Expanding into China offers companies plenty of growth opportunities, but it’s a notoriously difficult market to operate in. This is especially true when looking at the China Social Security system which requires different mandatory contributions from employees and employers in cities and states. These variations, coupled with China’s sheer size, add complexity to any global expansion. But keeping these key factors in mind can help companies better understand (and navigate) the complexities of China social security system.
How are contributions calculated in China?
The first step is to calculate bonus income by dividing the previous year’s salary by 12 (use starting salary for new hires). There are the minimum and maximum bonus bases, depending on the location. Then the premium rate is applied to the base, and this rate varies by region. Typically, the employee contribution rate is just over 10% and the employer contribution rate is 27-30%, subject to the premium income cap. All factors are subject to fairly regular rate changes, which can make it difficult for many companies to stay current. Likewise, it is the full responsibility of the employer not only to register with the local employment office but ut also to make timely payments to any scheme.
Are foreign workers and expatriates obliged to contribute to social insurance?
The national system requires expatriate employees to contribute, but some regions have different rules for foreigners. For example, Shanghai does not require expatriates to contribute to social insurance, and other cities may only require certain insurances, such as medical expenses.
Another exception concerns foreign employees whose country of origin has a social insurance contract with China and who, in this case, do not have to be paid (because the employee still contributes at home). These countries include Germany, Canada, Japan and others, where pensions and/or unemployment are exempt.
China’s Social Security System:
What Policymakers Need to Know Before Expanding
There is a significant amount of regulatory variation between cities, states, and industries, but the following provides a general guideline on what to expect when navigating China social security system.
Different industries will regulate pension requirements in different ways, so always be sure to follow the rules imposed by your particular industry.
This is about providing employees with access to area hospitals. However, it is very common in China for ex-pats to use private insurance to access higher-quality private hospitals. Understanding the differences (and options) between public and private healthcare coverage in China is essential.
The ability to make claims against these types of policies depends on the employee’s exit specifications. In general, unemployment insurance is available for periods of up to 24 months after a person leaves.
This is financial assistance paid to women after childbirth. Along the same lines, you should also know that it is illegal in China to fire a pregnant woman for at least a year after giving birth.
This is another factor that will vary widely, both by industry and by where a business operates.
Housing Fund: Perhaps the most interesting thing about China’s housing fund is that foreign workers don’t contribute. The amount of contribution from other employees again depends on the city in which a business is located and Hukou, the household registration system used in mainland China.
All factors are subject to fairly regular rate changes and you have a better option with Moore MS Advisory, which can make it difficult for many companies to stay current. Likewise, it is the full responsibility of the employer not only to register with the local employment office but also to make timely payments to any scheme.
Visit Here also Businesshunt360.com