Talent Mobility Remains a Hurdle in the Greater Bay Area

The Greater Bay Area (GBA) is a key development project for China, with the major focus being on connecting nine cities together as well as the two special administrative regions of Hong Kong and Macau.

A key part of the project involves connecting the nine mainland cities of Guangzhou, Shenzhen, Zhuhai, Foshan, Dongguan, Huizhou, Zhongshan, Jiangmen, and Zhaoqing, along with the two special administrative regions of Hong Kong and Macau.

This involves massive investments into transport infrastructure like roads, light rail, bridges and airports to facilitate integration. This world-class infrastructure is great news for supply chains and aims to attract more businesses to set up operations in the region. We go into more detail on this in our GBA focus blog.

However, there are some shortcomings that are yet to be addressed, the major one of which is the topic of this blog:

Hiring and Mobility Challenges

So, let’s start with an example. Take the new Shenzhen-Zhongshan Bridge (pictured above), which has cut travel times between Shenzhen and Zhongshan from two hours to less than 45 minutes. This allows someone to potentially live in Zhongshan while working in Shenzhen.

Yet, while the bridge is an amazing engineering feat enabling cross-city commuting, a company in Shenzhen would not actually be able to simply hire an employee living on the other side of the bridge in Zhongshan.

This is because the GBA’s regulatory hurdles around local hiring remain just as complex as in other parts of the Chinese mainland.

In China, companies need to set up a separate entity in each city where they intend to hire employees due to requirements around social security, taxation, and access to public services. Basically, an employee’s work address, location of social security payments, and tax payments must all converge in the same city.

Simply put, a company must have an entity in the city in which the employee is based if the employee wishes to receive social insurance in that city.

And in our experience, employees value highly the companies that can pay social insurance in a compliant manner.

For example, the company in Shenzhen can only pay social insurance for employees living in that city. If the company’s operation spans multiple cities across China, it must establish separate entities to hire employees in each location. We discussed this at length in a previous post.

These local hiring requirements also apply within the GBA. So, if you have an entity in Guangzhou and want to set up an R&D team in Shenzhen, you will need to establish a separate entity.

Setting up an entity can take months, and each city has its own regulations, procedures, and documentation requirements, making the process time-consuming and complex. You’ll even need to open separate business bank accounts for each new entity.

Implications

So, while the GBA boasts numerous advantages, the ability to seamlessly hire and mobilize talent across the region remains a work in progress. And this has major implications for companies on the ground.

For example, some of the smaller cities in this area, such as Zhuhai, Huizhou, Jiangmen, and Zhaoqing, are witnessing an increase in the establishment of factories due to the new policies. However, the mobility of talent to these smaller cities remains a significant challenge for businesses, a topic that was discussed in last month’s British Chamber Supply Chain Roundtable among businesses operating on the ground.

Therefore, city governments across the GBA should focus on finding ways to increase the mobility of talent within the region. This will ensure that the new transport infrastructure truly benefits the people working in the area.

The Solution

Luckily, Kinyu offers a solution through The China Desk to help businesses overcome this challenge and take full advantage of the opportunities in the GBA.

Kinyu enables you to hire and engage employees across all GBA cities without the need to establish multiple entities or navigate complex paperwork. We take care of everything related to your workforce – managing employee payroll, benefits, social security contributions, and compliance matters.

If you have a presence or are considering establishing an operation in the GBA or China, book a meeting with one of our Kinyu team members to see how we can help you succeed.