The True Cost of Exporting: Human Resources
When in China
Sinogie Consulting CEO Bruce McLaughlin has had plenty of interaction with the employment environment in China, both as an employer and on behalf of clients. He offers tips on how to save time and money when hiring in China, most of which transfer as lessons for elsewhere.
Know the going rate: “Australian companies will deal with people with incredibly unrealistic wage expectations, particularly out of the good universities. Shop around and talk to people like Austcham [China-Australia Chamber of Commerce] to find out what a reasonable wage would be.”
Not just a salary: “The number you give when you’re making the job offer is their take-home pay. You need to add 48 percent or so on top of that. That covers the fee you pay [employment agencies like] Intellectech or Fesco, which is maybe 2-3 percent, and then tax, social insurance and all the other bits.”
Doing a background check: “It depends on what the client wants but we charge between US$2,000-5,000, for jobs that are paying at least A$100,ooo a year. That’s a background check of previous employment and a check of whether they’ve been involved in anything dodgy in the past.”
Watch the baggage: “Firing can be quite difficult. I know people have just ended up paying people to stay at home: it can be the only way you can do things. One due diligence mistake people sometimes make is to forget to check what’s going on with employees: you think you take on a company of 300 employees when it actually has 3,000, you’ve just never seen them. And you can’t get rid of them, it’s a cost you have to factor in.”
Replacement costs: “A lot of people I know have a staff turnover of one job having three or four people in a year. It’s lost time in training more than anything. If your staff are already at full stretch then it makes things a bit hard for them for a few weeks and bonuses can be a good idea in a situation like that.”
No hidden costs: “Do everything legally—it’s so easy not to, but when you let employees not pay tax it will come back to bite you rather than them because paying tax is your responsibility.”
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