But without a solid HR function on the ground to back them up, you’re leaving a lot to chance. You’ve got boots on the ground with nobody making sure they’re pointing in the right direction. Here are three reasons why local HR support is the backbone of a functioning China operation.

1. Holiday Leave Won’t Take Itself

In China, employees often won’t take their leave. They’ll quietly accrue overtime, rack up hours, and never say a word about it, especially if there’s a financial incentive to keep going.

That sounds productive until you’re staring down a mountain of owed leave and overtime liabilities at year end.

Under Chinese labour law, if an employer fails to arrange for employees to use their annual leave, the company must pay 300% of the employee’s daily wage for each unused day. The daily wage is calculated by dividing the monthly salary by 21.75 working days.

Even if an employee quietly chose not to take their leave, the employer is still on the hook unless it can produce written proof the employee voluntarily waived their entitlement. Foreign companies often aren’t aware of this rule and end up paying significant sums to Chinese employees who were.

China’s Labour Law mandates overtime pay at 150% of the standard wage on weekdays, 200% on rest days, and 300% on public holidays. Without proper oversight, overtime can quietly stack up. And when employees know that unchecked hours mean a bigger payout, there’s little incentive for them to flag it.

An HR presence on the ground can manage this: making sure people actually take their holidays, tracking overtime exposure in real time, and ensuring you don’t end up with a nasty surprise when someone leaves and files a claim. Without that, you’re essentially hoping nobody notices. And in China, the labour authorities tend to side with the employee.

2. Teams Are Built, Not Assembled

Hiring in China goes beyond finding someone who ticks the boxes on a job spec. It’s about how that person fits into the existing team dynamic. Personalities, working styles, the unspoken stuff that makes a team gel or fall apart. Get it right and the returns are significant.

Gallup’s research shows that engaged teams are 21% more profitable and 17% more productive than their disengaged counterparts, with a 59% reduction in turnover.

Someone managing HR from a head office thousands of miles away simply isn’t going to pick up on any of the interpersonal dynamics that drive those numbers. You need someone in the room, someone who understands the local culture and can gauge whether a new hire will complement the team or throw a spanner in the works.

3. You Need a Counterbalance

China operations often run semi-autonomously, driven by time zone gaps and distance from head office. That creates a real risk of one person or a small group quietly consolidating too much control. Hiring friends and family into roles, sidelining people who push back, making decisions that serve themselves rather than the business. Most of the time it’s not dramatic. It just creeps in when nobody is watching closely enough.

A local HR function prevents this. It provides an independent set of eyes and ears on the ground, reporting directly to head office. It ensures hiring decisions are based on merit, that company policies are followed, and that employees have someone to raise concerns with who isn’t their direct manager. Without it, you’re relying on the very people who benefit from a lack of oversight to hold themselves accountable.

The bottom line: Managing a team in China from the other side of the world is doable. Managing them well without local HR support? That’s a different story. If you’re serious about getting it right, you need people on the ground who understand the culture, the labour law, and the day-to-day reality of your workforce.

The post Three Reasons You Need HR on the Ground in China appeared first on Kinyu.

“It was very easy for us to overestimate the capacity of people who spoke good English to actually deliver on the job,” said Monga, founder of Guangzhou-based IMEX Sourcing Services. “In interviews, people who speak good English will always outshine the ones who don’t.”

It’s not hard to see why. Despite having more English language learners than any other country, China’s proficiency levels remain low. Only around 10 to 25 million people in the Chinese mainland speak English fluently, roughly 1-2% of the population, depending on how you define proficiency. The EF English Proficiency Index ranks China around 86th out of 116 countries and territories, with a national score of 464, below the global average of roughly 477 to 488.

That makes hiring English speakers in China competitive and expensive — and the ones who do exist tend to cluster in teaching, marketing and sales, not on factory floors or in sourcing teams.

The EF data breaks down English proficiency by job function, based on test scores out of 800. In China, marketing professionals scored highest at 529, followed by strategy and project management roles at 517 and sales staff at 510. Purchasing and procurement scored just 459, among the lowest of any professional category. Put simply, the people already doing supply chain work in China are among the least likely to speak good English.

For supply chain companies hiring on the ground, that means the pool of candidates who can impress English-speaking executives on a video call is small, fiercely competed for and expensive. The much larger pool of skilled professionals who cannot gets overlooked entirely.

“When we created more role-specific tests, we realized that there were amazing, very talented Chinese-speaking people who understood sourcing, understood quality control,” Monga said. “They were very good at negotiation, very detail-oriented. And that completely changed our mindset.”

Even so, limited English proficiency is often a dealbreaker for recruiters — no matter how stacked their CV. After all, how do you manage someone you can barely talk to?

The temptation for many companies, especially those with limited resources, is to keep searching for a single hire who can manage suppliers in Chinese and report back to headquarters in fluent English. But as the data shows, those candidates barely exist.

Monga’s answer was to stop looking for one person and build a team with differentiated roles instead. The key was deciding upfront which roles actually needed English and which didn’t. IMEX separated client-facing account management, where English is essential, from technical sourcing and quality control work, where deep supply chain knowledge matters more.

“English is an important factor,” he said. “But if you can get more specialized skills and separate the roles, then that would be something I would advise.”

Build a Team, Not a Single Hire

The model that often works is a team structure with a bilingual leader who can communicate directly with headquarters, supported by specialists who do not need to be fluent speakers. Those team members still need to read and write English well enough to handle emails, reports and key documentation, but they do not need to lead a call with London or New York. That distinction alone opens up a significantly wider talent pool and brings in candidates with stronger technical credentials.

Yes, building a team costs more than a single hire. But the tradeoff is access to deeper expertise at every level.

For companies not yet ready to build a full team, we suggest starting with one key hire: a supplier account manager. But choose this person with the future in mind. Look for someone with the sourcing and supplier management skills you need today, but also the communication ability and leadership potential to manage a broader team as your China operations grow. That way, your first hire becomes the foundation of your team, not a role you eventually need to hire around.

“I always recommend anyone, if they have the resources, to get a certain degree of specialization in their teams early, because that makes everything else a lot easier in terms of quality control, communication and a whole host of other things,” Monga said.

Communication Runs Both Ways

Yet, there is one condition that makes or breaks this approach. Building a team around lower-English roles only works if those employees are properly supported in their own language. HR issues, workplace concerns, contract questions and day-to-day management all need to be handled in Chinese by someone who understands the local labour environment.

Without that, companies risk the same problems that come from managing entirely by remote: miscommunication, disengagement and sudden resignations.

For firms without the scale to justify a dedicated China-based HR hire, employer of record providers can fill that gap, offering local-language HR support alongside employment compliance and payroll. Either way, the principle is the same: if your team operates mostly in Chinese, their support structures need to as well.

The Bottom Line

The practical takeaway for hiring managers is straightforward:

• Build a team, not a single hire
• Put a strong English-speaking leader at the top
• Hire specialists for their technical ability, not their fluency
• Make sure the whole team has access to Chinese-language HR support locally

The companies getting the most from their China teams are often the ones who stopped treating English as the first filter.

Watch the Full Interview

Want to hear it straight from Ash? In this episode of “On The Ground,” Kinyu CEO Benjamin King sits down with Ash to discuss how businesses can build and scale sustainable China sourcing teams. Watch the full interview on YouTube.

The post Does Your China Hire Really Need to Speak English? appeared first on Kinyu.

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.

EORs are especially popular for companies employing staff outside their home country because they let businesses hire employees quickly and legally (like in China) without the time, cost and hassle of setting up and maintaining a local company first.

In this article, we’ll discuss how EORs work, the benefits they offer, the risks involved and practical ways to manage those risks.

What is an Employer of Record?

An EOR is the legal employer on paper. They take full legal responsibility for payroll, tax filings, benefits administration and keeping everything compliant with local rules.

However, it’s important to understand that your employees remain effectively yours. Your company manages their daily work, performance and team leadership. Meanwhile, the EOR focuses mainly on the back-end employment administration.

This arrangement is valuable in places like China, where local labour laws and regulations vary by city and can be difficult for foreign companies to navigate. Using an Employer of Record in China lets foreign businesses hire staff quickly and legally without the headache.

Employer of Record Risks

It all sounds pretty good, right? But before you dive in, don’t overlook the possible pitfalls. Not every EOR is the same and there are a few things you’ll want to consider before making a choice:

Permanent Establishment Risks

EORs don’t give you a free pass when it comes to tax obligations. If your team in China is signing contracts, running major operations, or directly driving revenue, the authorities might see your business as having a permanent base there, even if you’re using an EOR.

This can create unexpected tax bills, extra paperwork or government scrutiny. It’s not just about who’s on the payroll; what kind of work they do, and how closely it ties to your global business, matters. If in doubt, check with a local tax adviser and keep the EOR’s role strictly to employment, not core business management.

Worker Misclassification

If you treat regular staff as “contractors” via an EOR, you’re heading for a compliance mess. Misclassification can mean back-payments, legal trouble and unwanted attention from regulators. If workers performing regular, core roles are treated as contractors without meeting legal standards, companies may face fines, back taxes, social security obligations, and potential lawsuits. Contracts must reflect the true nature of the working relationship clearly and accurately.

Intellectual Property Ownership

Not all EOR contracts cover IP properly, especially in China. If your employees create something valuable, make sure ownership clauses are watertight and reviewed by a local legal expert. Don’t leave IP up for grabs.

Data Security

Your people’s sensitive data goes to a third-party. Check the EOR’s compliance with Chinese data laws: are records stored securely? Is cross-border transfer handled by the book? Data breaches or regulatory slip-ups can be costly.

Regulatory Compliance

It’s not just employment law; some sectors have extra rules. If you’re in finance, health care, tech, etc., ask potential EORs about industry-specific compliance. Don’t assume general expertise covers your niche.

If you’re wondering how this all works in practice, take a look at these real-world examples. These case studies show how different companies have used our EOR service to solve specific supply chain and staffing challenges in China:

Building a Quality Control Team for Home Goods in China

Kinyu Helps UK Energy Firm Cut Costs and Improve Quality

Hiring a Project Manager in China for Smart Home Firmware

How Kinyu Can Help

Want to talk through your options or need advice on hiring in China? Get in touch with Kinyu or check out our China Desk services for step-by-step support.

The post Everything to Know About an Employer of Record appeared first on Kinyu.

What Are China’s 2026 Public Holidays?

Here’s the full calendar of statutory holidays:

Note the “makeup working days” on the right-hand side of the table. These are Saturdays and Sundays that turn into regular working days to offset the extended holidays. If your staff work these, they get paid their normal rate, not overtime.

What About Half-Days and Regional Stuff?

Beyond the 13 big holidays, there are a few partial observances worth noting:

• Women’s Day (March 8):
  All adult women get half a day off.
• Youth Day (May 4):
  Employees aged 14–28 get half a day off.
• Children’s Day (June 1):
  Kids under 14 get the whole day off. Mainly impacts parents (schools close), so don’t be surprised if some staff ask to stay home.
• Army Day (August 1):
  Active military personnel get half a day.

There are also cultural festivals: Lantern Festival on March 3, Tibetan New Year, the Ghost Festival in August, and so on. These aren’t statutory paid holidays across the whole country, but they matter culturally and may affect your business. Check with local authorities if you’re operating in specific regions like Tibet or Guangxi (which has its own Double Third Festival on April 19).

Do You Actually Have to Give Paid Time Off?

The short answer is: usually yes, but not always.

For most businesses operating a standard working hours system, statutory holidays are mandatory paid leave. No ifs, no buts. Your staff must get paid as if they worked, and you cannot deduct it from their annual leave balance. This is baked into Chinese labor law.​

But there are genuine exceptions:

If you use a “comprehensive working hours system” (common in transport, telecom, retail, and some hospitality), your staff might not be entitled to paid time off on statutory holidays if you’ve formally designated those days as regular working days within your approved schedule. However, if they do work, you still pay them 300% of their normal wage.

If you’re in Beijing and use a “non-fixed working hours system”, the rules are different. Employees don’t get overtime pay for statutory holidays, so you don’t owe them 300% compensation. But this is specific to Beijing. In Shanghai and other cities, the 300% rule still applies.

If you’re unsure which classification applies to your operation, contact us and we can help you out. The rules genuinely differ between Beijing, Shanghai, Shenzhen, Guangzhou and other locations.

What If You Need Staff to Work on a Holiday?

If your business must operate on a statutory holiday, and you don’t fall into an exemption category, you must pay 300% of the employee’s normal daily wage for every hour worked. If you need to do this, always inform employees in advance and get written consent where possible, especially for holiday work, to avoid disputes or complaints.

The post China’s 2026 Public Holidays: What Employers Should Know appeared first on Kinyu.

Congratulations! Your employee is getting hitched, and as their employer, it’s your chance to shine by supporting them during this significant life event.

But what exactly are your “I do” obligations? Let’s break it down: 

Do I Need to Provide Marriage Leave? 

Yes! By law, employees across China are entitled to a minimum of three days of paid leave for their wedding. But many provinces have decided to roll out even more generous offerings. 

Regional Variations 

As of November 2025, at least 28 provinces, regions and municipalities have explicitly extended marriage leave in their local regulations.

As the country grapples with declining birth rates, many areas are stepping up with generous benefits to encourage couples to marry and start families.

These efforts appear to be paying off. China recorded an 8.5% increase in marriage registrations in the first three quarters of 2025, with 5.15 million couples getting married compared to 4.75 million during the same period in 2024. This marks a significant reversal after marriage registrations fell 20.5% in 2024 to just 6.1 million couples. That was the lowest since records began.

Gansu and Shanxi are currently leading the way by offering an impressive 30 days of paid leave! 

Here’s how marriage leave varies across different provinces:

Do I Need to Pay My Employees During Marriage Leave? 

Absolutely! During marriage leave, employees are entitled to receive their regular salary. So while they’re off celebrating their big day, their paycheck won’t take a hit! 

Important Considerations 

• Eligibility: Employees qualify for marriage leave once they register their marriage with the relevant authorities. This includes foreign employees and those remarrying. 
• Usage Timeline: Typically, marriage leave must be taken within one year of registration. Employers may allow extensions under specific circumstances. 
• Flexibility: Many regions allow employees to take their leave all at once or in segments, depending on work requirements and mutual agreement with employers. 

The post Marriage Leave in China: Tying the Knot with Leave Policies  appeared first on Kinyu.

High-profile summits and hypersonic missiles make compelling news coverage but reveal little about the day-to-day realities facing your China operations.

For anyone running operations in China — particularly those employing staff — the real news was two regulatory shifts that received less media attention yet carry immediate, actionable consequences.

Specifically: tougher social insurance rules and a new national childcare subsidy.

Social Insurance: No More Informal Deals

In August, China’s Supreme People’s Court closed a lucrative loophole. For years, employers and workers routinely agreed to forgo social insurance contributions (pension, healthcare, unemployment, housing funds) in exchange for higher take-home pay.

The practice was widespread: Financial Times analysis found only one-third of China’s 734 million workers made full social insurance contributions in 2024, while a separate survey of 6,000 Chinese companies found fewer than 30% fully complied with social insurance requirements.

The court ruling makes such arrangements legally void.

Supplier Risk Assessment Required

For many foreign businesses, this is seemingly no big deal. Most were already doing this by the book. However, their supplier networks likely did not.

Chinese companies now face unavoidable contributions: employers typically contribute 20-28% of wages, with employees contributing another 10%. For suppliers operating on compressed margins, this represents a substantial cost increase that will inevitably flow through to contract pricing.

If your suppliers were among the 70% of companies not fully compliant with social insurance, they’re facing a 20-30% increase in labour costs with little warning. Combined with ongoing tariff pressures, this could push marginal suppliers toward financial distress.

 What Businesses Should Do: Review your own company’s worker contracts and stop any “no insurance” deals with employees.  Conduct financial health checks of critical suppliers, particularly smaller manufacturers in labour-intensive sectorsl  Review existing supplier contracts for price adjustment clauses that could accommodate higher labour costs 

New Childcare Subsidies

China also launched its first nationwide childcare subsidy over the summer, providing 3,600 yuan ($500) per year for children under 3. This forms part of Beijing’s “birth-friendly society” campaign aimed at reversing falling fertility rates.

The money goes straight to parents, not companies. Yet, it does signal broader policy shifts ahead. At a press conference detailing the new policy, Guo Yanhong, deputy head of China’s National Health Commission, urged local governments to introduce complementary policies alongside the national subsidy.

This suggests additional regional regulations around maternity and paternal leave are likely.

In fact, Shanghai has already responded by introducing a social insurance subsidy that reimburses employers 50% of social security contributions during maternity leave periods. The scheme partially offsets new insurance obligations — provided companies apply.

Maternity leave

All this increased focus on childbearing creates hidden regulatory exposures that many businesses underestimate.

For example, around 22% of Chinese mothers voluntarily reduce their 98-day national maternity leave entitlement, according to University of Bielefeld research. Career concerns drive this trend, with many women worried about being passed over for promotions if seen as likely to take extended leave.

However, accommodating shortened leave requests can create legal liability.

Maternity leave is first and foremost a right and a protective measure for the female employee. It is not merely a benefit to be waived.

Chinese regulations make employers responsible for ensuring employees can take their full leave entitlement without pressure. Companies face liability if they create conditions that discourage leave usage or if regulators determine an employee’s “voluntary” decision wasn’t truly voluntary.

Therefore, it’s important to encourage workers to feel comfortable taking their full leave entitlement. If workers insist on returning early or splitting their leave, require them to initiate it, document everything thoroughly, get medical certification and secure written agreements. Never be the first to bring it up.

Even so, given how broadly “workplace pressure” is defined, the safest approach remains encouraging full leave usage.

Paternity leave operates under more flexible local rules, but the same principles apply.

What Businesses Should Do: Train HR staff and managers never to suggest career consequences for taking leave.  Review and update employee handbooks to emphasize full leave entitlements by locationl  Establish protocols requiring employees to initiate any early return requests in writing. Check if your city/province offers maternity leave subsidies for employers, like Shanghai.

Military parades grab headlines, but regulatory changes like these shape your actual costs, which is exactly why we track them for you.

The post China’s Two Biggest Summer Policy Changes (Not the Military Parade) appeared first on Kinyu.

If It’s Not in Your Handbook, It Doesn’t Count 

If you want to discipline or fire someone, the reason must be clearly listed in your employee handbook. No exceptions. If it’s not in there, you have no legal ground to act. 

For example, if your employee is late and your handbook doesn’t say that’s a problem, there’s not much you can do. You’ll need to add that rule and only start enforcing it from the day you publish the updated handbook. 

Your handbook should spell out, in plain language, what counts as misconduct. A good way to do this is to clearly split violations into “minor” and “major” in your handbook, and spell out the consequences for each. These rules need to be written in Chinese to have any legal standing. 

Get Proof of Receipt: Give every employee a copy of your handbook and get proof they received it. Have them sign a receipt form in Chinese. This is your evidence if there’s ever a dispute. 

What Counts as a Violation? 

Start by listing out all possible violations in your company handbook. This needs careful thought, as what counts as a violation can be different for each industry or business.  

Major violations (think: theft, leaking secrets, or serious rule-breaking) can mean immediate termination without compensation. 

For minor issues, like being late or dress code problems, clearly outline your disciplinary steps, such as verbal warning, written warning, and then termination if it happens again. We’ll cover those steps next. 

Minor Violations 

Examples include: 

• Being late or leaving early without approval 
• Unapproved short absences (less than 4 hours) 
• Dress code violations 
• Minor breaches of company policy 

Major Violations  

Examples include: 

• Theft or fraud 
• Leaking confidential company information 
• Bribery or corruption 
• Serious safety violations 
• Harassment or discrimination 
• Conflict of interest not reported 

And before you get any ideas: no, you can’t just call anything a “major violation” because you’re feeling strict that day. Chinese law says punishments must fit the crime. If you try to fire someone for wearing the wrong socks and call it a “serious breach,” the courts won’t back you up. 

Stick to what’s fair, reasonable, and actually serious, otherwise, you risk losing in court and paying compensation. 

Detail your Disciplinary Process 

Once you’ve listed the rules, you need to spell out exactly what happens if someone breaks them. Document every step. If you end up firing someone, they might claim they were never disciplined — so keep records of each stage. 

Here’s a sample process: 

Quick Pro Tips 

• Follow your own process – Stick to the disciplinary steps and appeal process written in your handbook. If you skip a step or don’t follow your own rules, you could lose in a dispute 
• Document everything – Always keep written records of every warning or disciplinary step, even for minor issues. Have employees sign to confirm they received each notice. 
• Open communication matters – Give employees a real chance to ask questions or comment on your rules. Address their concerns and explain anything that’s unclear. 

The post Disciplinary Action in China: Simple Steps for Managers  appeared first on Kinyu.

This guide will show you how Chinese performance reviews work, what the law says you must do, and how to get them right. 

Do You Need to Conduct Performance Reviews? 

You might wonder if performance reviews are necessary. After all, if your small team is hitting all their targets, why bother with the paperwork? The answer is simple: Performance reviews in China aren’t technically required by law, but skipping them is a huge risk you shouldn’t take. 

Here’s why: Chinese labour law does allow you to fire someone who can’t do their job properly, even after you’ve tried training them or moving them to a different position. But there’s a catch. 

To legally let someone go for poor performance, you need solid proof that they’re not meeting standards. Without documented performance reviews, you’ll struggle to prove any of this in court. 

So, while no law specifically says “you must conduct performance reviews,” the legal system essentially forces you to have them if you ever want the option to remove underperforming staff. 

How Reviews Usually Work in China 

Most Chinese companies do performance reviews once a year, typically right before Chinese New Year (January or February). This timing makes sense in Chinese culture because Chinese New Year represents new beginnings. 

There are practical reasons for this timing, too. 

Chinese New Year is when: 

• Many workers expect their yearly bonus 
• Companies plan their budgets for the coming year 
• It feels like a natural time to reward good work 

The review results directly affect two important things: 

• Salary adjustments – workers might get a raise based on their performance 
• Year-end bonuses – better reviews usually mean bigger bonuses 

For workers, these reviews really matter because year-end bonuses are often equal to several months’ salary. 

Note: Annual performance reviews remain standard practice in China, but there’s a growing shift toward more frequent feedback. Many Chinese companies are now adding quarterly check-ins or monthly one-on-ones alongside the traditional yearly review. 

What to Look for When Reviewing Staff in China 

Performance reviews in China work pretty much the same as anywhere else. You’ll want to be looking at hard numbers like sales targets and production quotas, plus softer skills like attitude and teamwork. 

What metrics matter most will depend on your specific business, but here’s the critical bit: make sure your employee handbook clearly states exactly what you’ll be evaluating.  

This transparency isn’t just good practice. In China’s legal system, having clearly defined performance criteria in writing can save you major headaches down the road. 

The Basics 

• Numbers still matter: Track sales targets, production quotas, and financial results 
• Quality of work: Accuracy, attention to detail, and following procedures 
• Meeting deadlines: Reliability and time management 
• Rule-following: Compliance with company policies and Chinese regulations 

Beyond the Numbers 

• Team contribution: How they help colleagues and support group goals 
• Attitude and effort: Dedication and willingness to go the extra mile 
• Relationship building: How they maintain harmony with colleagues and clients 
• Alignment with company values: Especially important in Chinese work culture 

IMPORTANT: Keep detailed notes of all feedback sessions. This documentation isn’t just bureaucracy – it’s essential protection if performance issues escalate later on. 

Firing Someone? Tread Carefully! 

The law simply doesn’t allow termination just because someone isn’t performing well at their job. Of course, there are exceptions for serious violations like revealing company secrets or major conflicts of interest. 

But if someone simply isn’t meeting performance expectations, you’re legally required to provide improvement opportunities before you can even think about letting them go — unless they’re still on probation. 

Here’s what to do: 

• Create a clear improvement plan with specific goals 
• Provide proper training or move them to a more suitable role 
• Give them reasonable time to improve 

Only if they continue to underperform after all these steps can you consider termination – and you’ll need solid evidence showing you followed this entire process correctly. Save ALL notes from meetings, copies of warnings, and formal evaluations. 

Keep Reviews Confidential 

We’d recommend adding a confidentiality clause to performance reviews in your employee handbook. This will stop staff members discussing their evaluations, it often leads to resentment, perception of favouritism, and damaged team harmony. 

Quick Pro Tips 

• Set the timing right: Schedule reviews 1-2 months before Chinese New Year when most companies determine bonuses and raises. 
• Document everything: Keep detailed records of all performance discussions, even informal ones.  
• Get your handbook right: Clearly define review criteria and the improvement process in your employee handbook. Courts might want to check this document in disputes. 

The post Managing Employee Performance Reviews in China  appeared first on Kinyu.

For instance, it’s not unheard of for Chinese employees of foreign companies to take kickbacks from suppliers in return for awarding business contracts. 

This happens at small and big companies. Even global brands like Adidas have faced big kickback and bribery scandals involving their China teams, with reports of managers receiving millions in cash. 

To stop this, you need to spot conflicts early and set clear rules. 

Why Conflicts of Interest Are Different in China 

Business in China is built on personal ties, known as guanxi. Building trust (and scoring good deals from suppliers) often involves meals, gifts or favours with business partners. For example, it’s normal in China for a supplier to take an employee to dinner. In other countries, that might look suspicious. 

But these close ties can sometimes blur the line between good business and bad behaviour. Without proper rules in place, Guanxi can turn into favouritism or kickbacks. That’s why it’s vital to set clear rules and train your team well. 

Define Conflicts Clearly in Your Handbook 

First, you should be defining exactly what constitutes a conflict of interest in your employee handbook. Quick reminder: This is the guide that explains your company’s rules, policies and what you expect from everyone. 

In the Kinyu handbook, we define a conflict of interest as “any situation where the personal interests of an employee (or any of his/her relatives) conflict with the interests of the company.” 

What constitutes a conflict of interest might be a bit different for your company, depending on your industry and how you operate. But the most important part is to keep the definition simple and well-defined, so everyone understands what’s expected. 

Include clear examples like these: 

• An employee or family member holding shares in a supplier, client, or competitor 
• Staff making private business deals with company clients or suppliers 
• Hiring or promoting friends/relatives instead of the most qualified candidates 
• Accepting gifts or perks from business partners without proper approval 
• Using company position for personal gain or to benefit associates 

We also suggest running a background check on new employees during onboarding to spot any potential conflicts of interest early. 

Set Firm Disclosure Requirements 

You need to set clear rules for what employees should do if they spot a conflict: 

• Immediately report any potential conflicts to their manager 
• Disclose if they, their spouse, or family members hold positions in other companies that might create conflicts 

The clearer you are, the fewer surprises you’ll face down the road. 

There Have to Be Consequences 

Nobody likes being the bad guy, but you should also spell out what happens if someone crosses the line. 

In China, it’s perfectly legal to classify conflict of interest violations as grounds for immediate termination without notice or compensation. Your handbook should clearly state that: 

• Hiding conflicts of interest is a serious violation 
• Acting against company interests can result in immediate dismissal 
• Taking bribes or unauthorized disclosure of confidential information are grounds for summary dismissal 

Important: Chinese courts usually back up companies to fire employees right away if they hide a conflict of interest, as long as the company’s rules are clear and the process was fair. If you’re vague or keep employees in the dark, you might end up paying out more than you bargained for. 

Tips on Spotting Conflicts of Interest 

• Look for hidden ties. Check if employees or their family members have any financial or personal links to your suppliers, customers or competitors. This could be shares, jobs, or business deals. 
• Watch for unusual choices. Is an employee always pushing for the same vendor without a clear reason? Time to dig deeper. 
• Encourage reporting. Make it easy and safe for employees to report concerns, even anonymously. 

Practical Prevention Strategies for HR 

Based on our experience, we recommend these practices: 

• Be Clear: Your handbook should clearly define conflicts, provide examples, and outline disclosure procedures. 
• Conduct Regular Training: Make conflict awareness part of your onboarding and offer refresher sessions. 
• Respect Cultural Context: Acknowledge the importance of relationships (guanxi) in Chinese business culture while maintaining clear boundaries. 

The Bottom Line 

If you want to keep things running smooth (and stay out of the headlines), set simple, clear rules, talk about them often, and make sure everyone knows where the line is drawn. Make it clear: Enjoy those business dinners; just leave the secret handshakes at home. 

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