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25 October, 2016
As it continues to internationalize its economy, China is opening up new avenues for highly skilled foreign professionals to take up employment in the country, while state-owned and foreign-invested companies are being encouraged to recruit experienced expats, particularly for managerial positions.
As reported in Expat Briefing recently, an increasing number of foreigners have applied for a Chinese "green card" since a change to rules in Shanghai in July 2015, and new rules put in place in 2013 have made it easier for foreign personnel to be employed in China generally. These rules are summarized in special feature. However, first, we provide an overview of what life in China is like for expats.
The obvious cultural differences between East and West can make the prospect of working in China, or living there as an expat for a prolonged period of time, seem very daunting, especially for those born and raised in Europe, North America and the 'West' generally. However, as China's economy has grown and foreign investors have piled into the country at a rapid rate, the domestic labour supply has failed to keep pace with the growth of "new" industries like IT and financial services and the skillsets these sectors require. Therefore, China is home to a growing group of expat workers from all corners of the globe who have made the country their temporary home.
If nothing else, a move to China can be very financially rewarding for many expats. Indeed, according to HSBC's Expat Explorer Survey 2016, foreign workers are finding China an increasingly favourable place in which to live and work. Over one-third (34 percent) of the expats responding to the survey moved to China to improve their job prospects compared with 25 percent globally, while more than half (54 percent) believe that moving to China is indeed good for their career progression, compared with a global average of 43 percent.
What's more, one's salary in China seems to go a long way. Almost two thirds (66%) of expats in China say their disposable income has increased (compared with the global average of 56%) with the same proportion (66%) seeing an increase in the amount of money they can save. One in five expats in China earn more than USD200,000 a year, twice the global average of 11 percent.
Pursuing a career in China also comes with plenty of perks, according to Expat Explorer. Three in five (60%) expats in China receive an airfare allowance, compared with 33% globally, while almost two thirds (66%) receive an accommodation allowance, more than twice the global average. Nearly two-fifths (38%) receive a relocation allowance or mobility premium.
Language and Culture
While many expats say that China offers a high quality of life overall, the linguistic and cultural differences will be stark for many newly-arrived expats, and adjusting to the Chinese way of life is usually cited as the most common problem for foreign workers.
Although there are concentrations of foreigners in some major cities, notably Beijing and the coastal cities of Shanghai, Shenzhen, and Guangzhou, where you can expect to find a parallel 'Western' life-style and facilities, other parts of China can potentially be quite lonely places for expats, especially those experiencing difficulties learning the local language and integrating into the culture generally.
Few people in China speak English, even less so outside of the major coastal cities, so this makes learning Chinese (which is Mandarin in most parts of China, and Cantonese in the south and Hong Kong) to at least a rudimentary level essential. However, the language barrier is the most significant challenge waiting expats in China, with expats generally reporting that Chinese languages are significantly more difficult to learn than many others.
Of course, if you are employed at a facility operated by a Western company, even in a remote region, you may well find a nucleus of other foreigners and Westernised facilities which may dull the shock of a transition to China. However, expats report that fully immersing oneself in the local culture is generally a very rewarding experience, and those that do so during their period of expatriation tend to be much happier for it. Conversely, those who isolate themselves from Chinese life and associate only with other Westerners will be unlikely to enjoy the experience of living and working in China.
Obviously, the Chinese don't only live differently from most other cultures, they also work differently. So knowing how Chinese employees relate to one another will help ease the transition of working in a predominately Chinese organisation, while hopefully reducing the chances of your offending someone! Here are a few tips: in terms of business culture, Chinese people are normally very punctual, and it is considered rude to be late for business meetings; it is customary when meeting someone for the first time to shake hands and when giving or receiving a gift or business card, and it is customary to hold it with both hands. Chinese people consider gifts as an important show of courtesy.
In terms of professional relationships, 'Face' is the key to understanding how to behave socially in China. In countless ways, it is necessary to be sensitive to the nuances of social and family position, in terms of conducting a conversation, your bodily behaviour, and in such matters as paying for things.
Life in China
Although China has embraced capitalism and foreign investment over the last couple of decades, it is still an intensely bureaucratic society. In China, procedures that might be relatively painless in most advanced countries, for instance opening a bank account, will invariably involve queuing and navigating various bureaucratic obstacles. Indeed, setting up basic amenities is often an arduous task for expats in China, particularly healthcare.
A local bank account is, however, going to be a necessity for expats expecting to reside in China for reasonably long periods of time unless they want to pay often hefty charges for withdrawing money from foreign bank accounts at ATMs. You can also expect to use cash more than plastic in Chinese shops and restaurants.
Compared with some Western nations, China is a relatively safe country for foreigners. Expats are unlikely to experience serious crime, although it is wise to keep a tight rein on your belongings in the thronging crowds of the major cities where pickpockets are known to operate.
On the subject of China's thronging cities, dense crowds are something that expats also have to get used to if living in an urban area, even if those already accustomed to city life. And as was highlighted at the time of the Beijing Olympics, pollution is an issue, and many people choose to wear masks to filter particulates from the smog-like city air – or simply stay indoors.
Lastly, it also worth being aware of the politics of China. Although China claims to be a more open and tolerant society than in the days of Chairman Mao, the Communist Party retains an iron grip on power, and any acts of dissent by the local population are usually dealt with fairly ruthlessly by the authorities. While the political state of affairs shouldn't necessarily endanger foreigners going about their daily business, the Government still practices censorship, and Beijing has been widely condemned internationally for blocking certain websites that might offer criticism of the regime. In spite of the State's tight hold on the media, digital or otherwise, telecommunications infrastructure in the sorts of areas that expats are likely to live is generally of a high standard, and mobile telephony in China is amongst the most advanced in the world.
Permanent residents are subject to tax on their world-wide income. Non-residents pay tax only on Chinese-source income during the first year of residence. Expats resident in China between one and five years pay tax on local-source income and income remitted to China from abroad. Only individuals staying in China for more than five consecutive full tax years are taxed on worldwide income, as from the sixth year for each full tax year spent in China.
For wages and salaries received in China, individuals are entitled to a fixed monthly deduction of RMB3,500, but foreign nationals are entitled to an additional fixed deduction of RMB1,300. Tax rates vary from 3% to a maximum of 45% on monthly earned income over RMB80,000. Employers operate a 'PAYE' withholding tax system for tax on salaries and social security contributions, which bear more heavily on employers (20% of payroll) than on employees (8%).
Withholding tax of 10% applies to dividends, interest, royalties and capital gains.
China has signed tax treaties with over 90 countries. The treaties mean that the amount of withholding tax charged on money flowing in and out of China is reduced.
On July 12, 2013, the State Council promulgated a set of new rules governing the entry of foreigners into the People's Republic of China, the Regulations on the Administration of the Entry and Exit of Aliens. The new rules entered into effect on September 1, 2013, and replaced the former Rules for the Implementation of the Law on Administration of the Entry and Exit of Aliens.
The new regulations add additional categories to the existing visa system to make it easier for foreign personnel to be employed in China. These are described in the list below, but in summary, under the new Regulations, an "R" visa designed to attract foreign talent has been added into the new system. The current business visa, the "F" visa, will be issued to visitors coming to China for non-commercial official visits; an "M" visa has been added for business and trade purposes. Tourists will still apply for an "L" visa, while overseas Chinese holding foreign passports may obtain a new "Q" visa for home visits, with which they may be granted a longer stay than ordinary tourists.
The "dependent visa" proposed in the draft was not retained in the final version; spouses, parents, children under 18, and spouses' parents may obtain a new "S" visa for purposes of accompanying foreigners who reside in China for work, study, or other purposes or those coming to China for other personal matters.
The new visa categories are as follows:
Most visa holders will also need to apply for a residence permit from the local public security bureaus within 30 days of entry into the country, according to the Law on the Administration of Exit and Entry. The Regulations prescribed five types of residence permits: work, study, journalist, reunion, and personal, together with their respective required supporting documentation.
Generally, the new visa rules have been welcomed by recruiters and advisers and the new 'R' category is expected to lead to lower application processing times compared with the standard 'Z' visa, and increase the pool of much-needed foreign workers in China. Ambiguities remain in the new rules, however. For instance, it is not clear whether foreign workers must register at a local police station each time they visit another city in China, and whether they must re-register upon their return. The lack of clarity surrounding this aspect of the new regime could be a problem for foreign executives at regional headquarters of multinational companies, as well as for journalists reporting from different parts of the country.
The Government is expected to issue further regulations to clarify certain aspects of the new visa rules, but only time will tell if the updated regime is an improvement on the old one.
For more information on all aspects of living in China, from money and finances to health care, education and employment, please visit the China section of Expat Briefing.
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