Human Resource Considerations

Doing Business in China

By: Grace Zhu, Karen Wang

Whether you are currently doing business with China or considering an expansion, human resources will be essential to your success. This article is intended to provide an overview of laws and regulations that differ in many important respects from those of the United States and other countries where you may be doing business.


Under Chinese laws and regulations, employers must:

  • File hiring-related notices with relevant government bureaus.
  • Record and maintain personnel files of employees.
  • Contribute to employees’ social benefits and housing funds.

Rules and Regulations

Standard working hours are eight hours per day, or 40 per week.

The comprehensive working hour system requires the employer to obtain pre-approval from the local labor administrative department. It offers:

  • Eight working hours per day or 40 per week on average.
  • Eligibility for certain industries specified by Chinese labor law, e.g., staff in transportation, railway, shipping, etc.

Whether you are currently doing business with China or considering an expansion, human resources will be essential to your success.

Flexible working hour system requires employers to obtain pre-approval from the local labor administrative department. In this arrangement, there is no limit on working hours. It is applicable to certain positions specified by Chinese labor law, for example, drivers.

Salaries comprise a base salary (calculated on a monthly basis), overtime, incentives and bonuses (calculated monthly/quarterly/annually), allowances, and social benefits, including social insurance and the housing fund.

Additional compensation includes salary paid during a probation period, which can’t be less than 80% of the salary after the probation period, and compensation for overtime work, which can be 1.5 to 3 times the normal salary, depending on the OT (e.g., OT on weekdays, weekends and public holidays) by the end of 2017.

Taxes, social insurance and housing funds have different tax rates depending on the employee’s salary.

  • Tax relief for Chinese employees: RMB3,500 previously, adjusted to RMB5,000 effective Oct. 2018
  • Tax relief for foreign employees: RMB4,800 previously, adjusted to RMB5,000 effective Oct. 2018

Social insurance and housing fund rates differ depending upon the city and are paid by both the employee and the company:

Social insurance includes:

  • Pension
  • Medical
  • Work-related injuries
  • Unemployment
  • Maternity
  • Housing fund


Social Insurance Contributions in Shanghai by the End of 2017

Social Insurance Base Pension Unemployment Medical Injury Maternity
Company Individual Company Individual Company Individual Company Company
20.0% 8.0% 0.5% 0.5% 9.5% 2.0% 0.32% 1.0%


Housing Fund Base Housing Fund
Company Individual
7.0% 7.0%

The social insurance base and housing fund base are adjusted by the government in Shanghai every year in April and July. The responsibility of the company and the individual is different in different cities and may be adjusted by the government.

Labor Relations Management – The HR Process

Induction and termination. Upon hiring, companies must register Chinese employees through the employer’s company account in the Ministry of Human Resources and Social Security (MOHRSS). MOHRSS is a ministry under the State Council which is responsible for national labor policy standards, regulations — and managing the national social security system. It is thus responsible for labor force management, labor relations, social insurance management and legal construction of labor.

Foreign employees must acquire employment and resident permits from MOHRSS and the Entry and Exit Administration of Ministry of Public Security.

Labor Contract (Employment Contract)

Employees can be terminated during probation. According to Chinese labor law, if the term of a labor contract is not less than three months but less than one year, the probation period shall not exceed one month.

If the term of a labor contract is not less than one year but less than three years, the probation period shall not exceed two months. For a labor contract with a fixed term of three years or more or without a fixed term, the probation term shall not exceed six months. During probation, three days’ written notice is required for termination. After probation, 30 days’ written notice is required. Chinese employees will be deregistered with the Labor Authority. The employment and resident permits of foreign employees will be cancelled upon termination.

Employment contract and staff handbook. In China, the employment contract creates legal rights and obligations at law on terms subject to Chinese labor law. Contracts apply to individual employees.

The staff handbook outlines policies and procedures that should be followed by all employees. The handbook signed by the employees has legal effect as long as the terms do not conflict with Chinese laws/regulations.

Leave entitlements include an annual leave, the length of which is determined by work experience and differentiated by cities:

  • Marriage leave is compulsory and can last 3–10 days.
  • Maternity leave is granted to men for 10 days and to women for 128 days (Shanghai) and is compulsory.
  • Sick leave is partially paid (e.g., 60%–80% subject to the years of working) and is not compulsory.


Ranked among the top three corporate service providers globally, Vistra Group provides a broad range of services and solutions from International Incorporations to Trust, Fiduciary and Fund Administration Services.

Vistra employs more than 3,500 professionals across 75 locations in 48 jurisdictions. In China, we help foreign companies with market entry including setting up Offshore Company Structures, Incorporation in China, Virtual CFO and HR Solutions.

Ready To Help:

Established in 2008, PNC's Shanghai Representative Office (SRO) is available as a resource to PNC clients who are doing business with China or in China. The SRO can provide assistance and guidance on:

  • Corporate Establishment
  • Obtaining Local Banking Services
  • Market Information
  • Introductions to Local Resources

Should you have any questions, please contact the International Advisory Team; Grace Zhu, Chief Representative or Chris Chen, Representative, in the PNC Shanghai Representative Office.

In China, the employment contract creates legal rights and obligations at law on terms subject to Chinese labor law.

Grace Zhu

Chief Representative

PNC Bank N.A., Shanghai Representative Office

Grace Zhu is responsible for PNC’s business in mainland China and Hong Kong.

She has more than 25 years’ experience in the banking industry in Shanghai, including check clearing, payments, cash management, trade finance and loans business. Prior to joining PNC Bank, Zhu served other major U.S. and international banks. 

Zhu holds a bachelor’s degree in finance and taxation from Shanghai University of Finance & Economics and a master’s degree in business administration from the joint program of Shanghai University of Finance & Economics and Webster University.

Karen Wang

Associate Director

International Expansion,  Vistra China

Karen Wang has been helping overseas companies enter China for more than 10 years. She gained her experience from multinational organizations and international consultancy firms, where she advised overseas clients in a variety of industries, including manufacturing, consumer goods, trading and consulting, including both multinationals and startups.

Wang co-chairs the American Chamber of Commerce Future Leader Committee and is a frequent speaker on China-related topics.

Important Legal Disclosures & Information

This document and the Information it contains is intended for informational purposes only, and should not be construed as legal, accounting, tax, trading or other professional advice. You should consult with your own independent advisors before taking any action based on the Information. Under no circumstances should the Information be considered trading advice or a recommendation or solicitation to buy or sell any products or services or a commitment to enter into any transaction. The Information is gathered from sources PNC Bank believes to be reliable and accurate at the time of publication and are subject to change without notice. PNC Bank makes no representations or warranties regarding the Information’s accuracy, timeliness, or completeness. All performance, returns, prices or rates are for illustrative purposes only. Markets do and will change. Actual results will vary, and may be adversely affected by exchange rates, interest rates, or other factors.

PNC is a registered service mark of The PNC Financial Services Group, Inc. (“PNC”). 

PNC Bank’s Shanghai Representative Office was approved by the China Banking Regulatory Commission on April 16, 2008. PNC’s Shanghai office is prohibited from engaging in any form of operational business activities in compliance with the People’s Republic of China on Administration of Foreign-funded Banks released by the State Council. Accordingly, PNC’s Shanghai Representative Office does not accept deposits, underwrite loans or issue credit of any kind, or sell wealth management products in China. Any activities of these types in China using the PNC name or trademarks are not authorized by PNC.

Bank deposit and treasury management products and services are provided by PNC Bank, National Association (“PNC Bank”), a wholly-owned subsidiary of PNC and Member FDIC.

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