China Business

Employment in China is Job One: Make This YOUR Business

China job offer letters

When I was in high school, I went to a bakery in Budapest, Hungary, during the Communist era. The bakery was tiny — the kind that in the United States would have at most two people working there. I was the only customer. I ordered from one woman, was instructed to go to the cash register by another woman, had my pastry wrapped by another woman, had my pastry handed to me by a fourth woman, and paid a fifth woman. Now that’s what I call full employment.

China is not near to that yet, but foreign businesses would be wise not to underestimate how important it is to Chinese government functionaries that “their constituents have jobs. I thought about this last week when two of my law firm’s clients told me of their discussions with Chinese government people where the Chinese government people had stopped by to pretty much just make sure these two companies had no layoff plans. Both clients told me no threats of any kind were made, but both felt their relationship with the government would be much better if nobody got laid off.

Today, the always excellent Managing the Dragon blog did a post aptly entitled, “Jobs: Now “Job One” in China,” [link no longer exists] in which it talks about the heightened importance of jobs in China right now. The post goes on to set out the following “suggestions for foreign investors in China:”

  • If you are in a joint venture, now is not the time to be pressing for those labor-saving measures to increase its efficiency. In the best of times, Chinese partners and the local governments they answer to are sensitive to any job cuts that may threaten stability. In the current economic climate, expect the resistance to be even greater.
  • If you have a wholly-owned company in China, be careful in how you implement any layoffs. In the face of uncertain economic prospects, Western companies will instinctively seek to adjust employment levels, which is understandable. Even though your operation in China may be wholly-owned, however, this will not stop laid-off workers from taking their complaints to the local government–and the government will be listening. Talk to your friends in the local government ahead of time so there are no surprises.
  • Make the most of any expansion plans your business may have in China by publicly or privately announcing them. China has a long memory and remembers companies and individuals who come forth in difficult times.

I concur.

7 responses to “Employment in China is Job One: Make This YOUR Business”

  1. “If you have a wholly-owned company in China, be careful in how you implement any layoffs. In the face of uncertain economic prospects, Western companies will instinctively seek to adjust employment levels, which is understandable.”
    Suddenly this recommendation seems not so out of place in the “West” too….

  2. I agree as well. For the past two or three years, the focus of the annual audits of foreign businesses has been on whether we have been paying up fully on our tax liabilities. Now, we should expect a shift in focus for our 2009 audits: employment. How many employees do you have, what are your plans for them, and what are your staffing plans for 2009-10?
    Right now is a good time to prove your commitment to China and commitment to employment of Chinese staff. It’s also a good opportunity for service industries and their home offices to save costs by shifting work to China. The labor market in China has been a challenge over the past few years, but now it has already shifted from a seller’s to buyer’s market. You need to take advantage of it. You can do so in a way that’s appealing (and timely) to our home office, by helping them reduce their payroll expenses. Sell the idea.
    You’ve been hearing that the service sector will reign in China. That time is now. Get in and make it happen.

  3. When I was there I remember officials from the Shanghai and district employment offices going around asking owners/managers if they could find room for middle aged SOE employees. Nothing of note happened if you didn’t have room but many people ended up paying 1-2 people 50 RMB a day out of their pocket just to clean the office, keep the tea/coffee machine full and bring food back for regular employees and bureaucratic red tape got a lot looser for those owners/managers.

  4. Greg’s got a good point. The cost of helping officials meet their employment goals (either by not cutting one’s own workforce or by hiring gofers) can sometimes pay for itself with other favourable government treatment. Worth checking with officials what can get in return for helping them…

  5. Greg’s point about looser bureaucratic red tape is interesting. Could this be perceived as a form of “corruption”, if not in intent then at least in practice?

  6. Corruption might be too strong of a word in this case especially since threats aren’t involved. “Fast tracking” might be a more appropriate term and can the city be blamed for creating favorable conditions for those who throw some bread crumbs out for former SOE people who have little if any marketable skills, especially in today’s job market?

  7. We all know about the condition of china market & global from last three years but it’s taking pickup in a slow manner so now the good time to prove your commitment to China and commitment to manpower market of Chinese staff. It’s also a good opportunity for professional service industries and their domestic offices to save costs by shifting work to China. The labor market in China has been a challenge over the past few years, but now it has already converted from a seller’s to buyer’s market. You need to take advantage of the situation.
    Charles

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