China, formally the People's Republic of China, is an East Asian nation. With a population of over 1.4 billion people, it is the world's most populated nation. China encompasses five geographical time zones and borders 14 nations, second only to Russia in the globe. It is the world's third or fourth biggest nation, with a size of around 9.6 million square kilometers (3,700,000 square miles). There are 23 provinces, five autonomous regions, four municipalities, and two Special Administrative Regions in the nation (Hong Kong and Macau). Beijing is the national capital, while Shanghai is the biggest city.
China arose as one of the world's earliest civilizations in the rich Yellow River valley of the North China Plain. From the first through the nineteenth centuries, China was one of the world's top economic powers. China's political structure has been founded on absolute hereditary monarchy, or dynasties, for millennia, starting with the semi-legendary Xia dynasty in the 21st century BCE. China has grown, divided, and reunified countless times since then. The Qin unified central China and formed the first Chinese empire in the third century BCE. The Han dynasty (206 BCE – 220 CE) featured some of the most sophisticated technologies of the period, including papermaking and the compass, as well as agricultural and medicinal advancements. The Tang and Northern Song dynasties (618–1127) completed the Four Great Inventions by inventing gunpowder and moveable type. As the new Silk Road attracted merchants as far as Mesopotamia and the Horn of Africa, Tang culture-expanded across Asia. The Qing dynasty, China's final dynasty and the foundation of modern China suffered tremendous losses to the Western empire in the nineteenth century.
The Xinhai Revolution, which toppled the Qing dynasty in 1912, brought the Chinese monarchy to an end. In 1937, Japan invaded China, launching the Second Sino-Japanese Conflict and briefly putting an end to the civil war between the Chinese Communist Party (CCP) and the Kuomintang. The surrender and expulsion of Japanese troops from China in 1945 created a power vacuum in the nation, resulting in fresh conflict between the CCP and the Kuomintang. The civil war concluded in 1949 with the split of Chinese territory; the CCP created the People's Republic of China on the mainland, while the ROC government fled to Taiwan. Both claim to be China's only legal government, despite the fact that the UN has recognized the PRC as the sole representative since 1971. Since 1978, China has implemented a series of economic reforms and joined the World Trade Organization in 2001.
The CCP presently governs China as a unitary one-party communist country. China is a permanent member of the United Nations Security Council and a founding member of several multilateral and regional cooperation organizations, including the Asian Infrastructure Investment Bank, Silk Road Fund, New Development Bank, Shanghai Cooperation Organization, and RCEP, as well as a member of the BRICS, G8+5, G20, APEC, and the East Asia Summit. It is among the lowest in worldwide rankings of civil liberties, government transparency, press freedom, religious freedom, and ethnic minorities. Political dissidents and human rights advocates have condemned Chinese authorities for severe human rights violations, including political persecution, mass censorship, mass monitoring of its populace, and violent suppression of rallies.
China has the world's biggest economy in terms of GDP at purchasing power parity, the world's second-largest economy in terms of nominal GDP, and the world's second-wealthiest nation. The nation is the world's top producer and exporter, and it has one of the fastest expanding global economies. China is a nuclear-weapon state with the world's biggest standing army in terms of military manpower and the world's second-largest defense budget.
The period of work is used to measure paid time off:
There is no entitlement to resign if you have been working for less than a year.
5 days of voluntary leave for employees who have worked for 1 to 10 years.
10 days of voluntary leave after 10-20 years of work
After 20 years of service, you are entitled to 15 days of paid leave.
There are seven national holidays, with extra holidays in certain countries.
Pay for sick leave varies depending on duration of service:
Sick leave for six months:
Employed for less than two years: 60% of the average hourly pay
70 percent of daily earnings after 2-4 years of work
4-6 years of work experience: 80% of the average hourly rate
6–8 years of experience: 90% above the average hourly rate
After 8 years of service, you can get 100% of your daily pay.
Sick leave of more than 6 months:
40 percent of daily pay for less than a year of work
50% of daily income after 1-3 years of work
After three years of service, you will be paid 60% of your daily salary.
A medical card is required for all employees.
A female employee is entitled to 98 days of maternity leave, with an extra 15 days if the delivery is painful or multiple births are occurring. Women who give birth after the age of 23 could be eligible for extra maternity leave in some cities.
Maternity leave is compensated by the Social Security Bureau where the individual is enrolled and is calculated based on an average monthly wage for the preceding 12 months. This rate or three times the minimum wage would be paid by Social Welfare, whichever is higher. Employers in some countries, such as Beijing and China, complement maternity pay with extra pay.
When paid paternity leave is taken, fathers are entitled to ten days of paid paternity leave. Additional paternity leave is available in some cities.
For infants under the age of 12 months, nursing mothers are entitled to one hour off every day.
Marriage Leave: Each city has its own set of rules, which range from 3 to 10 days. Employees in Beijing and Shanghai are entitled to ten days of marriage leave.
Bereavement Leave: It varies by city and can take anywhere from one to three days.
In China, a contract may not be permitted to end unless all parties concur or the contract expires.
Both the employee and the employer have a right to 30 days' notice in advance. Three days' notice may be given, however, if the employee is on probation.
The probation period is determined by the length of the employment contract. For employment contract of 3 months to a year, a maximum of 1 months’ probation is administered. For employment contracts of 1 to 3 years, a maximum of 2 months’ probation is administered. For employment contracts of 3 years or more, up to 6 months’ probation is administered. For employment contract for less than 3 months or that expire upon completion of assignment, probation is not permitted.
Severance pay varies according to the reason for termination, but in general, it is one month's income for each year of service, limited at three times the minimum wage, and not to exceed twelve months.
In China, the standard workday is eight hours and no more than 44 hours per week. Employers may adopt different work hours in exceptional circumstances and with the Labor Department's approval.
Offices are typically open from 8 a.m. to 6 p.m. each day, with a two-hour lunch break between noon and 2 p.m., although hours vary by city. Government offices are open Monday through Friday from 9 a.m. to 5 p.m. and are closed on weekends.
Overtime is limited to one hour per day, but may be extended to three hours in exceptional circumstances, up to a total of 36 hours per month. Overtime pay for workdays is 150 percent of the regular rate, 200 percent on rest days, and 300 percent on official public holidays.
Employees with flexible work hours are generally not entitled to overtime pay, but this is subject to labor bureau approval.
The minimum wage in China varies by province and city. For example, as of 2021, Shanghai has the highest monthly minimum wage of 2,480 yuan, followed by Shenzhen at 2,200 yuan and Guizhou at 1,570 yuan. Employers typically pay employees on a monthly basis, either in cash or via a bank transfer.
Although a 13th-month bonus or salary is not required by law, it is a market norm in China. Instead of a guaranteed bonus, you can state in the employment contract the monthly salary, the frequency with which employees will be paid, and the total annual salary. You can then specify that a bonus is optional but will be distributed if certain conditions are met. Salespeople frequently receive a commission plan in lieu of this bonus.
The national system provides basic health and pension insurance; however, extra health insurance may be supplied to the employee.
Employers in China contribute to a housing fund, which is similar to a 401k plan. Employees' real estate rent and purchase costs are subsidized by the fund. Some contributions are required; nevertheless, employees typically bargain for a higher housing fund rate. Employers are typically required to contribute between 5% and 25% of an employee's annual wage. Distinct cities have different policies concerning the housing fund.
It is difficult to provide stock options to employees in China. We strongly advise you to consider if it is "worth" delivering this bonus to your Chinese staff before doing so.
The standard corporate tax rate imposed on companies in China is 25 percent. The concession rate for high-technology companies is 15 percent.
Individuals in China are imposed an income tax rate between 0 percent and 45 percent. The actual percentage depends on the income bracket the individual belongs to.
The standard rate for the value-added tax (VAT) or goods and sales tax (GST) in the China is set at 13 percent. The rate is different for services like energy, books, and transportation which is set at 9 percent. Goods and services for export are tax-free.
The visa must be sponsored by the employer, who must be a recognized firm that hires foreign workers. The employee must be a foreign specialist in the subject in which they would be working.
In China, there is an age restriction for both male and female candidates for a work visa; male applicants must be between the ages of 24-65, while female workers must be between the ages of 24-55. The employer must provide the employee with a government-issued work permit and visa notification letter, which must be signed and sent to the Chinese government.
A Z Visa is only valid for 30 days after arrival, after which the employer must apply for a temporary residence visa on the employee's behalf. The Z visa is valid for 90 days to a maximum of 50 years.
Other visa alternatives include the R Visa, which is designed for highly talented individuals in high demand in China, and the J Visa, which is designed for journalists. Typically, the procedure takes around 8 weeks to complete.
In China, it is essential to have a robust employment contract in place that specifies out the conditions of the employee's remuneration, benefits, and termination obligations. In China, the salary and other compensation amounts should always be stated in Chinese Yuan Renminbi rather than a foreign currency in an offer letter and job contract.
In China, both fixed-term and non-fixed-term contracts are permitted. A non-fixed term contract exists when an employee agrees to extend an employment contract after at least ten years of service, unless the employee expressly agrees to a fixed term contract. A contract is considered non-fixed term if the employer fails to sign it within one year of the employee's start date.
Renminbi (RMB)
Chinese Yuan (CNY)
For international corporations, China has three typical business structures:
A joint venture (JV) is a cooperation between international and Chinese investors. It is a kind of foreign-invested business (FIE). Profits, losses, and management responsibilities are shared by these investors. Companies that need the assistance of a local business partner for distribution, government contacts, or market understanding often pick this option.
Representative office (RO): An RO is the simplest and least costly choice since it does not need any registered capital. It has a restricted commercial scope and is only permitted to conduct market research, public relations, sales, and service operations inside the nation.
WFOE (wholly foreign-owned enterprise): A WFOE is a limited liability company formed and financed entirely by foreign citizens. This option is often chosen by businesses that wish to manufacture a parent company's product in China and export it to a foreign nation.
The procedure of establishing a subsidiary in China is dependent on the option you choose.
WFOEs are the most common company structure used by US corporations wishing to set up a Chinese subsidiary. To establish a WFOE, you must first complete the necessary legal papers, such as articles of incorporation, audit reports, and letters of authorisation, as well as create bank accounts in China and select a legal representative.
Although WFOEs are not required to have any minimum registered capital, some sectors may still have these criteria. Subsidiary regulations in China, such as the minimum registered capital requirement, differ by city.
All international investors must retain a PRC corporation to serve as the company's sponsor. Because investors cannot file for incorporation papers directly, the PRC organization — such as a local authorized Foreign Enterprise Service Company (FESCO) — is in control of the application procedure.
