completed Years of service in the PRC (accumulatively)||Statutory Annual Leave Entitlement (working days)|
|Less than 1 Year||No leave|
|1 > 10 Years||5|
|10 > 20 Years||10|
|> 20 Years||15|
Paid public holidays in China
In addition to annual paid leave, every employee also has 7 paid public holidays. Confusingly, some of these holidays mean more than one day’s leave each meaning a total of 11 days guaranteed leave through public holidays. There are also four additional public holidays available only for specific social groups (this covers International Women’s Day, Youth Day, Children’s Day and Army Day). The seven public or national holidays that everyone receives are:
- New Year’s day (1 day)
- Spring Festival/Chinese New Year (3 days)
- Qing Ming Festival (1 day)
- Labor Day (1 day)
- Dragon Boat Festival (1 day)
- Mid-Autumn Festival (1 day)
- China National Holiday (3 days).
Allowances in China
It will depend on the role and the company. Some companies, besides an earned personal bonus, encourage their successful employees by giving an incentive. It’s up to the company how they want to encourage their “star” employees (ex. trips, gift cards, memberships, etc.).
New potential employees are usually interested in how to grow internally in the company they are about to join. For instance, they may enquire whether it will be possible to move even internationally to one of your other international branches.
A good career development opportunity plays an important part when Chinese employees choose between job opportunities they might have.
There are no limits to making your job offer more attractive on the market. Above are just some general examples you could consider when looking for a new employee in China.
Compliance in China
As well as making your employment offers attractive, when hiring in China you must ensure that your hiring is in full compliance with employment, tax and business laws and regulations. This includes:
- Providing an employment contract for all employees
- This is a legal requirement, and should set out employee compensation (in yuan renminbi), benefits and the performance management process (including, where necessary, the termination procedure).
- Ensuring that employees are hired by an entity that is legally entitled to employ in China This may mean setting up a Wholly Foreign-Owned Enterprise (‘WFOE). Or, alternatively, using a global Professional Employer Organization (‘global PEO’) to locally employ your workforce, while they still work under your direction. In China, global PEO solutions are usually implemented by Foreign Enterprise Service Companies (‘FESCOs’).
- Guaranteeing staff their minimum entitlements under the law in China This includes compliance with minimum entitlements for leave, pay, benefits and working hours;
- Withholding tax This means making sure that payroll taxes are withheld and all other tax obligations complied with.