China Work Culture

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China Work Culture

Chinese people take a philosophy of focused, hard-working diligence all the way from the schoolroom to the workplace. Respect for their family members is very much the philosophy that is applied to their working lives.

• Respect is a key word for business dealings, both in personal interaction and operating within strict company hierarchies. Avoid embarrassing exchanges at all costs

• Building trust is another vital element in developing business relationships, which typically begin with formal introductions to the most senior members of the company

• Play safe and dress formally for initial meetings. Big corporations and state organizations may stay formal whereas, in common with many western countries, hi-tech operations are often informal

• Small talk about family is an important factor in networking and building relationships, and foreigners should be ready to give their answers to: “What do you think of China?”

• Present business cards like a gift – with both hands

• Dealing with language is crucial … keep emails in plain English; clever remarks may be “lost in translation”

• It is normal to conduct business in a restaurant over lunch or dinner. Entertaining plays a central role in conducting business in China

China Minimum Wage

There is no national minimum wage. The 31 provinces, autonomous regions and municipalities set individual limits according to the cost of living and make adjustments in the mid to latter part of the year. At the lower end Hunan has a minimum wage of 1,130 yuan (US$174) per month/11.4 yuan per hour and at the top is Shanghai with 2,480 yuan (US$378) per month/22 yuan per hour.

Probation in China

Probation or trial periods are generally included in an employee’s work contract, for instance:

Contract period Probationary Period

3m – 1 year I month or less

1 – 3 years 2 months or less

Fixed term more than 3 years 6 months or less

Open Term 6 months or less

There is no probation for contracts less than three months or for part-time workers, or if a contract terminates when a project ends. Only one probation period is allowed per employer. Chinese Labor Law states that employees cannot be summarily dismissed without good reason during their trial period.

Working Hours in China

Workers have a five-day week, Monday through Friday, 40 hours a week typically from 8am to 6pm with a generous two-hour lunch break. Overtime per day should not exceed three hours, or 36 hours a month. Employees’ working hours must be included, by law, in the work contract. Flexi-time is allowed if the company is registered with China’s Labor Bureau.

Overtime in China

Generally employers consult workers regarding overtime as well as any relevant trade union, with 36 hours a month or three hours a day the maximum allowed unless the staff or company’s safety is in jeopardy. Depending on whether overtime is on normal work days, Saturday/Sunday or national paid holidays, rates of 150, 200 and 300% respectively of the normal hourly rate, apply.

Notice period in China

Terminating employment is covered by China’s Labor Law and Contract Law and should be written into the employment contract. However employee and employer can agree notice and reparation are not required. Under certain circumstances, the employer can give 30 days’ written notice (or one month’s salary) prior to termination; three days’ notice during probationary period. For serious offences, or bankruptcy, employers can dismiss workers with no prior notice.

Redundancy, Termination, Severance in China

Employment can be terminated at the end of a fixed-term contract. Employees must have 30 days’ written notice of early termination or pay in lieu. In the case of severance, one month’s salary applies for each year of service; less than six months’ service brings half a month’s salary.

Pension Plans in China

In addition to China’s basic first tier pension system, employers and employees contribute to the second tier, which is indexed by provincial wage rates rather than at state level. Employers contribute around 20% and employees 8%.

Public Holiday in China

Being paid for the seven public holidays is usually written into the employment contract.

Name Date in 2021 Duration

New Year January 1-3 3 days

Spring Festival February 11-17 7 days

Qingming Festival April 3-5 3 days

Labor Day May 1-5 5 days

Dragon Boat Festival June 12-14 3 days

Mid-Autumn Festival September 19-21 3 days

National Day October 1-7 7 days

Sick Leave in China

For non-work related sickness and injury employees are eligible for medical care and treatment for three months to two years, without fear of losing their jobs. The percentage of sick pay is proportional to the time with present employer.

Years of uninterrupted service Sick leave as a percentage of salary

For less than six months’ sick leave

Less than 2 years 60%

2 to 4 years 70%

4 to 6 years 80%

6 to 8 years 90%

More than 8 years 100%

After six month consecutive sick leave

Less than 1 year 40%

1 to 3 years 50%

More than 3 years 60%

Vacations / Holidays in China

China’s annual leave allocation can be confusing for foreign companies as holiday entitlement does not depend on the work record with their current employer but the employee’s work experience during their lifetime.

Less than 12 months no leave

Between 1 and 10 years 5 days

Between 10 and 20 years 10 days

More than 20 years 15 days

Maternity/Paternity Leave in China

Pregnant workers receive 14 weeks statutory maternity leave, 15 days pre-natal which can be extended if there are difficulties with the pregnancy or if it’s a multiple birth. Each province or municipality may vary the amount of leave given above the mandatory minimum. Female employees receive salary, medical reimbursement and hospital expenses for delivery from either their employer or medical insurance. China has two weeks’ mandatory paternity leave, though some states allow more.

Bonuses in China

Bonuses can range from huge pay-outs to none at all, depending on the sector, length of service and whether bonuses are profit-motivated or at a fixed rate and so not dependent on the company’s financial results. This is also known as the 13th month salary. Typically technology, IT and manufacturing will award large bonuses whereas teaching, which is not product oriented, are likely to award small remunerations. For the first year of employment, a bonus is typically paid pro rata.

Car Allowances in China

Management level staff may receive a company car or mileage allowance, but these provisions may be affected by planned changes to the tax laws on allowances in January 2022.

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The complexities of China’s tax, payroll and employment laws are part of a business culture that will create barriers to your international expansion. Bradford Jacobs remove the mysteries of all these issues – freeing your staff to concentrate on growing your business