Recruiting in China

By Chris Devonshire-Ellis and Richard Hoffmann

Aug. 27 – A recurring theme over the past two years for expatriates wanting to be based in China is the subject of possessing a criminal record. These may of course be for relatively minor offenses; however China’s policy in this regard can be strict.

A standard requirement (although it is not always requested) for expatriates looking to work in China is for a “Certificate of No Criminal Record” to be provided when applying for a work permit. This is a particularly strict requirement in Shenzhen and Guangzhou, though less so in Beijing and Tianjin. Providing this certificate means having to go to your local police station in your home country and obtaining one. Different countries have different systems for providing such a document, and some smaller countries can even issue this from their embassy in Beijing. For most expatriates seeking employment in China, however, this needs to be obtained from their local police authority in their home country.

The same also applies to having a criminal record in China. However, criminal records are not usually recorded in China on a national basis. Therefore, it may be possible if in possession of a criminal record in China – if the authorities have not already deported you – to apply successfully for such a work permit in a different region of China. The best advice is of course to not commit criminal acts in China. You risk your job, simple as that.

A little known aspect of China’s laws also criminalizes debts of over RMB10,000. That means that if a foreign invested company has become insolvent or bankrupt, unless the debts, including all staff obligations, taxes due and so on are met by the parent company, expatriates simply walking away from the situation risk being found guilty in absentia. This is of particular pertinence to the chief representative or legally responsible person. In these positions, the title means exactly what it says – responsible for the activities of the company, including its debts.

People can be incarcerated for long periods over debts incurred by their company in China. Returning to China knowing that you have such a background then is unwise. Expatriates’ personal data is now shared on a national basis, and even if one manages to apply for a work permit in a different city, a sharp-eyed clerk somewhere may mean a knock on the door sometime later.

The lesson for all expatriates in China is to pay your debts, and keep out of trouble. You may not get a second chance.

Foreign-invested companies in China facing significant problems in which closure becomes necessary must take the appropriate actions when doing so. Leaving China with unauthorized debt places you at significant future risk should you wish to later re-enter the China market. It is far better to negotiate with creditors than face prosecution. Most of the obligations under such circumstances can be dealt with through negotiation, and require the provision for creditors meetings. Although unpleasant, these do allow for the company to state its position firmly, abide by the rules, and decrease the amount of outstanding debt. While creditors can usually be dealt with, staff and any outstanding tax matters do need to be settled. The procedure for closure also requires an audit.

We have recently provided update advice and the procedural structure on this subject, please see the China Briefing issue “Closing Representative Offices and Liquidating Businesses in China” for more information.

Chris Devonshire-Ellis is the principal of Dezan Shira & Associates. Richard Hoffmann is a senior legal associate with the firm and is responsible for issues relating to expatriate employment and human resource legal and administrative matters in China. If you have queries about obtaining work permits in China, please contact Richard at legal@dezshira.com. Businesses requiring advice on liquidation procedures and related matters may contact Sabrina Zhang, national tax partner for the firm, in strict confidence at tax@dezshira.com.

By Bloomberg News

Aug. 23 (Bloomberg) -- China will crack down on foreign companies directly recruiting and hiring workers in China to do manual labor overseas, the Ministry of Commerce and the Ministry of Foreign Affairs said in a joint statement posted to the commerce ministry’s website today.

The government will also stop Chinese companies from sending labors from the nation to work overseas for foreign individuals, according to the statement. China will also strictly control the sending of Chinese labors to work in overseas nations where conditioners are worse than those domestically and where risks are high, according to the statement.

Nearly 73 percent of Taiwan's young men and women who graduated from universities or colleges this summer would not mind crossing the Taiwan Strait to work in China, the 1111 job bank quoted the results of a recent poll as indicating Tuesday.

Graduates who majored in business management, finance and economics topped the list of China-bound aspirants, the poll found.

Shanghai is the top choice in terms of location, with 73.08 percent of the new graduates who responded to the poll saying they would prefer to work there, followed by Hong Kong (46.15 percent) , Beijing (42.79 percent) , Guangzhou (21.15 percent) and Suzhou-Hangzhou (20.19 percent), according to the poll.

Work in the information technology sector is the most coveted job of the respondents, followed by trade and goods and services distribution (30.29 percent) , and industrial and business services (23.08 percent), the results show.

Some 63.46 percent of the respondents cited China "promising to become the world's leading market" as the major reason for their willingness to work there, while 62.5 percent said they want to work in China to expand their experience and 44.23 percent said working in China would help broaden their global perspective, according to the poll.

A total of 80.29 percent of the first-time job seekers who do not mind working in China said they expect a higher salary working in China than they could earn in Taiwan, at roughly NT$43,600 (US$1,364) per month, according to the poll.

The 1111 job bank conducted the survey between June 22 and July 5. It received 1,174 valid samples and had a confidence level of 95 percent and a margin of error of plus or minus 2.86 percentage points. (By Opal Cheng and Deborah Kuo) ENDITEM/J

China's central authorities have set down a more open policy to attract top-notch foreign talents to help promote the economic and social development and global competitiveness of the nation.

According to the newly unveiled National Medium and Long-term Talent Development Plan (2010-2020), the government will work out favorable policies in terms of taxation, insurance, housing, children and spouse settlement, career development, research projects, and government awards for high-calibre overseas talents who are willing to work in China.

Furthermore, the government will also improve the system for giving permanent residence rights to foreigners, explore the potential of a skilled migration program, and work out measures to ensure a talent supply, discovery and appraisal system.

The national plan, a blueprint for creating a highly skilled national work force over the next decade, aims to transform the country from being "labor-rich to talent-intensive."

Wang Huiyao, vice chairman of Beijing-based China Western Returned Scholars Association, said, "The measures outlined are very attractive. They've touched upon various concerns of talents from overseas including personal and career needs."

"The plan is practical and concrete compared with previous documents," said Wang, who help draft the plan.

A program to hire 1,000 overseas top-notch specialists initiated in late 2008 was also incorporated into the new plan as one of the 12 key projects to be completed over the next ten years.

By May this year, 662 people have been recruited under the program, which gives priority to leading scientists who are able to make breakthroughs in key technologies, develop high-tech industries and lead new research areas.

Xiao Mingzheng, director of the Human Resource Development and Management Research Center at Peking University said, "It's preferable to import talents rather than capital or technology."

"As China strives to adjust its economic growth pattern, it has become more important for it to tap others' 'brains'," he said.

"The new policies reflect China's open attitude to personnel recruitment - that is, the country not only exports talents to serve the world but also enables foreign talents to serve China's development," he said.

China's efforts to attract overseas talents have gone beyond the central government level.

The country recruited about 480,000 talents from foreign countries, Hong Kong, Macao and Taiwan last year, according to the State Administration of Foreign Experts Affairs.

And about 50,000 Chinese officials and professionals went overseas for various training programs last year.

Li Yuanchao, head of the Organization Department of the Central Committee of the Communist Party of China, said earlier this year, "Top-notch talents are crucial for improving the core competitiveness of a country, a region, and a company."

"Not only should the central government earnestly carry out its talent recruitment program. Local governments should also develop their own programs to create conditions to allow talents to achieve," he said.

Confidence among recruitment companies around the world about the prospects for hiring rose 11% in the five months to May so that 67% now expect revenue growth in the second half of the year, the Association of Executive Search Consultants said Tuesday.

As a result recruitment companies are expected to hire more staff to handle the increased business, with 48% of those people surveyed for the AESC's mid- year member outlook report saying they anticipate hiring more consultants in the second half of 2010.

The healthcare and life sciences sector and the energy and natural resources industries are currently the strongest two areas for hiring and are expected to be among those seeing the most growth in the second half of 2010, the AESC report said. The industrial and financial services sectors are also expected to see some of the biggest recoveries this year, it added.

"The latest results are indicative of an industry regaining strength following the downturn," said Peter Felix, AESC president. "Once again there is talk of a talent shortage in certain industries and functions, even though unemployment levels remain high."

China, India and Brazil are expected to see the greatest scarcity of talent in the second half of 2010 with 64.9% of those surveyed expecting China to experience a lack of personnel, while 37.8% and 37.2% said they thought India and Brazil, respectively, would experience problems, the report showed.

Those people in employment have become slightly more willing to consider making career moves as a result of the improving jobs market, with 45% of recruiters saying senior executives will consider moving jobs, up from 42% at the end of last year.

As the global race to the bottom for private industry labor continues, it seems the younger Chinese laborer - many of which are exposed to the rest of the world via the internets (sic) - is beginning to have enough. While not a new issue [Feb 28, 2008: China Raising Minimum Wage] the very high profile suicide cases at mega contract manufacturer Foxconn along with strikes at Honda plants in China are bringing this issue to the forefront of public conscience. Even Apple's Steve Jobs is concerned:

* Apple Inc Chief Executive Steve Jobs finds "troubling" a string of worker deaths at Foxconn, the contract manufacturer that assembles the company's iPhones and iPads, but said its factory in China "is not a sweatshop." "It's a difficult situation," Jobs, dressed in his customary black turtleneck and jeans, said on stage. "We're trying to understand right now, before we go in and say we know the solution."
* “The situation at Hon Hai is negative for Apple, so they need to work together to try to resolve this,” said Jenny Laia technology analyst at CLSA Ltd. in Taipei. About 70%of Apple’s products may be manufactured at Hon Hai’s facilities, she said.

Not everyone agrees with Mr. Jobs, who is obviously biased:

* Foxconn is a sweatshop that “tramples” the rights of workers partly because it pays about 900 yuan ($131) a month, forcing factory employees to do overtime to support themselves and their families, according to Li Qiang, founder and executive director of New York-based China China Labor Watch.

While this is a positive for "humanity" you can almost hear the siren call of other countries, such as Vietnam, [Apr 7, 2010: Vietnam Begins to Lure Business Away from China] beckoning for the world's corporations to exploit their workers if the Chinese won't have it.

* “We have been seeing wage inflation over the past several months,’’ said Chris Ruffle, who helps manage $19 billion as China co-chairman of Martin Currie Ltd. Rising salaries may prompt businesses that operate plants in China to move to lower-cost countries such as Vietnam and Cambodia, Ruffle said.

One can only wonder what nation's workers will be left to exploit circa 2025 when the Vietnamese and Cambodian worker inevitably rises up as the Chinese are doing. If only Africa had government stability! Perhaps North Korea will be willing to open its doors.

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Via AP:

* Global manufacturers struggling with life-or-death pressures to control costs are finding that the legions of low-wage Chinese workers they rely on have limits. A strike at Honda Motor Co. and the official response to a spate of suicides at Foxconn Technology, a maker of electronics for industry giants such as Apple, Dell and Hewlett-Packard, suggests China's leaders are at least tacitly allowing workers to talk back.
* Over the weekend, the top communist party leader in Guangdong province visited Foxconn's sprawling factory where 10 workers have committed suicide and urged the company to adopt a "better, more humane working environment" for its mostly young workers, state media reported.
* "The 80s and 90s generation workers need more care and respect and need to be motivated to work with enthusiasm," said Guangdong party chief Wang Yang. (my assumption is he meant those workers born in the 80s and 90s)
* That transition is taking hold across China. Manufacturers, under pressure to deliver low prices in home markets, are struggling to attract and keep young workers who, brought up in an era of relative affluence, are proving less willing than earlier generations to "eat bitterness" by putting up with miserable working environments and poor wages.

* The strike at Honda also reflects broader trends of growing dissatisfaction among China's long-suffering workers with lagging wages and generally harsh working conditions. Employers in Shanghai complain of difficulties in finding and keeping young workers, both skilled and unskilled. Contractors were obliged to pay heavy bonuses to keep workers on the job during the lunar new year as they rushed to finish construction for the Shanghai World Expo, which runs for six months until Oct. 31.
* "Our economy can no longer rely on squeezing labor benefits, because workers are unwilling to accept it anymore. I have to say the squeeze is very cruel now," said Chang Kai, a labor expert at Beijing's Renmin University.
* Foxconn says it is installing safety nets on buildings and hiring more counselors at its 300,000-worker factory in Shenzhen, the boomtown bordering Hong Kong in Guangdong province that became the epicenter of China's first waves of cheap-labor export manufacturing in the 1980s-90s.
* The factory campus has air conditioned production lines, palm-tree lined streets, fast-food restaurants and recreation facilities. But labor activists accuse the company of demeaning and dehumanizing workers with a militaristic management style, excessively fast assembly lines and overwork that have overwhelmed some laborers in their late teens and early 20s and away from home perhaps for the first time.
* (in the Honda plant) "Most of the employees on strike at the plant have agreed to new wages, and some production started there from today," said Honda spokeswoman Yasuko Matsuura in Tokyo. She said "almost all" of the striking workers have agreed to increasing the total starting wage by about 24% to 1,910 yuan ($280) per month.
* China outlaws unauthorized labor organizing, limiting such activities to the government-affiliated All China Federation of Trade Unions and to company branches of the ruling Communist Party. But in recent years authorities increasingly appear to be tolerating sporadic, peaceful protests by aggrieved workers.
* "Wages have been rising in recent years, but compared with soaring prices they remain very low," said Li Qiang, founder of New York-based China Labor Watch. "The government recognizes that problem, so even if strikes are still illegal some are tacitly condoned, though the strikes and protests have to stay within certain limits," he said.
* Working conditions vary widely across China -- from modern factories in full compliance with Western standards to slave labor brick kilns. Yet another of those was reported after 34 migrant workers were freed by a police raid in northern Hebei province, the state-run newspaper China Daily said Monday.

and....

* "The Foxconn incident shows one big problem: people are not machines," Jin Bei, head of the industrial research institute of the Chinese Academy of Social Sciences, said in a commentary Monday in the China Business Journal.

Ah, if only they were! The need for sleep is such a human weakness - Sincerely, HAL9000.

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Another story via Bloomberg on this problem re: People are not robots.

* Ah Wei has an explanation for Foxconn Technology Group Chairman Terry Gou why some of his workers are committing suicide at the company’s factory near the southern Chinese city of Shenzhen. “Life is meaningless,” said Ah Wei, his fingernails stained black with the dust from the hundreds of mobile phones he has burnished over the course of a 12-hour overnight shift. “Everyday, I repeat the same thing I did yesterday. We get yelled at all the time. It’s very tough around here.”
* Conversation on the production line is forbidden, bathroom breaks are kept to 10 minutes every two hours and constant noise from the factory washes past his ear plugs, damaging his hearing, Ah Wei said. The company has rejected three requests for a transfer and his monthly salary of 900 yuan ($132) is too meager to send money home to his family.
* At least 10 employees at Taipei-based Foxconn have taken their lives this year, half of them in May, according to the company, also known as Hon Hai Group. The deaths have forced billionaire founder Gou to open his factories to outside scrutiny and apologize for not being able to stop the suicides.
* Foxconn’s Longhua complex outside Shenzhen spans three square kilometers (1.16 square miles) and is criss-crossed by tree-lined streets with a water fountain at the center of the facility. Workers wearing polo shirts emblazoned with ‘Foxconn’ in Chinese characters over their hearts walk along the streets. Men wear blue, women wear red. Security personnel wear white. The complex boasts its own hospital, a collection of restaurants and a swimming pool surrounded by palm trees.
* The workers, 86% of whom are under 25 years old, live in white dormitories with eight to ten people sleeping in a room. The living quarters have stairs running up the outside walls and the company has begun covering them with nets to prevent people from jumping.
* About 80% of the front-line production employees work standing up, some for 12 hours a day for six days a week, according to Liu Bin, a 24-year-old employee.
* “It’s hard to make friends because you aren’t allowed to chat with your colleagues during work,” Liu said at Shenzhen Kang Ning Hospital where he was seeking help for insomnia. “Most of us have little education and have no skills so we have no choice but to do this kind of jobs. I feel no sense of achievement and I’ve become a machine.” (somewhere HAL9000 is smiling)
* “The fundamental problem for Foxconn and other Chinese factories is that their business model relies on a low-cost workforce sourced from rural areas of China,” said Pun Ngai, a professor of applied social sciences at the Hong Kong Polytechnic University “Due to its size, Foxconn has to be that much tougher than other factories, and has to become more emotionally detached from its employees than others.”
* Foxconn raised pay for workers by 30 percent to 1,200 yuan from 900 yuan a month, spokesman Ding said today. The additional money may not be enough to stem the suicides, according to Xiao Qi, a college graduate who works at Foxconn in product development. He earns 2,000 yuan a month, yet gets no joy from his job, he said. “I do the same thing every day; I feel empty inside,” said Xiao, who said he has considered suicide. “I have no future.”