A team of 15 people sitting in the same Guangzhou office might include someone from Harbin (3,000 km away), someone from Chengdu (1,500 km), someone from a village in Guizhou with no direct train link, and someone who grew up 20 minutes down the road.

If you manage a team in China, do you know where your staff are actually from? Not just which city they work in now, but where they grew up? Where their families still live? Where they go back to for Spring Festival?

If the answer’s no, you’re missing out on key information that affects how you handle major holidays like Spring Festival and how well you engage your team. Here’s why.

Quick note on compliance: Hiring someone from a different city affects their social insurance setup because of hukou (household registration). That’s mostly an onboarding issue — we cover it in another blog.

Spring Festival: When Distance Really Matters

The biggest practical reason to know where people are from is Spring Festival planning.

People who need to travel far to return to their hometowns will often save up all their annual leave and take it in one block around Chinese New Year.

For many, it’s the only chance all year to see close family. And they’re also trying to avoid the absolute chaos of peak travel. This year’s travel rush expects 9.5 billion passenger trips between Feb. 2 and March 13. Yes, billion!

Now, this is where some managers get nervous. We’ve had employers say to us, “I can’t have staff taking the nine-day holiday plus a bunch of annual leave on top — that’s too long away from the business.”

We’d push back on that for two reasons.

1. First, your suppliers and partners are probably closed anyway. Most Chinese businesses shut down during Spring Festival, and even if they don’t, a lot of their employees will be on extended breaks.
2. Second, fighting it damages retention. If you block people from going home to see their families during the one time of year it’s possible, they’ll remember. For employees far from home, that could be the thing that makes them quit. Replacing someone costs far more than a few extra days of leave.

However, if granting extra annual leave around an already long break is tricky, remote work can be a practical middle ground.

Some Chinese companies offer flexible remote work around Spring Festival: travel booking platform Ctrip Group lets eligible customer service staff work remotely for up to 60 days between mid-January and mid-March. Think about that. They’re a travel booking company offering remote work during the biggest travel period of the year — their absolute peak season. And they’re still making it work.

If they can be that flexible during their crunch time, it’s worth considering what might be possible in your own business.

Employee Engagement

A less obvious application is engagement.

Gallup lists “caring managers — feeling supported by someone who genuinely cares” as one of the main drivers of employee engagement. Finding out where your employees are from and showing genuine interest is a free, practical way to demonstrate that you care.

Every region in China has its own food, dialect and customs. Taking 10 minutes in a one-to-one to ask “What’s a dish from your hometown I should try?” costs nothing and lands surprisingly well, especially from an overseas manager who actually remembers the answer next time.

Other conversation starters that work:

• “What’s the biggest difference between here and your hometown?”
• “Is there a festival or tradition from your region that you miss?”
• “When you go home, what’s the first thing you eat?”

These questions show that you see someone as more than just their job title, which is exactly what engagement research tells us matters. And for employees far from home, feeling seen and valued by their manager can be the difference between staying and leaving.

A manager who remembers that someone is from Guizhou and asks how their family’s sour fish soup turned out over the holiday is doing more for retention than most formal engagement initiatives.

The Bottom Line

Asking where someone is from is a five-second question. But the information it gives you — about Spring Festival planning, engagement opportunities and retention risks — can genuinely improve how you run your team in China.

And unlike most HR initiatives, it costs absolutely nothing.

The post Why Knowing Your Employee’s Hometown Matters in China appeared first on Kinyu.

Out of nowhere, a small Chinese AI lab called DeepSeek stunned the world last month by releasing a cutting-edge model that outperformed its Western rivals – all while supposedly costing a fraction to train.  

It topped app stores worldwide, fuelling (probably premature) claims that U.S. tech is finished. 

Leading Chinese scientist Rao Yi said it was the “biggest shock to come out of China in 185 years.” Silicon Valley venture capitalist Marc Andreessen dubbed it China’s “Sputnik moment.”

The hyperbole was predictable; but this time it might be justified.  Is China’s tech sector overtaking the West? 

China’s New AI Star 

Well, the first thing to understand: DeepSeek isn’t one of China’s established tech giants. In fact, most Chinese people hadn’t even heard of them until recently. Chinese giants like Baidu and Alibaba seem just as blindsided as their Western rivals. They’ve been churning out large language models since ChatGPT’s debut, but it took a startup to actually move the needle. 

Now, they’re scrambling to react. 

Last week, Alibaba Cloud’s Qwen2.5-Max cracked the global top 10 on Chatbot Arena’s leaderboard, outperforming several DeepSeek models. $BABA shares jumped on the news. They also poached top AI researcher Steven Hoi Chu-hong, managing director of Salesforce Research Asia. Clearly, all this signals that they’re now playing catch-up with DeepSeek. 

But what exactly is DeepSeek doing differently? How did this small firm of 150 employees jump to the front of the pack? 

Export Controls 

U.S. politicians have a simple explanation: blame the chips. 

In a rare show of bipartisan unity, Senators Elizabeth Warren and Josh Hawley introduced legislation targeting “loopholes” in export controls that allegedly let DeepSeek access Nvidia’s silicon. 

Anthropic CEO Dario Amodei echoed this view, telling the ChinaTalk podcast that DeepSeek’s future depends entirely on “how many chips they can get access to.” 

There’s some truth here. The H20 – Nvidia’s export-compliant chip designed specifically to bypass U.S. restrictions on China sales – outperformed its sanctioned H800 cousin in certain scenarios. In fact, a DeepSeek employee even posted on X that “nothing can stop us on the path to AGI, except for computational resources.” The company’s leadership have echoed similar sentiments. Not surprisingly, Trump allies are reportedly preparing plans to slam that door shut. 

But there’s something missing here. 

If it was just about the chips, why couldn’t bigger Chinese tech firms, with deeper pockets and far more resources, do what DeepSeek did first? The story is clearly more complex than “export controls failed.” 

But if it’s not just about the chips, what’s really going on? 

A New Work Culture 

MIT researcher JS Tan points to a different explanation for DeepSeek’s success: its radical approach to talent. 

“While many of China’s tech giants have focused on squeezing maximum output from overworked employees, DeepSeek has demonstrated the transformative potential of a supportive and empowering workplace culture,” writes Tan. 

Breaking from China’s notorious 996 culture, founder Liang Wenfeng apparently built DeepSeek more like a laid-back Stanford lab, ditching the rigid hierarchies that he says suffocate innovation at its bigger rivals. 

“We don’t pre-define roles,” Liang told Chinese outlet An Yong in July last year. “Everyone has their own growth trajectory – there’s no need to push them.” 

Instead, employees are encouraged to explore their creative ideas freely: “If someone has an idea, they can freely access the training cluster without approval. Since we have no hierarchical structure or departmental boundaries, people can mobilize anyone as long as the other party is also interested.” 

DeepSeek also binned the common Chinese tech practice of “horse racing,” where multiple teams compete on the same project. 

Normally we’d file such claims under “startup BS,” but DeepSeek’s engineers regularly pop up on X to confirm this easy-going approach. 

More tellingly, DeepSeek is actually innovating. The most obvious result is that their models achieve more with limited chip resources while outperforming rivals. But they’ve also made genuine interesting user-facing innovations too – like letting users see how the AI reasons through problems step-by-step. 

As Platformer’s Casey Newton put it, the company’s “decision to expose chain of thought is a surprise hit,” suggesting it “might prove to be as influential on other companies as anything else that DeepSeek has done.” 

AI Talent Wars 

DeepSeek’s emphasis on workplace culture comes as China’s AI sector faces a talent shortage. Despite a surge in job openings, a recent report from Maimai, a Chinese professional networking platform, indicates that the supply of qualified candidates is not keeping pace. 

So, in a market where both advanced chips and top-tier AI talent are scarce, DeepSeek’s ability to attract and retain skilled engineers might be even more crucial than access to hardware. 

“When you don’t have resources, all you have is your brain power,” Yu Zhou, a professor at Vassar College, recently told U.S. tech outlet Rest of World. 

What’s Next? 

To solidify its competitive edge, DeepSeek is seeking to expand its team, advertising over 50 open positions with salaries almost twice as high as rival firms on Chinese recruitment platform BOSS Zhipin. 

But whether DeepSeek can maintain its unique culture as it morphs from plucky startup to bloated tech firm will be one of the more interesting beats to follow in China over the next few years. 

For China’s broader AI sector, the challenge is whether those lumbering giants can actually learn a thing or two from DeepSeek’s work culture. 

For the rest of us with teams in China, DeepSeek’s success is a useful reminder that employee empowerment isn’t just some HR buzzword – it can actually drive results.

The post Is DeepSeek’s Workplace Culture the Secret to Its AI Success? appeared first on Kinyu.

Last month, a CSIS study reported growing disillusionment among Chinese people with their economic system.

In the past, studies repeatedly found that Chinese people largely attributed success to hard work and failure to personal shortcomings. “Lack of ability” was consistently seen as the main reason for poverty until 2014. Personal skills, hard work, and education were viewed as the primary paths to wealth.

But new research shows people’s views have changed a lot. Now, most Chinese people say that not everyone gets the same chances in life, and that’s why some stay poor. Many also blame an unfair economy for keeping people in poverty.

Meanwhile, the study says Chinese people now believe getting rich depends more on who you know, what you’re born into, and how unfair the system is, rather than personal effort.

This changing view is showing up in popular trends like the “lying flat” movement, known in Chinese as “tang ping” (躺平) – a rejection of societal pressures to overwork.

Also, fewer people in China are starting their own businesses compared to similar countries. Only about seven out of every 100 people try to start a business, which is the lowest rate among comparable economies.

So, are we witnessing the twilight of the famously intense Chinese work ethic that once prompted academics to pen articles titled “Why Do the Chinese Work So Hard?”

Not quite.

It’s Complicated

You see China’s vastness allows for multiple, sometimes contradictory, trends to coexist.

While the “lying flat” movement has gained prominence, it primarily reflects the experiences of young urban professionals. This group is often overrepresented in Western media due to their internationalized outlook and willingness to talk to foreign reporters.

In most of Chinese society, particularly in rural areas and lower income households, the ethos of hard work remains strong.

For instance, many Chinese Olympians rose from modest beginnings, far from the gleaming stadiums of international competition.

Olympic Stars

Take Quan Hongchan, who, at 14 years old, captured gold in the women’s 10-meter platform diving event at the Tokyo Olympics. Her success continued at the 2024 Paris Olympics. There, she secured two gold medals. One came in the individual 10-meter platform event. The other was in the synchronized 10-meter platform, where she partnered with teammate Chen Yuxi.

Hailing from rural Guangdong province, Quan is the third of five children born to a family of farmers. Her journey to Olympic glory was initially motivated by a desire to help pay for her mother’s medical treatment after a serious injury in 2017.

Likewise, Chinese tennis superstar Zheng Qinwen, born in 2002, didn’t come from a privileged background. She grew up in a small city where tennis wasn’t common, and her family didn’t have much money. Despite this, her parents recognized her talent and made big sacrifices to support her, even moving to different cities for better coaching. Her hard work and her family’s dedication paid off – she’s now one of the world’s most promising young tennis players.

Similarly, Hou Zhihui, who clinched gold in weightlifting at the Paris Games, rose from modest beginnings in Hunan province. Her path from rural obscurity to Olympic champion exemplifies the determination that has become a hallmark of Chinese athletes.

A part of this story is, of course, China’s 2,000 state-run sports academies, which offer resources for underprivileged children to compete internationally. However, this system’s success also stems from the athletes’ remarkable determination and resilience.

A Culture of Hard Work

While Olympic success stories often capture the spotlight, broader statistics reveal a persistent culture of hard work in China:

• Long working hours: Despite attempts to reduce working hours, China remains in the top decile of weekly working hours by country, according to the U.N. The average Chinese worker puts in between 2,000 and 2,200 hours (about 3 months) yearly. For comparison, the U.K. average is 1,677 hours (about 2 and a half months).
• Continuous learning: The average length of education for Chinese workers continues to increase, rising from 13.6 years in 2017 to 13.8 years in 2022.
• Upskilling enthusiasm: 95.3% of workers express interest in acquiring new vocational skills or knowledge, particularly those aged 18 to 40 and those with higher education.
• Workforce mobility: In 2022, China had around 293 million migrant workers, representing 72% of the total labor force, demonstrating a continued willingness to relocate for work opportunities.

Source: All-China Federation of Trade Unions’ Ninth National Workforce Survey (Chinese)

On-The-Ground Experience

As an employer of record, we work with hundreds of Chinese professionals across China each year, and “lack of hard work” is rarely a trait we encounter.

In our experience, the drive for self-improvement and career advancement remains a defining characteristic of the Chinese workforce.

Our clients frequently cite this dedicated work ethic, alongside China’s robust logistics network, as primary reasons for operating in the country.

Need guidance on effectively working with a Chinese team? Book a consultation with our China specialists to ensure your success in China.

The post Is China Losing Its Work Ethic? Olympic Golds Prove Otherwise appeared first on Kinyu.

However, employee relations in this context are often overlooked — and the absence of a dedicated strategy can significantly contribute to employee-related issues. Once you have the talent and tools for compliant hiring, keeping them engaged is crucial to ensure job delivery and make this long-distance relationship beneficial. But how can you maintain employee relations in a cross-cultural, geographical, and linguistic setting?

Here are a few tips that we have used on the ground in China:

Regular Communication

This goes without saying for any remote-based team, but it’s particularly important for teams in China. From our experience managing teams at Kinyu, we’ve found that consistent engagement is necessary to ensure your team is engaged with the company’s direction.

We understand that employees in China want to see their company grow and feel stable in their roles. Therefore, it’s a good idea to regularly share more information about company goals, achievements, and new projects.

Showing the bigger picture, or in Chinese, 画大饼 (painting a big pie), is key to keeping your team on track with their work. However, ensure your company aspirations are realistic; many companies in China overpromise and underdeliver in terms of company development.

Appreciation of What Life is Like in China

Engaging with your team members about life in China can be challenging if you’ve never lived there. However, taking an interest can make a significant difference. Learn from one of your more senior colleagues in China about housing, the job market, food, local holidays, and various social media trends, and then discuss these topics with the wider team.

Benjamin King, CEO of Kinyu SCM, has gained a deeper understanding of Chinese society by following various trends. He notes, “There are many stories that emerge on social media which spark rigorous public debate and reveal where Chinese society has come from and, in some areas, where it needs to go. Ninety-nine percent of these stories never make headlines in Western media, which is a loss to those who need to engage with teams in China.”

Your remote team in China will appreciate your efforts to understand their culture and society more than whether you remember which year of the Chinese zodiac it is.

Feedback and Recognition

It’s important to be direct with remote colleagues in China, whether acknowledging their achievements or communicating areas that need improvement. Public appreciation and private feedback for improvement are essential to ensure your points are understood while allowing your employees to save face.

When addressing concerns, one-on-one conversations to understand your colleagues’ perspectives are best. You must ensure you ask the right questions. From our experience, Chinese employees may not open up initially; you might have to probe more deeply until your colleague shares their thoughts on a matter.

Training and Development:

Offer training and development opportunities to remote employees to help them enhance their skills and advance their careers. As Richard Branson famously said, “Train people well enough so they can leave, treat them well enough so they don’t want to.”

In our experience, employees on The China Desk value the opportunity to develop; some examples are:

• An Account Manager in Guangzhou taking PMP courses for upskilling in project management.
• A Supply Chain Manager in Tianjin taking English classes to further improve communication with different company departments.
• A Technical Project Manager in Tianjin travelling to the U.K. to join company workshops on improving product delivery across many geographies.

Sometimes, employees may not know what training to undertake or might be too busy to consider it themselves, so you may need to take the initiative in order to deliver the training.

Bonus Tip: On-the-Ground Employee Relations with The China Desk

From our experience, a remote team in China may not feel very secure when employed by a faceless HR firm in China. Having a function on the ground where they can engage with their actual employer of record (EOR) can provide a sense of stability and recognition.

At Kinyu, we refer to this as the General Manager function, in which we hold weekly meetings with all teams on The China Desk, understand their work challenges, and provide suggestions for improvement. Employee relations represent the softer side of HR management, which employer-of-record firms do not usually offer.

Since The China Desk specializes solely in the supply chain, product, and manufacturing sectors, we are uniquely positioned to understand the responsibilities of your employees and provide this meaningful on-the-ground engagement.

This approach can increase employee retention and improve project delivery times. If you’re interested in learning how Kinyu SCM can simplify your operations in China, we’re offering a free review of your China office infrastructure to see if you can save money and time by using The China Desk!

The post 4 Key Tips for Engaging Your Remote Team in China appeared first on Kinyu.

The partnership sees Kno Global utilising The China Desk by Kinyu for operational support in China. Additionally, it leverages Kinyu’s manufacturing and supply chain network for business development purposes.

Clients using The China Desk will gain preferential access to Kno Global’s technology. This access will further enhance their social compliance efforts on the ground in China.

“Using the China Desk by Kinyu has given us renewed confidence in our China operations. Not only is it a great platform to support our existing operations, but Kinyu is embedded within China’s supply chain ecosystem, so we have been able to engage with factories and supply chain companies to further develop our business in what can be a challenging market,” said Marianne Hughes, CEO of Kno Global.

Kno Global’s platform is an effective tool for reducing “social audit fatigue” among suppliers. Factory workers can use the Kno Global platform to report grievances and suggest improvements to their work environment. Additionally, they can access learning modules for stress management. The platform not only enhances social responsibility and transparency for major Western brands but also improves worker retention in factories. This helps limit staff turnover, saving on recruitment costs and ensuring consistent quality levels in production.

Companies can also employ the platform in an office setting, providing a safe environment for whistleblowers – an increasingly important issue.

“We are really excited to deepen our cooperation with Kno Global in China, as social compliance and worker retention are such tricky areas for both brands and factories. This partnership advances Kinyu’s goal of becoming a people-centric supply chain company by providing the transparency and data that brands and plant managers crave,” said Benjamin King, CEO of Kinyu SCM.

The partnership with Kno Global strengthens Kinyu’s position as a leading supply chain-focused employer of record in China. Kinyu focuses on the people who operate global supply chains and offers a holistic HR solution via The China Desk to foreign companies, utilising its offices across China.

Contact us today to discover more about how The China Desk and the Kno Global solution can benefit you!

The post Kinyu Announces Partnership with Kno Global appeared first on Kinyu.

When receiving enquiries about The China Desk, they usually come from companies considering their options for setting up an operation in China. Companies that come to Kinyu SCM are generally looking for the following functions:

• Hiring employees on the ground.
• Establishing an export and trading company function to take advantage of tax rebates.

Setting up your branch entity in China would be a logical strategy to fulfil these requirements. However, it’s important to understand the impact of international agreements on Permanent Establishment and how China’s Corporate Income Tax (CIT) fits into this.

What is a Permanent Establishment?

China has bilateral agreements with most major economies regarding the “establishment” as described by PWC:

An “establishment or place” is defined in the CIT regulations as an establishment or place in China that engages in production and business operations, including the following:

• Management organisations, business organisations, and representative offices.
• Factories, farms, and places where natural resources are exploited.
• Places where labour services are provided.
• Places where contractor projects, such as construction, installation, assembly, repair, and exploration, are undertaken.
• Other establishments or places where production and business activities are conducted.
• Business agents who regularly sign contracts, store, and deliver goods, etc., on behalf of the non-TRE.

Many articles address permanent establishment, but they typically target multinational companies. However, how can this impact SMEs?

What Does This Have to Do with Tax in China?

The entire issue of permanent establishment is all about tax, specifically paying the appropriate corporate tax in China. If you have a “Permanent Establishment” (PE), then the profit generated, which is tied to the operation of that PE, may be subject to the CIT in China.

China has bilateral agreements with most major countries regarding this matter. For instance, you can reference Article 5 of the United States-The People’s Republic of China Income Tax Convention.

Moreover, if you aim to export out of the China entity and benefit from the VAT rebate on exports, you might need to add a significant profit margin to the goods within China. Subsequently, you would pay tax on that margin. The standard corporate income tax rate in China stands at 25%.

Therefore, it’s crucial to carefully consider your strategy and seek advice on whether your plan to establish an entity is tax-viable.

Turn Your ‘Man on the Ground’ into ‘Management on the Ground’

Another concern revolves around having boots on the ground. If you contract with a freelancer in China, there’s a chance you might trigger a permanent establishment. This could mean that a portion of your HQ profits, attributable to the operation in China, might be subject to CIT. The method by which authorities determine the portion attributable to the operation in China can be arbitrary, with the outcome likely favouring the tax coffers.

Therefore, when considering the reasons for setting up a team on the ground, it’s crucial to be mindful of the concept of permanent establishment. Outsourcing your management operations can help distance your organisation from triggering a PE. There are various methods to achieve this, each with its own implications. Thus, it’s essential to seek advice from an accountant who specialises in this sector.

In the end, the concept of permanent establishment should be a consideration in your global organisational structure and decision-making process.

Please note, this article does not constitute advice. China can change its policies over time, so you might find the information in this article outdated when you read it. Kinyu SCM is not responsible for any actions taken based on this article. If you wish to learn more about this topic from Kinyu, and how Kinyu can assist, please feel free to book a call here.

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