Everything about China and it's culture

Everything about China and it's culture

  • Category Archives Expat in China
  • What Foreigners Looking for Work in China Need to Know

    The Labor Department announced no new jobs were created in August in the United States. With fears of a double dip recession rising, the unemployment situation, already mired at 9.1%, could get worse before it gets better.

    Many Americans are looking to China’s soaring economy for job opportunities. Firms such as Apple , Goldman Sachs ,and Microsoft have announced they will add staff in China. Citigroup said it would triple the number of employees in the country from three thousand to ten thousand within three years. Even Google, which shut down its search engine in China last year and began redirecting users to its Hong Kong site, is hiring.

    Two years ago, seemed to suggest that foreigners could find jobs in China, even if they didn’t speak much Mandarin or didn’t know about the local culture.

    But is that reality?  The simple answer is no.

    Working in China can be a great career experience. Younger executives get far more responsibility than they would in America. Charlotte, one of my firm’s analysts, leveraged her China experience with us to pursue an MBA at the University of Pennsylvania’s Wharton Business School.

    With China becoming the growth engine for some of the largest companies like Intel, Disney and Starbucks, executives with China-based experience are likely to be in high demand.

    There are, however, serious downsides to working in China to think about before heading over. Unlike several years ago, being able to speak English or having overseas work experience does not automatically give you an advantage.

    Nearly one million Chinese have studied abroad in the last three decades. Almost 30 percent have returned to China in recent years because of job opportunities and daunting U.S. work visa policies.  Nearly 80 percent of my firm’s recent hires in the past two years studied in America and the United Kingdom.

    Companies often prefer to hire these returnees because they can move with ease between Chinese and Western business environments. Given this pool of qualified Chinese, foreign job seekers have to work harder to prove their value. The Chinese government is also making it difficult for foreigners to get visas unless they have demonstrated expertise in sectors like finance and IT.

    Foreigners lucky enough to find jobs should also expect lower salaries than what they get at home. Even before the financial crisis, companies began phasing out expatriate packages with cars, chauffeurs and housing allowances – except for the most senior executives. Expats should expect to be paid a fraction of their salary back home until they can prove that they add value to the China operations.

    Often the best jobs are in smaller firms, run by executives that can show you the ropes of the Chinese business world. They are more likely to train you, and potentially pay you the high salaries you want.  Bigger multinationals often prefer to relocate someone from headquarters – who knows the company culture – to China for several years.

    The most successful foreigners often take a low paying job to start. After two or three years of proving their value, learning Mandarin, and networking, they finally find the compensation packages they were looking for.

    Despite the lower pay and the challenges, working in China can be a great experience and a stepping stone.

  • No rise in expat tax threshold

    The income tax threshold of 4,800 yuan (US$744) enjoyed by expats in China will remain unchanged when personal tax thresholds are raised.

    At present the threshold is 2,000 yuan with an extra 2,800 yuan for expats.

    From September 1, China is raising the threshold to 3,500 yuan but the extra sum for expats is to be cut to 1,300 yuan, leaving them with the same 4,800 yuan benefit.

    “We’ve received lots of inquiries from clients about the expatriate deduction,” Freeman Bu, an Ernst & Young partner in Shanghai, said yesterday.

    “They have argued that the cost of living is also rising for them as inflation is the same for Chinese and expatriates.”

    “The move is in line with China’s aim to revise its tax law to let low and medium income families benefit from tax cuts,” said Bu.

    “Expatriates are often deemed as high-income earners.”

    Bu said that expats earning close to 18,000 yuan a month would pay more under the new tax system, which meant that “probably the majority of expatriates will have to pay more on tax.” While for Chinese, those earning 38,600 yuan a month will pay more tax.

    “The ‘standard monthly deduction’ for expatriates were 4,000 yuan since 1994, this was increased to 4,800 yuan since 2006 and has remained at this level for the past 5 years, clearly the expatriate population has not benefited from the increase of the exemption threshold and this does lead to a perception amongst many expatriates that the overall tax burden has increased even though they too have been under the same inflation pressures,” said Joyce Xu, a Deloitte partner.

    She added that the primary objective for the current PRC Individual Income Tax reform is intended to reduce the tax burden for the lower income groups, whilst increasing “moderately” the tax burden for the high income groups.

    “Expatriates are traditionally regarded as the “high income group” as such, not surprisingly , the new individual income tax law has not provided visible relief measures to reduce the tax burden of this group,” the industry expert said. “This also reflects an ‘equalization’ in terms of exemption threshold between the PRC nationals and the expatriates. This, viewed in the context of the proposed new social security law where expatriates for the first time will also be paying PRC social security contributions on a compulsory basis, does seem to lead to not insignificant additional tax burden for the expatriates and the multinational companies.”

    “To better attract the international talent working in China, it is important that at the policy level, the expatriates are also provided with reasonable tax relief and an appropriate balance is trike between the need to alleviate the tax burden for the less well off and at the same time not inadvertently over tax the expatriate group unduely,” she added.

    Industry experts said the move came as no surprise as the 4,800 yuan threshold was unchanged last time thresholds increased in 2008.

    The threshold was raised from 800 yuan to 1,600 yuan in 2006, when expats’ extra benefit remained at 3,200 yuan, giving them a total deduction of 4,800 yuan from the previous 4,000 yuan.

    The threshold was further raised to 2,000 yuan in 2008.

    But the expat extra was cut to 2,800 yuan, leaving their allowance unchanged.

    China currently levies tax progressively on personal salaries in nine brackets ranging from 5 percent to 45 percent.

    From September 1, the 15 percent and 40 percent brackets will disappear and there will be a new 3 percent rate.

  • China eyes expatriate insurance fees

    Foreign companies in China face significantly higher costs because of a new social insurance law that will apply to expatriate employees for the first time from July 1.

    China’s first national social insurance law could require companies employing foreigners to pay up to Rmb4,324.56 ($667) per month in social insurance contributions, to pay for things like state medical insurance, pensions, workplace injury, unemployment and maternity insurance, according to employer lawyers.

    Foreign employees might have to pay up to a further Rmb1,285.68 per month each in individual contributions.

    Big areas of uncertainty remain, however, including whether the law will be voluntary or mandatory, and whether it will apply to all foreign workers – including those seconded from overseas – or only those working on local contracts. Treatment of nationals of Taiwan, Hong Kong and Macau is unclear.

    Beijing has yet to indicate whether localities will have discretion to decide which foreigners are affected, or whether there will be a national standard, and whether expatriates who leave China can withdraw some benefits. Detailed regulations to implement the law are not expected for several months.

    At a time when labour costs are rising rapidly in China, new social insurance levies on expatriate staff could further increase the cost of doing business in China. Income tax rates in cities like Shanghai – where the top levy is 45 per cent – are already seen as a disincentive to attracting foreign financial professionals.

    The European Union Chamber of Commerce in China has urged China’s ministry of human resources and social security to make contributions for foreigners optional. The chamber has complained of a worsening environment for European business in China in recent years.

    Lesli Ligorner, China employment law head at Paul, Hastings, Janofsky & Walker in Shanghai, says she believes expatriate inclusion will be mandatory. “It is going to affect labour costs significantly,” and could cause some employers to cancel costly medical insurance for their staff, she said.

    “The law could potentially affect any foreigner with an employment permit and a certain minimum stay in China”, says Ralph Koppitz of law firm Taylor Wessing, Shanghai.

    Jeffrey Wilson, counsel at JunHe Law Offices in Shanghai, who helped write a submission on the law on behalf of the American Chamber of Commerce in Shanghai, says he does not expect implementation in the short term. But most China-based employment attorneys expect that, in the longer term, inclusion of foreigners is inevitable.

  • New housing regulations prevent expats from owning more than one house

    Has the Shanghai laowai (老外) bug got into you? Have you been thinking of making Shanghai your new home? If so, then before you settle down you might want to check out these new regulations. According to China’s Ministry of Housing and Urban Rural Development, purchases of apartments/houses by foreigners could be restricted or even capped in a move to combat speculative money from overseas.

    If the rumors are true then these new rules, fresh out of Beijing, would mean that foreigners can only purchase one flat for their own personal use, and are required to provide proof of having worked in the country for at least one year prior to the purchase. Furthermore, overseas companies would only be permitted to buy non-residential properties in cities where they are registered.

    The government is getting stricter and stricter with housing rules for expats. Back in the good old days of 2002 foreigners could buy property as free as locals. Revisions to the regulation came in 2006 which then required foreigners to demonstrate they had worked/studied for more than a year in China, but did not limit the number of home purchases allowed by overseas individuals. Yang Hongxu, an analyst with Shanghai-based E-house China Research and Development Institute, said that “The new policy, the most stringent on property purchases by foreigners so far in China, is in line with the country’s latest tightening measures to rein in property speculation”.

    Considering the extortionate prices of property in Shanghai, we are wondering how many foreigners are actually willing/able to purchase property here?!


  • Being Jewish in Shanghai

    Just past sundown on the last Thursday in August, Sophie Rosen, a 12-year-old American expatriate, strode to the front of the Ohel Moshe Synagogue in Shanghai, and became the first bat mitzvah in the venerable building’s 83-year history. She wore a purple qipao buttoned to the top of her neck, and a canny smile that she shared, first, with Shanghai’s rabbi, an orthodox member of Chabad, then her mother and father, reform and conservative Jews, respectively, and then the assembled congregation, mostly non-Jewish, with a large Chinese contingent. "Me?" She said in a local Starbucks on the day before the event. "I’m just a normal Jewish girl, anywhere."


  • In pursuit of purity and the water of life

    In many a China emergency, American Jim Ellis is there, providing clean drinking water for earthquake survivors and victims of a typhoon, a chemical spill and blue algae.

    Throughout more than 40 years of doing business, American entrepreneur Jim Ellis has always based his enterprises on providing basic needs such as shelter and clean drinking water.

    But it wasn’t until the devastating Sichuan earthquake on May 12 last year that the former construction boss and maker of water filters was able to make a vital difference in lives of tens of thousands of vulnerable people.

    Ellis and employees of his company Paragon Water Systems flew into Sichuan just three days after the earthquake to install water filters in temporary tent cities. In many cases, he provided the only clean drinking water.

    One of the first foreigners allowed into the affected areas, Ellis and his team worked virtually non-stop for 15 days to install water filters and train local operators in 20 cities and towns.

    The filtration system they installed is capable of supplying water to 10,000 people a day. The systems were flown in from Canada within 48 hours of the quake.

    Still haunted by the devastation, Ellis says his enduring memory is of the strength and resilience of the survivors and helpers.

    "I have never seen so many people come together to help each other, there was so much devastation," he says. "The army was unbelievable; these young soldiers were out there digging through rubble with their bare hands, and putting up tents 24 hours day. The strength of the people in Sichuan in the face of something so dramatic and tragic was really amazing."


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