China: Operating a Business

Wholly foreign-owned enterprise (WFOE)

Number of partners: One juridical person or one or more shareholders.
Entity owned 100% by foreign interests that have the same rights as a local company.
Capital (max/min): Minimum varies according to the sector of activity.
Shareholders and liability: Limited to the amount of contributions.

Equity Joint Venture (EJV)

Number of partners: Minimum of one Chinese entity and minimum one foreign entity.
Capital (max/min): No minimum capital required, but at least 25% must originate from foreign investors.
Shareholders and liability: Limited to the amount of contributions.

Co-operative Joint Ventures (CJV)

Number of partners: Minimum of two partners: one Chinese entity and one foreign entity.
Capital (max/min): No minimum capital required.
Shareholders and liability: Limited to the amount of contributions.

Foreign Investment Joint Stock Company (JSC)

Number of partners: Minimum two partners.
Capital (max/min): Minimum capital needed: CNY 5 million if domestic capital, CNY 30 million if foreign capital.
Shareholders and liability: Each shareholder contributes the same amount to the share capital and is linked to the company by its share of the share capital.

Holding

Number of partners: Minimum one  partner.
Capital (max/min): Minimum capital USD 30 million.
Shareholders and liability: Each shareholder contributes the same amount to the share capital and is linked to the company by its share of the share capital.

Business Setup Procedures

The Competent Organisation

Ministry of Commerce

For Further Information

Doing Business: China, to learn about procedures to start a business in China

Financial Information Directories

Dun & Bradstreet - Worldwide directory with financial information on businesses

Kompass China - Business directory for China

Recovery Procedures

Principle

Minimum Debt-to-Capital Ratio Triggering Liquidation

Bankruptcy Laws

Company bankruptcy laws
The law on bankruptcy is being reshaped in China. It is difficult to be declared as bankrupt. To be declared as bankrupt, equities must be negative.

Reorganization and Rehabilitation Laws

Company bankruptcy laws

For Further Statistics

China Statistics

For Further Information About the Labour Market

ILO, International Labour Organisation

Opening Hours

 

• Legal Weekly Duration

40 hours

• Maximum Duration

8 hours per day with a maximum of 44 hours per week on an average. Not more than additional 36 hours per month.

Working Rest Day

Two-day weekend (Saturday and Sunday off)

Paid Annual Vacation

Retirement Age

The retirement age is 55 for women and 60 for men.

Child Labour and Minimum Age For Employment

More than 15 years for the industry. For other sectors, children can work at 13-14 years under certain conditions.

Informal Labour Market

Moonlighting is estimated at 18.5% of national workers and 72.5% of foreign workers.

Pay

Minimum Wage

The minimum wage varies across the provinces. Currently, the highest monthly minimum wages are in parts of Guangdong, Jiangsu, and Zhejiang provinces, which have all surpassed the RMB 2,000 (US$289) mark. Shanghai continues to have the highest minimum wage in China, at RMB 2,480 (US$358) per month, followed by Shenzhen and Beijing, both at RMB 2,200 (US$318) per month. Among the lowest minimum wages are those in some rural areas: Liaoning (1,120 RMB/US$162), Hunan (1,130 RMB/US$163) and Anhui (1,150 RMB/US$166).

Consult China Briefing's 2020 minimum wage guide for more information.

Average Wage

The average monthly salary was 8,452 yuan ($1,228.38) in 37 major cities during the second quarter of 2019, with Beijing, Shanghai and Shenzhen all topping 10,000 yuan.
NB: the average wage varies according to the provinces.

Other Forms of Pay

• Pay For Overtime

Increase of 150% if the worker is requested to work more.
Increase of 200% if an additional rest day cannot be granted.

Social Security Costs

The Areas Covered

Pension, medical, maternity, unemployment and work-related injury insurance schemes are provided.

Contributions

Contributions Paid By the Employer:

Contributions vary across the country and for different schemes. China’s Social Security System consists of 5 mandatory insurance schemes (pension fund, medical insurance, industrial injury insurance, unemployment insurance, and maternity insurance) and a housing fund (only applicable to Chinese employees). In Beijing, the employer's share of social insurance contributions amounts approximately to 27.8% to 29.5%:

• Pension 16%
• Medical expenses 10%
• Unemployment 0.8%
• Maternity 0.8%
• Work-related injury 0.2% to 1.9%

Contributions Paid By the Employee:

Contributions vary across the country and for different schemes. China’s Social Security System consists of 5 mandatory insurance schemes (pension fund, medical insurance, industrial injury insurance, unemployment insurance, and maternity insurance) and  a housing fund (only applicable to Chinese employees). In Beijing, the employee's share of social insurance contributions amounts approximately to 10.2%:

• Pension 8%
• Medical expenses 2%
• Unemployment 0.2%
• Maternity 0%
• Work-related injury 0%

Recruitment

Method of Recruitment

Recruitment is done more and more through Internet. But announcements in the newspapers are the most used means for the job offers. Numerous trade fairs are also organized and are a good means to recruit. Recruitment campaigns in the universities are also organized. The most prevalent method of recruitment is the interview. Certain companies must also pass technical or English tests. The psychological tests are not used in China, however role playing, simulations or group interviews are becoming more and more common.

Recruitment Agencies

List of the Top Recruitment Agencies in China

Recruitment Websites

ChinaHR.com
Zhaopin.com
51job.com

The Contract

Dispute Settlement

Social Partners

Employer Associations

CISASME - Chinese Association of International SME Cooperation

Social Dialogue and Involvement of Social Partners

While worker protests and work stoppages occur regularly, the right to strike is not protected by law. China has not ratified core International Labour Organisation conventions on freedom of association and collective bargaining. The enforcement of existing labour regulations is reportedly insufficient. The only trade union recognised by the Chinese Communist Party is the All China Federation of Trade Unions (ACFTU). As independent trade unions are illegal, some claim that the ACFTU can be an effective voice for workers.