China Work Culture
To succeed in business in China, it is vital for both employers and employees to have a strong understanding of the business culture.
As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about Chinese work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in China to start your expansion well-informed.
Work Culture in China
China’s economy is the second largest in the world and, according to the International Monetary Fund (IMF), it is continuing to develop. The population of one-and-a-half billion has a growing consumer base which attracts multi-nationals and an increasing level of expansion from international companies establishing a foothold.
The IMF predicted a nominal Gross Domestic Product of 15.6 trillion US dollars for China by the end of 2021 compared with US$20.5 for the United States of America, but the World Bank predicts a faster growth rate for China over the US.
China’s exports reached a record high in 2021, driving a US$535 billion surplus and building on US$2.5 trillion of exports in 2020 which made it the world’s largest exporting nation outside the European Union bloc. Raw minerals processing including metals, fuel, coal, fertilizers are at the heart of China’s industrial base along with manufacturing machinery, textiles, and armaments.
The potential is huge. But so are the challenges of operating in this huge market – and not simply those surrounding compliance with employment, payroll and tax regulations imposed by the state, provinces, and territories.
Chinese work culture demands major adjustments for most incoming foreign companies. Operating successfully will depend on making those adjustments. Chinese people take a philosophy of focused, hard-working diligence all the way from the schoolroom to the workplace. Respect for their family members is very much the philosophy that is applied to their working lives.
It is time to ‘get down to business’ so here are a few tips on taking the right steps; and avoiding the pitfalls!
- Language: China’s business language is Mandarin; taking an interpreter to a business meeting is advised
- Contact: If exchanging emails, keep language simple and direct. Clever or funny remarks may be ‘lost in translation’
- Business Meetings: ‘Respect’ is the key world for business dealings, both in personal interaction and operating within strict company hierarchies. The most important person will enter the meeting room first and introductions will continue in that order. Avoid embarrassing exchanges at all costs
- Negotiations: Building trust is another vital element in developing the business relationship as part of the negotiating process
- Punctuality: It is always best to be on time!
- Greetings: These usually begin with formal introductions to the most senior members of the company, but small talk about family is also an important element in building the relationship. Foreigners should be ready to respond to the question: What do you think of China?’ This is all part of ‘guanxi’ … building connections and networking to build a platform of trusted contacts
- Business Cards: Present them as if offering a gift, with both hands. A Chinese translation on one side will be appreciated. Exchanging cards is an important part of the process
- Dress Code: Play safe and dress formally for initial meetings. Big corporations and state organizations may stay formal whereas, in common with many western countries, hi-tech operations are often informal
- Sealing the Deal: It is vital to have worked out who are the decision makers from your business meetings
- Entertaining: It is usual to conduct business in a restaurant over lunch or dinner. Entertaining plays a central role in conducting business in China and is part of creating a harmonious relationship
- Gift-giving: Something small and thoughtful will be a talking point and a good way of breaking the ice
Chinese Minimum Wage
There is no over-riding national minimum. However, individual provinces, territories and municipal authorities are expected to revise their own rates every few years and record them with the State Council, reflecting local conditions.
In August 2021 Beijing, for example, increased the monthly minimum from CNY 2,200 to CNY 2,320 (€313, US$362). Shanghai already had the highest monthly minimum of CNY 2,590 (€350, US$404).
Thirteen provinces also increased minimum wages – Heilongjiang, Hubei, Jiangsu, Jiangxi, Ningxia, Shanxi, Shaanxi, Tibet, Xinjiang, Zhejiang, Shandong, Jilin, Hainan, with the prospect that more would follow this trend.
Provinces and territories regularly adjust minimum levels to reflect changes in the cost of living and other economic factors.
Probation Period in China
Probation or trial periods are generally included in an employee’s work contract, for instance:
- 3 months – 1 year: 1 month or less
- 1 – 3 years: 2 months or less
- No fixed term contract: 6 months or less
There is no probation for contracts less than three months or for part-time workers, or for a fixed-term contract. Only one probation period is allowed per employee. Chinese Labor Law states that employees cannot be summarily dismissed without good reason during their trial period. During the trial period, the employees’ wages shall be at least 80% of the contracted salary or 80% of the company’s set wage for the job and no less than the minimum wage set by the local authority.