It’s a daunting question. And it’s a tough one to answer, not least because the thought of setting up a legal entity in China feels like a bureaucratic nightmare. It’s a big commitment that stops many businesses in their tracks.

Quick Note: There are ways to hire staff in China without the red tape of setting up your own company. We’ll explain how that works later.

However, it doesn’t have to be a guessing game. At Kinyu, we use a few specific “litmus test” questions to help businesses decide. If you find yourself nodding “yes” to these scenarios, the move to a local team will likely pay for itself.

Are You Managing More Than One Supplier?

Most businesses start by ordering one product from one supplier, often directly via sites like Alibaba. It’s manageable. But once you add a second or third supplier, your DIY model will start to break.

• Communication: First, your supplier’s sales manager might speak perfect English, but the people actually making your goods (the production line managers and engineers) usually don’t. You are relying on the sales rep to translate your technical needs perfectly.
• Coordination: With multiple suppliers, it’s easy to spend your entire day chasing updates. To cope, most businesses start paying “per-visit” fees to inspection companies or sourcing agents for every factory. These costs add up fast.

The Fix: If you are coordinating between two or more factories, you need a Supplier Account Manager on the ground to act as your eyes, ears and voice.

Is Your Supply Chain Becoming Too Valuable To Leave To Chance?

As a start-up, it’s essential to keep costs low. But as you scale, you have more to lose. A single batch of faulty goods can quickly destroy your brand reputation.

It’s not uncommon in China for factories to swap materials or components to save money without telling you. If you aren’t there to see it, you only find out when customers start complaining.

Once your supply chain reaches a certain value, you need a dedicated hire to keep track of three specific things:

• Quality: Catching issues on the line before the goods leave the factory.
• Costs: Keeping a tight grip on your Bill of Materials (BOM) so your margins don’t disappear.
• Ethics: Ensuring your suppliers meet social compliance and certification standards.

Who You Need: A Quality Manager or a Procurement Manager to keep the factories honest and the BOM costs under control.

Are You Overpaying For ‘Middlemen’ or Third-Party Fixes?

Sourcing agents and third-party inspections are expensive. As your volume grows, these partners often become a significant drain on your profits.

1. The Cost Is Higher Than A Salary: Third-party agencies charge a high premium for every visit. As your volume increases, these “per-visit” fees or percentage-based commissions quickly exceed what you would pay for a fixed monthly salary. By bringing this in-house, you significantly reduce your “cost per day” for quality control and sourcing.

2. They Identify Problems, But They Don’t Fix Them: This is the biggest limitation of outsourcing. A third-party inspector has a very strict remit: they turn up, check a box, and give you a “Pass” or “Fail” report. The headache of fixing a bad batch falls entirely on you. An in-house hire, however, can stay at the factory to perform a root cause analysis and work with the engineers to ensure the mistake never happens again.

The Fix: Once your monthly spend on agents and inspectors hits a certain level, an in-house hire becomes the cheaper, more effective option. By conducting inspections and procurement in-house, you save on daily costs and own the relationship with the factory directly.

Are You Building Something Custom Or High-Tech?

China has many incredible original design manufacturers, but developing custom tech from another time zone is a minefield. Managing hardware, software and compliance via email rarely works.

Without someone on-site to oversee the R&D cycle, your requirements are easily misinterpreted, leading to months of expensive delays and compromised IP.

The Fix: You need a Project Manager with industry-specific expertise. They act as the bridge between your vision and the factory’s engineers, ensuring the product actually works and meets all standards.

How To Hire In China (Without The Legal Headache)

If you’ve decided you need a team but you’re dreading the paperwork, this is where The China Desk comes in.

We are an Employer of Record (EOR) platform. This means you can hire staff on the ground in China without setting up your own legal entity.

• Speed: Quickly get full-time or part-time staff active in days, not months.
• No Red Tape: You manage the person; we handle the complex Chinese bureaucracy and HR.
• Flexibility: Whether you need a full-time Quality Manager or a part-time Merchandiser to review suppliers, we handle the local contracts, payroll, and compliance.

The post Is It Time to Hire Your Own China Team? appeared first on Kinyu.

Understanding these options will streamline your hiring process and help you avoid potential issues further down the line.

What Are the Main Types of Employment Contracts in China? 

There are three types of employment contracts in China (well, four if we count part-time contracts, but more on that in a minute). 

In most circumstances, your first hires in China will be on fixed-term contracts. However, if an employee has signed two consecutive fixed-term contracts, they automatically qualify for an open-ended contract upon renewal. 

This means that after the second consecutive fixed-term contract, you cannot offer another fixed-term contract; instead, you must provide an open-ended contract.

Here’s how it works: 

• Legal Requirement: Once an employee completes two consecutive fixed-term contracts, you are legally obligated to inform them of their right to choose an open-ended contract. This is designed to protect employees’ rights and provide them with job security. 
• Employee Agreement: If the employee agrees to renew or establish this open-ended contract, you must comply. It’s not just a nice-to-have; it’s a legal requirement! 
• Consequences of Non-compliance: If you try to impose another fixed-term contract instead of offering the open-ended one, that new contract may not be legally valid. Employees who feel their rights have been overlooked can seek recourse through labour arbitration or litigation. 

What Should Be Included in a Chinese Employment Contract? 

So, what exactly should you include in your employment contracts? A labour contract must include several mandatory clauses to be legally compliant. Here are some essential elements: 

• Identification of Parties: Clearly state who the employer and employee are. 
• Contract Duration: Specify whether it’s fixed-term, open-ended, or project-based. 
• Job Description: Outline the employee’s responsibilities and expectations. 
• Working Hours: Define the hours and any overtime policies. 
• Compensation Details: Include salary information and any bonuses or allowances. 
• Social Security Obligations: Clarify contributions for pension, medical insurance, etc. 
• Termination Conditions: Detail how either party can terminate the contract. 

In addition to those must-have clauses, you can also add optional ones that cater to your specific needs and protect both parties. 

• Non-competition: This restricts employees from jumping ship to work for competitors after they leave your company. 
• Confidentiality: A clause that protects sensitive information shared during employment. It’s all about keeping your trade secrets safe! 
• Probation Period: An evaluation period for new hires to see if they’re a good fit for your team. It’s like a trial run! 
• Allowances and Benefits: Additional perks, especially for foreign employees, like housing or travel allowances. Who doesn’t love extra benefits? 
• Employee Handbook: A reference to company policies that employees are expected to follow. It keeps everyone on the same page! 

What About Probation?  

Different employment contract types also have slightly different probation rules. 

How can I Terminate an Employment Contract? 

It’s complicated. Employment contracts in China can be ended either when they expires or through early termination. However, if you’re thinking about firing someone without a valid reason, you might want to think again — unilateral termination by the employer without fault is generally not allowed unless there are statutory reasons. 

Reasons for Termination 

Here are some common scenarios where termination is permissible: 

• Mutual Agreement: Both you and the employee agree to end the contract. This is often the smoothest route. 
• Employee Misconduct: If an employee has done something wrong or violated company policies, you can terminate their contract for cause. 
• Changes in Business Circumstances: Sometimes, business needs shift, and you may need to let someone go due to restructuring or financial difficulties. 

We have a full guide on when you can and can’t fire somebody in China here.

The post What Are the Different Types of Employment Contracts in China? appeared first on Kinyu.

Why is there such a range? The variation in social insurance rates depends on the location of employment and the employee’s salary. Let’s dive in.

Overview

China’s social insurance program, known as “Five Insurances and One Fund,” consists of five insurance types and a housing fund, with both employers and employees required to contribute.

• Pension (Endowment Insurance) – Employers and employees both contribute to this scheme, part of China’s national pension system for laborers in retirement. The required employer contribution can be up to 20% of an employee’s salary.

• Medical Insurance – Both employers and employees contribute to this insurance, which covers medical expenses if an individual is injured. The employer’s contribution ranges from 6-12% of the salary, while the employee contributes 2%. Part of this fund goes into the individual’s medical account, and part goes to the health system’s public accounts.

• Unemployment Insurance – If an individual becomes unemployed, they can claim unemployment benefits from the state, provided they have paid their unemployment premiums for at least a year. Both the employer and employee contribute to this insurance.

• Maternity Insurance – Employers pay into this fund to cover maternity-related medical expenses and the employee’s salary during maternity leave.

• Work Injury Insurance – Employers solely contribute to this fund, usually below 0.5% of the salary, to cover costs associated with work-related injuries. If an injury occurs at work, this fund covers various costs, and the employer must pay the injured employee’s wages. This fund is different from Employer Liability Insurance.

• Housing Fund – In addition to the five insurances, employers and employees must contribute to the Housing Fund, administered by the Ministry of Housing. Eligible employees can use the funds in their individual accounts for a down payment on a house or a mortgage. Most cities have a minimum required contribution percentage, such as 5% in Guangzhou and 7% in Shanghai, but employers can choose to pay more as a supplementary allowance, typically up to around 12%.

How to Calculate Social Insurance

So, now you know what “social insurance” is, how do you calculate what you need to pay? The payable amount depends on the salary and location.

However, almost every city has its own policy on social insurance, complicating matters. Therefore, the employer contributions for your team member in Guangzhou will differ from those in Tianjin, even with the same salary.

The table below shows the percentage of salary and total payment for social insurance contributions in Guangzhou and Tianjin, highlighting the differences in employer obligations between these two cities.

There are variations like this across China, and the rates are subject to change, so you should seek professional advice to ensure you are paying the correct amount. For personalized support in calculating social insurance costs for the city and salary you plan to hire for, check out our Salary Calculator.

How Do You Pay Social Insurance?

Employers with an entity in China must open a local bank account eligible for handling payroll and sign agreements with relevant insurance bodies for monthly direct debits. Note that not all banks, such as HSBC local accounts, meet this requirement.

For those without an entity in China, employing team members through a third-party service provider is an option. The China Desk, for example, can manage all payroll and social insurance matters with full transparency.

Key Points to Note

Along with the overview and calculations, keep these key points in mind:

• Some cities have salary caps for social insurance calculations. For example, Tianjin currently has a cap of 22,434 yuan. Salaries above this cap will not increase the premium.
• You cannot pay social insurance in a city where your company is not incorporated.
• Rates and salary caps change regularly, so it’s essential to check for updates.
• The state can alter the housing fund rate.
• As a general rule (though not a strict policy), social insurance rates tend to be higher in cities where average salaries are lower. Beijing is an exception, with both high social insurance rates and wages.
• Paying social insurance is mandatory by law.

These warnings might feel daunting, but with proper budgeting and advice on social insurance calculations, you’ll be fine.

For support with social insurance costs for your employees in China, check out our Salary Calculator or contact one of our team members.

The post Social Insurance Essentials for Hiring in China appeared first on Kinyu.

The Benefits of an In-House Quality Team

As mentioned in a previous blog, there is a distinct difference between third-party inspection companies and having an internal quality function. The key difference is that third-party inspection companies only report the problem; they do not solve it.

To solve quality problems, understanding the product’s manufacturing process, the factory operation, and then communicating with the factory managers on root cause analysis is essential. A corrective action plan needs to be drafted, followed by a check to ensure that new processes are in place. This can only be done with a dedicated internal quality resource working for you.

Key Responsibilities of a QC Engineer in China

Let’s examine the work you should expect the QC to carry out. A Quality Control engineer is responsible for ensuring that products meet the required quality standards and specifications.

• Inspection and Testing: Conducting inspections and quality tests on raw materials, components, and finished products to identify defects or deviations from standards.
• Quality Assurance: Implementing quality control processes and procedures to prevent defects and maintain consistency in production.
• Documentation: Maintaining detailed records of inspection results, deviations, and corrective actions taken.
• Problem Solving: Identifying the root causes of quality issues and working with production teams to implement corrective and preventive actions.
• Supplier Collaboration: Collaborating with suppliers to improve the quality of incoming materials and components.
• Continuous Improvement: Continuously seeking ways to enhance product quality, reduce defects, and optimize production processes.

Qualifications and Skills

When hiring a QC engineer in China, consider candidates with the following qualifications and skills:

• Education: Many QC engineers hone their skills on the job, making formal education less crucial. However, if there’s potential for the role to evolve into a managerial position, a bachelor’s degree in engineering, quality management or a related field is advisable.
• Technical Knowledge: Proficiency in quality control tools and techniques, statistical analysis, and a familiarity with relevant industry standards and regulations is necessary.
• Communication Skills: Strong verbal and written communication skills are imperative for reporting findings and collaborating with cross-functional teams.
• Attention to Detail: The ability to identify even minor defects and deviations is crucial in maintaining product quality.
• Problem-Solving Abilities: QC engineers should excel in root cause analysis and implementing effective corrective and preventive actions.
• Experience: As noted, prior experience in quality control or a related field is highly valuable, especially within your specific industry.

QC Engineer Recruitment Process

The salary range for a QC engineer is generally lower than that of a managerial position, thus regular job platforms can yield a significant number of applicants. Discover more about job platforms in China on our recruitment blog.

• Define Job Requirements: Clearly outline the qualifications, skills, and responsibilities for the QC engineer position within your organization. If you desire a copy of a QC engineer job description, feel free to request one from our team.
• Screening: Review resumes and conduct initial interviews to shortlist candidates who meet the job requirements. This stage may involve back-and-forth conversations with candidates before in-depth interviews.
• Interview Process: Conduct comprehensive interviews to assess candidates’ problem-solving abilities, communication skills, and cultural fit within your organization.
• Reference Checks: It’s important to check references in this sector. Contact references provided by candidates to verify their work history and performance.
• Offer and Onboarding: Extend a job offer to the selected candidate and facilitate the onboarding process, including training and orientation.

How Much is a QC Engineer’s Monthly Salary?

Salaries for QC roles typically range from 6,000 to 8,000 yuan per month, contingent on experience and English proficiency. Additionally, budgeting for social insurance, which constitutes about 30%, is essential.

Key Points to Consider

• Expense Management: While salaries are relatively low, QC engineers often need to drive to factory sites regularly. Since factories are usually located away from residential areas, QC engineers might be driving 100+ km daily. They tend to use their own cars, so it’s essential to factor in petrol costs, depreciation, maintenance, and toll fees into the mileage. Sometimes, these expenses can equate to their entire post-tax salary!
• Overtime Management: Some factories in China operate seven days a week, and during tight production schedules to meet demand, QC engineers may need to work on weekends for inspections. Seasonal production trends can result in QC engineers being extremely busy during certain periods and less so during others.

It’s crucial to maintain a flexible approach to overtime. This entails communicating the requirements and expectations with your team, applying for a flexible working agreement with the local labor bureau if possible, and providing compensatory leave in lieu of days worked over the weekend. The statutory overtime requirement is to provide double pay for overtime worked if compensatory leave allocation isn’t feasible. Therefore, planning overtime and compensatory leave carefully is important.

To Summarise

Hiring your own Quality Control engineers can be a game-changer for the right business! Nonetheless, preparation for the hiring process is crucial, as is engaging with them on factory issues and time management.

It’s important to note that a QC role is not an office job. While this may seem obvious, managing a QC engineer in China differs significantly from managing someone seated behind a desk. They regularly travel to locations with more occupational hazards, so seeking advice on the appropriate Employers’ Liability Insurance is advisable. As mentioned, the usual expense and overtime arrangements may not suit a QC role well, necessitating a different management approach.

Unsure about how to hire and manage your China team effectively? Contact our team to learn more about The China Desk and how it can benefit you!

The post Hiring a QC Engineer in China: A Guide appeared first on Kinyu.

Here are some key areas to consider:

Time difference

A key factor to consider is the time difference. China’s time zone is UTC +8, so if you are in Europe or America, you will be asleep through a significant portion of China’s working day. Therefore, your contact windows with your China remote team are relatively small. As a result, it’s possible that your team members in China may not communicate with their colleagues during the morning hours.

Kinyu’s Founder, Benjamin King, experienced this challenge firsthand in his previous role as a China Country Manager. “It can feel quite lonely working from home all day with your colleagues only come online at 4pm.” This disconnect can adversely affect your team’s productivity and impact your operation.

As challenging as this can be, there ARE ways to support your team members and make remote working a successful arrangement for all parties. Our first recommendation is to set clear tasks and instructions for your team member so they wake up with a plan of action. Plenty of programs are available to simplify this process, such as Trello, Microsoft Planner and others (but make sure the software you use works in China!) 

Another option is for your employee to consider working later hours, starting late and finishing late, so there is more overlap with the rest of your team. However, this arrangement typically works better for European companies than American companies. You should also check out a Non-fix working time system 不定时工作制, which is a form of employment agreement you register with the local labour bureau. The Virtual General Manager Function in The China Desk is a tool to help with the time difference, where we check in with your team members, as they are often in the same office as our team.

Social insurance

Working remotely opens up opportunities to collaborate with individuals from all over the world, including China. However, it’s crucial to ensure that you comply with local labour laws and employ individuals correctly. This compliance applies domestically in China as well. For example, if you plan to hire someone in Tianjin but are based in Guangzhou, you cannot pay Tianjin social insurance from your company. As an employer, you are responsible for communicating this to your employees and ensuring they understand.

This same principle applies when hiring someone in China from an office in a different country. For more information on this topic, check out our blog on social insurance.

Team engagement

The importance of team engagement ties into the time difference issue in China. If you read about the foundations of Guanxi in our previous blogs, you will know that Guanxi is all about relationships – including those built in the workplace.

Therefore, it is crucial to have regular face-to-face meetings with your team and frequent non-work related video calls to foster these relationships. In addition, organising team-building events once or twice a year helps improve team engagement. For example, at The China Desk, our management team ensures a quarterly engagement trip to visit all China Desk employees and gain insight into their challenges and opportunities in business. This promotes solid relationships and a sense of camaraderie within the team.

Working from home

Whether working from your home office or your Garden Shed, it’s important to remember that many Chinese employees may not have the luxury of space at home. Due to the high population density, most people in China live in small apartments with only 1 or 2 bedrooms, making it difficult to have a separate office room.

Additionally, office amenities may be limited, causing working from home to be less prevalent in China than in the West. Instead, team members in China may opt to work from a local café rather than from home.

At Kinyu, we understand these difficulties and offer The China Desk as a flexible workspace option for your team members in China. This way, they can come and go as they please. So it’s crucial to think twice about the remote working options in China and ensure you have the correct set-up to make your China team member thrive! Download a case study, or book a call to learn more about The China Desk and how we can empower your employees!

The post Hiring Remote Workers in China: Key Things to Consider appeared first on Kinyu.

As the world celebrates International Women’s day we thought it would be a great opportunity to share more about the role women play in China supply chain. Kinyu SCM prides itself on having a 50:50 gender ratio, and this week we were delighted to interview Cece Tang, Head of Guangzhou office for Hays international. In addition to running the Guangzhou office, Cece is heading up Hays’ ESG business unit. Cece has over 10 years’ experience developing teams across major divisions such as Engineering, Supply Chain, IT, HR and Finance.

Here is what Cece had to say about women in supply chain:

Q: Cece, lets start with the work that Hays does for Procurement and Supply Chain in China.

A: Supply Chain & Procurement is one of the best performing teams at Hays. We support companies across Consumer, E-commerce, Manufacturing and 3PL businesses to place key Supply Chain professionals.

Q: How do you feel the role of women in supply chain has changed over the last 10 years?

A: A few years back the most popular roles in Supply Chain were procurement functions, where we could only see females in Junior Buyer positions but rarely met female Procurement Managers or Directors. It could be that a manager role required extensive travel & companies seemed to prefer to have men in such roles. In recent years this remains unchanged. However, along the years “supply / demand planning” and “logistics” have become a more critical function and play a key role in overall supply chain. Across 2022 Hays filled more “planning” roles than “procurement”.

I don’t see a strong preference on male/female for these roles and I believe it’s a real opportunity for females to step up into a truly senior role in overall supply chain management. I do hope the stereotypes on women having less flexibility to travel can change; and I also hope female candidates who actually get the opportunities offered can prove that.

Q: In your experience with placing these roles, how many female applicants/candidates do you receive, and how many clients have recruited women?

A: Generally in procurement roles I rarely see any female applicants. In other roles such as planning, overall Supply Chain management, logistics, we see some female candidates but overall for Procurement & Supply Chain, there are far more male candidates than women.

Q: Are there any particular roles where the placement of women is more prevalent? Any roles where placement of men is more prevalent?

A: In some planning/demand planning, Customer Services / Logistics roles where a “detail oriented” character is required, clients may tend to have a preference on female candidates; while in “Sourcing” and “procurement” roles where strong negotiation skills or heavy traveling is required, then there may be a preference for male candidates.

Q: What do you think companies/local government could do to attract more female talent into the workplace?

A: Removing unconscious bias and conduct behavior based interviews during the qualification process among male/female candidates is the first step to providing equal opportunities. By not categorizing female/male based on gender differences will then naturally lead to a better analysis on competences. I won’t say offering a hybrid working model is beneficial to attract females – as believing women have a higher demand of work/life balance is already a stereotype. However, companies who offer flexible hours / working days will definitely attract a more diverse group of candidates.

Q: Where do you think China is in terms of Gender equality – what is your opinion on Gender pay gap?

A: Hays has been putting huge efforts to drive gender balance and we are now at 53% female in our senior leadership team globally. There is no obvious pay gap if its the same role however I rarely see a female applicant for a General Manager / MD position in Supply Chain. I’m really hoping to see more women driving their career to the executive level in Supply Chain.

Thank you, Cece for your time, and we look forward to placing more women in supply chain roles with you soon! If you need some recruitment expertise in China, feel free to get in touch here.

The post <strong>IWD – The role of women in China Supply chain, Q&A with Cece Tang from Hays Guangzhou</strong> appeared first on Kinyu.

In addition, the number of women in leadership positions in China has steadily increased over the past few years. As a result, in 2020, the proportion of women in senior management positions in Chinese companies reached 8.5%. This number increased from 25.9% in 2015, according to a report by the National Bureau of Statistics of China.

A high-ranking member of the Chinese government has emphasised the importance of women in China’s development, stating, “Women are an integral part of China’s development, and their contributions are crucial to our success. We must continue to work together to create a more inclusive and equitable society, where all individuals are allowed to succeed.”

Although it is essential to recognise China’s progress, there are still many areas where women face discrimination, including education, employment, and healthcare. While Kinyu Supply Chain Management always promotes gender equality in the workplace, we want to increase these efforts over the next year. By empowering the female members of our team, we hope to do our part and work towards a more inclusive and equal society. Want to know more about Kinyu and our Inclusivity and Diversity policies? Feel free to get in touch!

The post International Women’s Day 2023; How is China Contributing? appeared first on Kinyu.

As mentioned in the opinion piece written by Kinyu CEO Benjamin King, the reality is that China will remain a central part of most supply chains for many years to come. The result is that total diversification is unrealistic. However, more and more countries are looking at re-shoring or at least nearshoring for some components and assembly.

So, if you plan to diversify, you may need to reconsider the size of your team. How will downsizing affect your China team, and what are your options? Here are a few points you should consider:

Developing a new team structure

You will most likely need to rethink your China team organizational structure when downsizing. It may not be as simple as letting a couple of people go. Entire departments or functions may have to be cut or indeed merged. As a result, it is much better in the long term to draw up your new structure from scratch instead of reshaping what you have now.

Who to keep on the ground

Once you have your new structure, you must work out who can best fill these roles. Again, you will have to balance experience against versatility and long-term planning. Whilst some team members who have been with you longer will know more about the company and operations, they may not necessarily be able to adapt to your new structure.

Downsizing, redundancy and budgeting

Before making any decision, you must understand all the impacts of letting your staff go. It is never an easy conversation, but preparations can be made in advance so that you are in control of the situation.

The cost of redundancy will always be a factor, as people who stay with you longer will be entitled to a more significant pay package. Before making any decisions, seek advice on the costs and make sure your management team has budgeted for this.

Outsourcing Administrative functions

If you plan to hire an HR team or accounts department, it’s worth checking the outsourcing options available. For example, it is possible to outsource the financial controller role to another firm; the firm’s representative can safeguard your company chops, deliver monthly P&L, and upload payments to your banking system for your approval. The same goes for HR; since your team headcount will be smaller, such an operation may not be so complex. Therefore, this is an effective way to downsize your operation whilst continuing to run it smoothly. Of course, you must work with a licensed and professional services firm for this part. Kinyu has a partnership with CW CPA, which provides this service alongside many others.

Closing your entity

When downsizing your team, you need to ask yourself: do I need a company to operate this, or am I able to do it myself? Some scenarios may require you to keep your entity. For example, if you use the entity to export or as a sales operation. However, if it’s mainly to house your sourcing operation, it’s not strictly necessary.

Closing your entity is not a straightforward process. Just like opening a company, there is a lot of paperwork that you will need to file with the local government bureaus, and it takes time to close a company. However, it will allow a light-touch operation with a quicker exit strategy.

Not sure where to start?

The China Desk supports companies that prefer to have a light touch operation. As part of our strategic HR and management offering, companies can cost-effectively maintain operations in China. If you find this task a lot to digest, feel free to get in touch to see how we can help.

The post Downsizing your China team, what do you need to consider? appeared first on Kinyu.

What is Employer’s Liability Insurance?

Before we go into detail, it is essential to remember that China labour law is very much pro-employee. In a dispute, the employee will have a distinct advantage over the employer, and it is the employer’s responsibility to provide a safe working environment.

So it is essential to have insurance and a strict code of conduct at work.

Employer’s Liability insurance covers damages for claims from an employee in the event of personal injury or death whilst employed by your company. This cover includes all work-related events, including, as the Bank of China has put it:

• The accident happens during work, in the workplace, and for work-related reasons.
• The accident happens before or after working hours and in the workplace when an employee engages in job-related preparation or ends work.
• The accident happens during work and in the workplace when an employee faces violence whilst performing duties.
• The employee’s disease is diagnosed and identified as an occupational disease.
• Suffering from an injury due to work or missing due to an accident during the workout period.
• Suffering from traffic accidents injury on the way to or from work.
• A death caused by sudden illness or after the rescue invalidly within 48 hours during working hours and in the workplace.
• Other situations as agreed in the insurance contract.

You may have read in our social insurance blog that social insurance often covers injury. However, such insurance far from covers the potential liability undertaken by an employer, so ELI is an absolute must.

The compensation amount will include medical expenses, legal fees and any other financial compensation arising from the injury.

So how do you make sure your cover protects you against such claims?

Kinyu’s insurance policy will cover all personnel employed under The China Desk. You can learn more about our policy here. If hiring personnel on the ground through an HR agent, you must clearly understand the policy and how it will affect you.

Different working environments will require other policies, so if you have a company in China or a partnership, it is best to seek advice from an insurance broker or professional.

What providers?

Some prominent providers are PIngAn, Taiping and Zhonghong, but many companies provide insurance to cover different occupations. Some examples of brokers include Marsh and Asian Risks. It is worth speaking to a broker to get good guidance on the best policy for your circumstances. The Kinyu Resource Platform has HR consultants who can advise you on the best policy.

What does it cover, and how much?

A basic example of an insurance policy is as follows:

• Up to CNY 1,000,000 for accident/death
• Up to CNY 100,000 for medical support
• In-patient subsidy is 150 CNY /day, up to 90 days
• Income subsidy during treatment, 150 CNY/day, up to 90 days.
• 24 hr coverage.

Please note this does not constitute an offer of insurance but only indicative information. All policies come with extensive terms and conditions attached. Please contact a broker or insurance company for professional advice.

What other precautions should I put in place?

Health and Safety: It’s essential to have robust health and safety guidelines for all employees. You should not allow your team members to travel for work without giving prior knowledge to your China HR team.

Geography Coverage: Most policies only cover mainland China and do not include Hong Kong, Macao or Taiwan. Therefore if your employee needs to travel for work outside of Mainland China, you must consider additional cover.

High-Risk Areas: There are some areas in Mainland China where insurance does not cover elements of medical expenses. These areas are not necessarily that obvious, so it is essential to check the specific policy details

Salary, Age, and Occupation: These are factors you must consider when evaluating which coverage is best for your company.

Factory/supplier ELI: If your employees have to visit factories or other areas with increased occupational hazards, those companies may not have appropriate systems or adequate insurance. Unless certified, your employees must not do anything requiring training on these sites.

Congratulations on making it through this article! There is a lot to digest, but it’s all imperative when operating in China. If you have more questions about this and hiring in China – feel free to get in touch.

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Who to hire

The first and most obvious place to start is who you should hire. If you are unsure, try writing down all the areas of your operation where you wish you had someone in-country that could add value. These may include quality, sourcing, and product management. Write them all down in order of priority.

If you have a supply chain in China, yet no personnel, you will likely be looking for a Jack-of-all-trades; someone to oversee multiple aspects such as vendor relationships, third-party partners, and communications. This team member will act as your overall eyes and ears are on the ground. If this sounds like what you need, check out the role of supplier account manager.

How to budget

Thinking that hiring in China is cheap is a significant misconception foreign companies make. When it comes to making a budget, you must ask yourself these questions: 

• What role are you looking for?
• Which part of China do you want to hire?
• How experienced should the perfect candidate be?
• What level of English is necessary for this role?

Specific roles and functions are cheaper than others, so it is essential to remember: You get what you pay for. If you can answer the four questions above, you should be able to carry out accurate market research for budgeting purposes. Also – don’t forget to budget for mandatory social insurance.

Employee insurance: Mandatory and advisable

You should know about two types of insurance: Social insurance and Employer’s Liability Insurance.

Social insurance is mandatory by China’s labour law and is similar to a country’s national insurance contribution by companies. 

China’s social insurance includes five core elements: Pension, Medical, Unemployment, Maternity, and Work Injury. On top of this, there is the housing fund.

Look out for a full article on this topic, but to summarise, there are two key points: 1) it is mandatory by law and 2) budget 30-40% of the monthly salary pay for this.

Employers Liability Insurance – this is not mandatory but highly advisable. Legally speaking, China is known for being very employee-friendly, including health and safety in the workplace. If someone gets injured at work – the employee may sue the company. You can find an entire article on this insurance and how to incorporate it into your HR policy here. Remember, some policies cover international travel if your personnel need to conduct business outside China. Golden Rule: It is never straightforward, so seek advice.

How to employ someone?

There are several options available when it comes to employing someone, so the right one depends on your company and situation.

1. Setting up a WFOE – You will need the complete entry method to set up your WFOE and hire your internal team. This method is the most comprehensive way to build your team. It may also tie in with other reasons to set up an entity, primarily if you sell products in China. However, it does come with some punchy costs, both upfront and ongoing. You may only need to hire part of the back office as there are many professional firms to outsource various functions. However, it can also be complicated to wind down, and there should be special attention to the critical management team you hire.

2. Using an HR/staffing agency – Many firms can act as the Employer of Record (EOR) to hire your staff. This method is the most stripped-down option for hiring. Professional EOR companies will happily help you engage your proposed employee, but as a result,  there will be minimal infrastructure around your new hire. The costs vary on how professional the EOR firm is. It is essential to understand the insurance policies and employment contracts that the firm uses.

3. The China Desk by Kinyu is a blend of a traditional HR services platform with in-country management and advisory. The China Desk allows a company to hire just 1 or 2 people but get the benefits of an entire team in China. It is the platform of resources and knowledge you can build with your WFOE but with the flexibility of using an HR company.

How to find the perfect talent?

Hiring the right talent is crucial for success in your China operations. China has plenty of people wanting to work, but the search for someone who has the right qualifications, English skills and motivations is where many companies come undone. The exit of Linkedin has exacerbated this situation even further. There are a few options: joining your country’s chamber of commerce in the region, local recruiting firms, and job websites such as Liepin and Boss ZhipinUnfortunately, you cannot post jobs on job websites via a staffing agency; it can only be done with your WFOE or as part of the China Desk.

Hiring under The China Desk by Kinyu includes a launch phase to support your talent search, combining a multi-faceted hiring strategy. This strategy is an entire topic, so look for more articles on talent search!

So here are the five core areas you must consider when building your China team. The next step is to book a meeting with our team for more support on hiring in China!

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