1. China Compensation Benchmark: A Survey of Salary, Taxes
& Benefits
www.psschina.com /china-business-blog/china-compensation-benchmark-a-survey-of-salary-taxes-benefits
Last time we took a look at some of the best practices for hiring staff in China your factory should be following, and
in my final blog today I want to share a a survey of salaries, taxes and benefits for Shenzhen, Guangdong and
Hunan to give you a bit of an inside look at compensation benchmarks in China.
The following blog is based on excerpts from the whitepaper entitled “Foreign Manufacturer's Ultimate Guide to
Hiring, Training, Managing & Firing Staff in China” which can be downloaded in its entirety right here!
China Compensation Structures
Let’s cut to the chase, at the end of the day, salary plays a big role in employee happiness. It’s not just the amount of
salary, but also the perception that they are being paid a fair wage is important to staff in China.
So an employer needs to monitor the labor market to make sure the salaries offered to candidates are suitable to
attract the level of talent desired. The costs of housing, annual inflation rates and even the nations GDP all impact
staff salary expectations. While inflation and GDP figures are fairly easy to find and monitor in China,
wages/housing/spending power varies greatly from area to area within China.
To help with your benchmarking, this blog post offers the following:
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2. Typical Compensation Structure for the 6 Typical Employees in Shenzhen
Pros/Cons of various locations in S. China from corporate and employee perspectives
Typical Compensation Structure for the 6 Typical Employees in Shenzhen
Pros/Cons of various locations in S. China from corporate and employee perspectives
For your reference, here is a study our team conducted to help make decision about where to locate our new
assembly center when our long-term lease in the Buji district of Shenzhen was up for negotiation in 2015.
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3. Other
location in
current
district (Buji)
of Shenzhen
Other district
in Shenzhen
(LongGang
District)
Oher city in
Guangdong
Province
(Dongguan
City)
Other city
in
Guangdong
Province
(Huizhou
City)
Other city
in other
Province
(Hunan
Province,
Hengyang
City)
Remarks
1. Paperwork:
Cost/time/workload to
adjust our business
licenses and other
key documents if the
WFOE is moved (low
vs medium vs high)
low medium high high high
2A. Rents
(Estimated %
change)
0% 0% -30% -30% -86%
2B. Rental Trends.
What is the estimated
annual increase for
each location using
the historic increases
over past 5 years to
estimate the next 5
years?
11% 11% 10% 12% below 7%
3A. Labor Rates
(Estimated %
change)
0% 0% -26% -33% -44%
3B. Labor Rate
Trends. What is the
estimated annual
increase for each
location using the
historic increases
over past 5 years to
estimate the next 5
years?
11.40% 11.40% 8.59% 9.60% 11.77% Hard to predict
the future as
Gov't can
change the
minimum
wage levels on
short notice.
As the
economy is
slowing down,
we are hoping
the min wage
increases will
not be as
drastic in the
next few
years. This is
a national
rather than
regional issue.
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4. 4. Utility Costs
(Estimate of %
change for power and
water)
0% 0% 0% 0% 0% Utilities are
roughly the
same across
all
industrialized
parts of S.
China.
5. Ease of recruiting
factory workers
about the
same,
perhaps a bit
easier to
recruit if we
have easier
transportation
and living
conditions.
about the
same,
perhaps a bit
easier to
recruit if we
have easier
transportation
and living
conditions.
a bit easier a bit easier easier For this line
item we are
referring to
workers on a
production
line. Outside
of SZ it gets
harder to find
technical
skills,
experienced
managers
and/or English
skills.
6. Ease of recruiting
skilled office workers
and managers
easy easy a bit harder a bit harder much
harder
For this line
item we are
referring to
workers on a
production
line. Outside
of SZ it gets
harder to find
technical
skills,
experienced
managers
and/or English
skills.
7. Landlord
Relations
depends on
location
depends on
location
depends on
location
depends on
location
depends on
location
8. Tax incentives
from local
government
0% 0% 0% 0% should be
available,
however
need to
further
check with
local
government
Tax incentives
unlikely to play
a major role in
the decision
making
process for
our industry
and any tax
incentives that
are offered
usually expire
within a few
years.
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5. 9. Estimated cost
per square meter to
buy (rather than
rent) factory space:
How has this #
changed over past 5
years and what is the
estimate for future
based on past 5
years?
6000-8000
Yuan /sqm
Going up
20% each
year
6000-8000
Yuan /sqm
Going up
20% each
year
4000-5000
Yuan /sqm
Going up
15% each
year
3000-3500
Yuan /sqm
Going up
15% each
year
1000-2000
Yuan /sqm
Going up 8-
10% each
year
10. Environment
(quality of life, access
to transport, food,
shopping…) for
employees
it depends on
which
industrial
park chosen,
some are
good, some
are not good.
it depends on
which
industrial
park chosen,
some are
good, some
are not good.
it depends
on which
industrial
park
chosen,
some are
good, some
are not
good.
it depends
on which
industrial
park
chosen,
some are
good, some
are not
good.
it depends
on which
industrial
park
chosen,
some are
good, some
are not
good.
There is large
variation
among options
in any given
area.
11. Cost of Living Very High High Medium Medium-
Low
Low
That concludes post no. 8 out of 8 in my 'hiring in China' series. I sincerely hope that you found this series of value
and please feel free to share your thoughts if there is anything else that you'd like to add to this post, or if you have
any questions please reach out to me by leaving me a comment below.
Related Topics: hiring in China | compensation
Mike Bellamy
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