Open Discussion: China’s Labor Law

Monday, July 9, 2007 4:59

Moving to China for many rests on their ability to save money, and as we all know the cost and availability of labor have been one of the key considerations for investing in China.

So, when the new labor law drafts were being reviewed, managers up and down the east coast began to sweat bullets…

For Beijing is not middle managers who are working a few extra hours, but college students who are paid less an a pittance in foreign fastfood retail shops, child slaves working in the mines of Shanxi, migrant workers who build China’s glimerring buildings without pay, and others.

According to Eric Ardnt’s post on Crossroads:

If appropriately enforced, the LCL will help reduce the abuses that are leading to labor unrest such as that which recently resulted in the deaths of migrant workers at the hands of strikebreakers. However, as with so many laws in China, enforcement of laws is far more challenging than enacting them. Only time will tell if the LCL is able to help curb the many problems plaguing labor relations in China.

However, up and down the east coast, there are still a lot of concerns about how this new law will impact operations, and as such I would like to open the floor to readers.

  1. Will the new law have a significant impact on the operations of your firm?
  2. What are the three biggest issues for your firm?
  3. What did you do to prepare for the passage of the law?
  4. Will the new law prevent further investments, or catalyze your exit?
  5. Will these laws be enforced evenly across China’s regions?
  6. Do you think that foreign firms need to be more careful and protect themselves more than they used to when documenting hiring/ firing and employee performance?

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2 Responses to “Open Discussion: China’s Labor Law”

  1. University Update - Yahoo - Open For Discussion: China’s Labor Law says:

    July 9th, 2007 at 5:52 am

    […] Link to Article yahoo Open For Discussion: China’s Labor Law » Posted at All Roads Lead to […]

  2. Global 50 GM says:

    July 10th, 2007 at 1:36 am

    To say the least, this is going to be a mess for us (10,000+ employees in mainland China).

    It is an issue that legal, accounting, HR, and externals have all been working on since the first day the initial drafts were released.

    In answer to the questions:
    1) Without a doubt this will impact our operations in China
    2) PT labor management, unions, and firing
    3) See above
    4) Neither (already in 50+ China markets)
    5) Yet to be seen, but using history as best indicator – No
    6) Yes – Firms need to understand the best process for them, but careful documentation of the reasons for termination will be mandatory to protect against possible actions by local labor officials or union officials (if apart of).

    Larger firms are going to have much different experiences than smaller firms, so while it will not prevent us from future investments I have little doubt the little guys will have a harder time. Especially, if they do not have the internal resources to plan and implement strong HR policies.