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The labour market landscape in China is dynamic and characterised by frequent updates to laws and regulations. Job preferences among the labour force have dramatically evolved, particularly since the pandemic. This report serves as a valuable resource for European SMEs aiming to navigate the details of human resources management in China. It offers insights into relevant labour laws, regulations, and best practices to recruit, manage and retain talent.
The first chapter provides an overview of the recent changes and trends in China’s labour market, highlighting regional and sectoral differences. Two key sections focus, first, on the long-lasting impact of the pandemic, which has resulted in new preferences and needs of Chinese employees. The second section looks into on the main cultural differences between China and European countries in the workplace.
The second chapter provides an overview of China’s intricate landscape of HR and labour laws, regulations and rules, at both national and local levels. It provides a detailed overview of the main obligations for employers, and relevant social security contributions and calculations.
The third chapter introduces common organisational and management structures for companies in China. We look into different sectors, the pros and cons of different structures, comparing traditional scenarios of pyramidal management versus emerging forms of flat management. This chapter also provides tips for EU SMEs on how to identify the most appropriate approach for their business.
The fourth chapter pinpoints the most essential factors in HR management in China. We focus here on the types of employment relationships and wage calculation systems for recruiting staff in China, including foreign citizens. Two other fundamental sections target the management of labour relations. The first delves into the formulation and termination of contracts as well as intellectual property protection. The second gives recommendations on the active management of employees, mainly through training and open communication.
The fifth chapter provides a summary of the main opportunities and challenges for EU SMEs, as well as considerations on the future trends of China’s labour market. We advise SMEs to proactively prepare to navigate China’s impending rise in labour costs. We also show why adapting to evolving conditions is crucial to maintaining competitiveness and profitability in the Chinese market.
China’s labour market is evolving rapidly. Active management and talent development have never been so crucial for European SMEs in China. These are key elements to increase productivity, personnel satisfaction and ultimately to optimise the retention rate of talent.
1. Understanding China’s Labour Market for EU SMEs
1.1 China’s Educational Attainment and Sectoral Employment
1.2 Post-pandemic Impact on the Labour Market
1.3 Understanding Cultural Differences between China and Europe
2. Compliance with China’s Labour Requirements
2.1 Different Levels of Labour Laws and Regulations
2.2 Social Security and Housing Funds
2.3 Laws and Regulations Relevant to EU SMEs
3. Effective Organisational Structure for EU SMEs
3.1 Organisational Structure
3.1.1 Pyramidal Management
3.1.2 Flat Management
3.1.3 Organisational Structure: Key Takeaways
3.2 Formulating a Suitable Management Structure
4. Essential Factors in Human Resources Management
4.1 Recruitment and Staffing
4.1.1 Different Labour Types
4.1.2 Wage Calculation Systems
4.1.3 Hiring Foreign Citizens
4.2 Labour Relations Management
4.2.1 Formulation of Labour Contracts
4.2.2 Termination of Labour Contracts
4.2.3 Intellectual Property Protection
4.3 Active Management of Employees
4.3.1 Employee Training
4.3.2 Grievance Redress Mechanism
5. Sustainable Workforce in China: Opportunities, Challenges, and Outlook
5.1 Challenges for EU SMEs
5.2 Opportunities for EU SMEs
5.3 Outlook on Labour Costs
