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Overview of China

China is located in Asia and is the most populated country in the world with over 1.39 billion people. Despite being the third largest country in terms of landmass, it only have one time zone, that of the capital city Beijing. China consists of 33 administrative units directly under the central government. These consist of 22 provinces, 5 autonomous regions, 4 municipalities and 2 special administrative regions (Hong Kong and Macau). The official spoken language is standard Chinese but there are several hundred languages spoken throughout China and its provinces. During the last decade, China’s economy has grown 7 times as fast as the United States and is now the Number 1 exporting country in the World. The national animal is the Giant Panda

China still has a culture of “keeping face” which is best compared to having or building a reputation. Chinese are very detail oriented so will have done their research on you and your company before a business meeting. The same is expected from you. Dress well for meetings as this is a sign of respect. A meeting usually starts with small talk. Do not get upset or lose composure during a meeting. When making decisions, the Chinese usually extend negotiations past deadlines so be patient.

Currency of China

  • Chinese yuan

Health Insurance and the Social Security system of China

Healthcare in China is under the country’s social insurance plan. Public medical insurance can be broken down into 3 categories:

  • basic cover for urban enterprise employees (this is an obligatory insurance and is paid by the employee and the employer. Contributions vary by municipality but are usually 6% of the salary for the employer and 2% for the employee).

  • basic cover for other urban residents

  • rural cooperative medical insurance for the farming population

Public healthcare in China does not cover emergency transportation or grant you access to private facilities. Non-working members of your family may not be covered.

Private healthcare is available, however the cost is quite high in comparison to the average income.

Employer cost of China

The cost for an employer to hire someone in China is a plus of 28.52% to the gross salary.

Salary and bonuses of China

Regular employees are paid monthly.

Commissions, incentives, and bonuses are variable and will be agreed upon directly with the employer.

Public Holidays in China

If a public holiday falls on a Saturday or a Sunday, then a weekday is declared the public holiday instead. 3 weeks before the start of the new year, the public holidays are announced.

  • January 1st – New Years Day
  • 1st day of 1st Lunisolar month (January/February) – Chinese New Year
  • 5th solar term (4 April, 5 April or 6 April) – Tomb sweeping day
  • May 1st – Labour Day
  • 5th day of 5th Lunisolar month (June) – Dragon Boat Festival
  • 15th day of 8th Lunisolar month (September) – Mid-Autumn Festival
  • October 1st, 2nd, 3rd – National Day (3 days holiday)

Working Hours in China

Office hours are from 8:00am to 6:00pm, Monday to Friday.

A regular work week is 40 hours.

Overtime must be paid with 150% of the hourly rate. An employee may not work more than 36 hours of overtime in a month.

Vacation in China

In China, after having worked for more than 1 year (this can be several employers, not just one) an employee is entitled to 5 days annual leave. This is valid for 1-10 years of service. After having worked for 10-20 years, an employee is entitled to 10 days of annual leave.

Sick Leave in China

When one falls ill in China, one has to receive an official certificate from a doctor, a so-called “official approval of sick leave certificate.” The employee then has to give this to his employer to start the sick leave. The sick leave entitlement is 3 months for employees with less than 10 years of cumulative years of working.

The sick pay is calculated based on how long an employee has worked continuously.

If an employee is sick for less than 6 months, the following applies:

  • continuous work for less than 2 years – 60% of the salary

  • continuous work between 2 and 4 years – 70% of the salary

  • continuous work between 4 and 6 years – 80% of the salary

  • continuous work between 6 and 8 years – 90% of the salary

  • continuous work for more than 8 years – 100% of the salary

If an employee is sick for longer than 6 months, the following applies:

  • continuous work for less than 1 year – 40% of the salary

  • continuous work between 1 and 3 years – 50% of the salary

  • continuous work between 3 and 6 years – 60% of the salary

Termination/Severance in China

When terminating an employee in China, three reasons are allowed: termination due to operational reasons, personal reasons or behavior.

A notice period of 30 days must be adhered to unless the employee is still in the probation time, at which point the notice period is 3 days.

To avoid a court case, most employers will reach an agreement with the employee and an agreed upon severance pay. Both parties sign this contract to avoid future disagreement.

Severance pay is based on the reason for termination but is usually 1 months’ salary for every year of employment. This is capped at three times the minimum wage and cannot be more than 12 months.