Labor Market & Salary Report
2016 | 2017 9th Edition
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Labor Market & Salary Report 2016 | 2017 9th Edition
Key Developments General Economic Conditions
GDP expected at 6.7–6.9% in 2016, above the
government bottom line target of 6.5%
Services sector accounted for 54.1% of the GDP
in 2016Q2, above half the economy for the sixth
consecutive quarter
Domestic consumption sees a slight slowdown,
though still in robust double digit growth
High exposure to debt: 248.6% of GDP
Labor Market Structure
Retirement age expected to be gradually raised
starting in 2017
Hukou reform: All provinces to present their plans
before the end of 2016; limited scope of reforms
expected, unlikely to increase labor flexibility
Labor Market Developments Urban job creation in 2016Q2 at 77% completion
of annual target
All regions of China report more job vacancies
than job seekers in 2016Q2, indicating labor
shortages; in western China this gap has even
increased
Resilient labor market due to the growing role of
services in the economy
Wage Developments Average wage growth accelerated for the first
time since 2011
Minimum wages to increase 10% every year under
13th Five Year Plan, which puts more emphasis on
productivity gains
Overall slower productivity gains, as services take
over the economy
Survey Results: Wage Adjustments
10.20
8.90 8.80
8.10
7.10
6.23
2012 2013 2014 2015 2016 2017
Wage Growth Development at German Companies in
China (%) Nominal growth
German companies expect wage increases of
6.23% in 2017, a record low in percentage since
the Chamber of Commerce in China began
measuring wage increase expectations
Only Guangzhou and Shenzhen expect average
wage growth above last year (7.12% this year)
Production workers, with an average expected
wage increase of 6.41%, experience the highest
drop in percentage points in their wage increase
49.9% of surveyed organizations are confident
productivity gains will still be able to match wage
increases
Survey Results: HR Environment
Improving internal processes and increased
automation are key factors for driving productivity
The impact of rising labor costs on operations
remains high despite slower wage growth;
recruiting and retaining qualified staff follow suit
as major business challenges
Engineering / R&D, Management, Technical Sales
& Sales positions: Most difficult to recruit
61.5% of survey participants report additional
training is necessary although satisfaction with the
technical and professionals skills of staff is high:
More than 60% satisfaction for the majority of
items measured in the survey
Only 0.9% of companies report strikes in 2016,
down from 12.2% in 2013
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Labor Market & Salary Report 2016 | 2017 9th Edition
Content I Labor Market Environment
1. From Fast to Steady
2. A Bird’s Eye Perspective:
China’s Macroeconomic Indices
3. Labor Market Structure
4. Labor Market Developments
5. Notes
II Wage Developments in China
1. National Wage Developments
2. Provincial Wage Developments
3. Wages by Ownership and Industry
4. Productivity
5. Notes
III General Survey Results
1. Wage Developments at German
Companies in China
2. Regional Wage Developments
3. Wage Levels
4. Productivity
5. Wage Determination
6. Collective Action and Trade Unions
7. Additional HR Data
8. HR Challenges, Retention & Recruitment
9. Foreigners
10. About the Survey
11. Profile of Companies and Contributors
12. Notes
Survey Results: Compensation Data
1. Introduction
2. Regional
3. East
4. North
5. South
6. Industry
7. Company Size
8. City Tier
9. Level of Pay
IV Appendix: Definitions
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To access specific compensation data, please
contact:
Dr. Sigrid Winkler
Executive Chamber Manager
German Chamber of Commerce in China | Shanghai
Tel. +86 21 5081 2266
Contact
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49
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.4
Contribution to GDP by Sector (%)
Quarterly Data, 2012-2016
Contribution to GDP and Growth by Industry (%)
First Semester 2016
I Labor Market Environment 1. From Fast to Steady
After nearly two decades of rapid economic expansion,
China’s double digit growth years took the country on a
journey that would transform it into the world’s second
largest economy and the largest exporter. It was only after
2009, amid turbulences in the global economy, that the
previous rocket-charged years gave way to a more
moderate growth (8.1% average growth between 2011 and
2014). Last year, China’s official GDP growth rate was 6.9%.
Nevertheless, China’s growth still accounts for one third of
the world’s, with its GDP representing 15% of the total.
The country is at a turning point, shifting gears to move
from an export-oriented and low value-added economy to
one that looks to domestic consumption, high-value added
manufacturing and the services sector to catalyze its
economic growth. In this transition, China is moving towards
a more sustainable growth model. One that should take into
account the improvement of social conditions (broader
access to public services, improved living standards) and
more respect towards the environment (energy efficiency,
low-carbon emissions). The 13th Five Year Plan (FYP),
approved in March 2016, further emphasizes these points.
2. A Bird’s Eye Perspective: China’s Macroeconomic Indices
China’s first half of 2016 concluded with a year-on-year (y-
o-y) GDP growth of 6.7% - above the bottom line goal of
6.5% for this year - and within the government’s growth
expectations, set between 6.5% and 7.0%. Both in the first
and second quarters GDP increased by 6.7%, exceeding
some analysts’ predictions of 6.6%. 1
In the first half of 2016 some industries have done notably
well, with growth rates outpacing growth of the broader
economy. Ahead of the pack is real estate, with a 9.0%
increase. It is closely followed by “other” services (8.9%
increase), a miscellaneous that combines scientific research,
healthcare, education, services to households and other
services, the combined total of which make up 21.8% of
China’s GDP. In the secondary sector, construction grew by
7.5%, while accounting for almost 6% of China’s GDP.
Finance grew by 6.7%, same as the overall economy. Among
the lowest industry-specific growth rates it is worth
mentioning manufacturing and mining (also including
production and supply of gas, water, and electricity): The
highest contributor to the economy managed to grow by
only 5.9%, due to overcapacity issues and weak global
demand. The “Made in China 2025” initiative aims to
readjust China’s manufacturing focus on sectors such as
GDP Growth China (%)
Quarterly Data, 2011-2016
6.7 6.7
0%
2%
4%
6%
8%
10%
Q1 Q2
2016
Quarter
Year
1 2 3 4
2011
1 2 3 4
2012
1 2 3 4
2013
1 2 3 4
2014
1 2 3 4
2015
Primary Secondary Tertiary
Source: National Bureau of Statistics China (NBS)
50%
Q1 Q2 Q3 Q4
2012
Q1 Q2 Q3 Q4
2013
Q1 Q2 Q3 Q4
2014
Q1 Q2 Q3 Q4
2015
Q1 Q2
2016
Source: NBS
Primary Secondary Tertiary
Source: NBS. The bubbles’ dimensions represent the contribution towards GDP during the first half of 2016. Next to each industry the y-o-y value is specified
21.8
Other services, 8.9
33.7 Manufacturing & Mining, 5.9
Real estate, 9.0
6.6
5.8
Construction, 7.5 Hospitality, 6.9
1.8
Finance, 6.7 9.2
Retail, 6.2 9.8
4.6
Transportation, 4.6
6.7 Agriculture, 3.2 6.7
21.8
33.7
0% 10% 20% 30%
6.7%
Contribution to GDP
Ye
ar o
n y
ear
Gro
wth
Growth of Retail Sales, Production and Fixed-asset
Investment (%)
0%
2%
4%
6%
8%
10%
12%
14%
Investment Production Retail
J/F Mar Apr May Jun Jul Aug Sep Oct Nov Dec J/F Mar Apr May Jun Jul Aug
2015 2016
Source: NBS. Retail sales and value-added in industrial production growth rates compared to the same period last year. Fixed-asset investment data is cumulative
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4.3 5.2
1.5 1.5 0.5
-1.9
1.3
3.5
-7%
-5%
-3%
-1%
2%JA
N
FE
B
MA
R
AP
R
MA
Y
JUN
JUL
AU
G
SE
P
OC
T
NO
V
DE
C
JAN
FE
B
MA
R
AP
R
MA
Y
JUN
JUL
AU
G
Price Level Development 2015-2016 (%)
Variation over the Same Month in the Previous Year
Breakdown of Consumer Price Developments
Average Variations (%) from January to August 2016
industrial automation, medical devices and new information
technology in order to enhance the country’s overall
manufacturing competitiveness.
China’s economic transition is aimed at three vectors: A
strong services sector, which will hold the lion’s share of the
economy; a well-oiled domestic consumption engine, which
in turn will allow for a decrease in the relevance of public
expenditure; and growth sustained by innovation, rather
than fueled by credit.
And how is China performing on these three fronts? When it
comes to the role of services, it is clearly doing well. The
tertiary sector accounted for 54.1% of China’s GDP in the
second quarter, making it the sixth consecutive quarter in
which its contribution has remained above 50%. However,
there is ample room for growth: Domestic demand for some
high-end services cannot yet be satisfied, with Chinese
going abroad for medical care or studies. With increasing
incomes, the share of services in the economy is expected
to grow further. In high-income OECD countries, services
account for at least 70% of the economy, even among
heavily industrialized members such Germany or Japan.2
Business sentiment – measured by the Purchasing
Managers’ Index (PMI) – also reflects a higher optimism in
services companies than in manufacturing.3
China’s urbanization rate, increasing minimum wage rates
and the sheer size of its consumer class (somewhere
between 100 and 300 million people in 20134) are meant to
drive domestic consumption. In the first nine months of
2016, retail sales recorded an average growth of 10.3%,
only slightly below the 10.5% growth for the same period in
2015, but falling far behind the 12.1% of 2014. However,
growth is still robust and above two digits. Imports rose
unexpectedly by 1.5% in August 2016, turning around a
12.5% drop in July.5 Consumer price increases have overall
remained below 3%, although food has been adding quite
some pressure, especially in the months from February to
April, with a rise of around 7.4%. Tobacco & liquor (was
integrated with food in the metrics provided by the National
Bureau of Statistics since January 2016) and healthcare
have also been pushing prices up, with average increases of
4.3% and 3.5% respectively in the first nine months of this
year.
It is with regard to its debt levels that China is struggling the
most. Whereas in 2008 only approximately two RMB was
necessary in order to generate one unit of GDP growth, by
2015 4.5 times as much were required.6 Due to these
diminishing returns, larger amounts of capital have been
required to sustain growth. In 2008 China’s debt amounted
to 148.3% of its GDP (combining the volume of public,
corporate and household credits). By the end of 2015, debt
was 2.5 times the size of its economy (248.6%). 37% of this
Business Sentiment 2016
Purchasing Managers’ Index (PMI)
52.4
51.2
52.2 51.8
51.2
52.7
51.7 52.1 51.9
48.4 48
49.7 49.2 49.4
48.6
50.6 50 50.1
Producer prices Consumer prices
Source: Caixin / Markit. PMI values >50 indicate expanding business; values <50 indicate contraction. * September data: forecast.
Source: NBS. *As of January 2016 Tobacco & Liquor has been integrated with Food, though for the latter category is still possible to find the isolated price indices
JAN FEB MAR APR MAY JUN JUL AUG SEP*
Manufacturing Services
Source: NBS
2015 2016
Fo
od
, To
bac
co
&L
iqu
or*
Fo
od
*
Clo
thin
g
Ho
usi
ng
Ho
use
ho
ld
arti
cle
s
Tra
nsp
ort
atio
n &
C
om
mu
nic
ati
on
Ed
uca
tio
n,
Le
isu
re
He
alth
care
debt is from state-owned enterprises (SOEs), which only
account for 22% of GDP.7 Policymakers have several
regulatory levers at their disposal to address reform, such as
budget constraints to SOEs and/or local governments, or
the removal of government guarantees for debt to restore
the market’s risk-return trade-off. However, because these
reforms would come at the expense of short-term growth, it
is unlikely that the government will compromise the present
to miss its target of at least 6.5% GDP growth every year
until 2020. As a consequence, the growing amount of debt
in the economy remains the main cause of concern among
the three vectors for the economy’s rebalancing.
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Secondary Primary Tertiary
Distribution of Workforce Across Sectors (%)
3. Labor Market Structure
The sustained growth of the economy in the past decades
has brought with it changes in the structure of the labor
market and in Chinese society. Among the most notorious
developments are a dramatic increase of the population
dwelling in urban areas and an aging population.
In 2000, 36.2% of the country lived in urban areas and the
population aged 65 and over was 7.0%. Today, according to
the latest data available (2014), the picture is quite different:
54.7% of the population live in urban areas and 10.1% is
aged 65 or over (estimate for 2030: 13.1%). What is more
critical is the working age: Having reached its peak in 2010
(74.5%), today it stands at 73.4%.
To address a shrinking labor force, while still having to cope
with growth targets, the government can pull certain policy
levers: Namely, increasing the age of retirement, relaxing
the one-child policy, increasing labor market flexibility, and
promoting efficiency and productivity gains. Productivity
will be addressed in the next chapter (Wage Developments in
China), while the first three aspects are analyzed below.
The current retirement age is set between 50 and 55 for
women, while men retire at 60. Increasing the retirement
age is a sensitive issue, likely to encounter public resistance,
for it has remained unchanged in China since the mid
1950s.8 Policymakers have so far postponed reform, the
first eligibility adjustments are only expected in 2017.
Retirement age could be raised gradually by a few months at
a time between then and 2022, until the average retirement
age (currently: 54 years) reaches a reasonable level. The
measure not only aims to address a shrinking labor force but
also to alleviate pressure on China’s pension funds (each
local government manages its own pension): In 2015
pension funds were only payable for 17.7 months, down
from 19.7 in 2012.9
More specific action has been taken with regard to the one-
child policy. Since January 2016, all couples have been
allowed to have two children. This puts an end to the 36
year period of the most well-known feature of China’s
family planning policy. However, the phasing out of the one
child policy already begun in 2014, when almost all
provinces allowed a second birth if one parent was an only
child. From the 11 million couples who qualified back then,
only 16.8% had applied for birth certificates for a second
child by September 2015.10 For some analysts this proved
that a two-child policy is unlikely to dramatically increase
fertility and would not be sufficient to address China’s aging
population, at least within the next decade.
Finally, labor market pressure can be alleviated by increasing
labor flexibility. Enacting policies could, within a short
China’s Age Demographic Composition of Population (%)
Source: NBS. *2015: estimate from the German Chamber of Commerce. Official data not yet released at the time of closing this report; 2020: forecast from Euromonitor International
Source: NBS. *2015: estimate from the German Chamber of Commerce. Official data not yet released at the time of closing this report
22.9 20.3 16.6 16.5 15.3
70.1 72.0 74.5 73.5 71.6
7.0 7.7 8.9 10.1 13.1
Aged 0 to 14 years Aged 15 to 64 years >65 years
2000 2005 2010 2015* 2020*
31
.4
32
.2
32
.4
33
.2
34
.1
34
.6
35
.7
36
.1
38
.5
40
.6
41
.9
23
.8
25
.2
26
.8
27
.2
27
.8
28
.7
29
.5
30
.3
30
.1
29
.9
30
.3
44
.8
42
.6
40
.8
39
.6
38
.1
36
.7
34
.8
33
.6
31
.4
29
.5
27
.8
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
timespan, allow reallocation of surplus labor from sectors
with overcapacity (mining, cement, steel or iron ore) to low-
skilled services (retail, hospitality, real estate). In the pursuit
of eradicating poverty, the government aims to grant urban
residency to around 100 million people by 2020: The 13th
FYP proposes to achieve an urbanization rate of 60% by
then. This will entail further reform of the household
registration system (hukou) in order to broaden the range of
services that currently can only be enjoyed at the place of
registration. It is expected that all provinces will present
their respective plans for the reform of the hukou system
before the end of 2016.11 So far the scope of the reforms
seems insufficient: Beijing and Shanghai will be exempt, and
migrant workers in other large cities can apply for residency
identity (access to education and healthcare) after six
months but are not yet entitled to residency status (access
to housing or unemployment benefits).12
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6.3 6.6 6.8 7.0 7.3 7.5 7.7
11.7 12.2
12.7 13.1 13.2 13.1
7.2
2010 2011 2012 2013 2014 2015 2016*
Source: NBS & People’s Daily. *Jobs created in the first semester of 2016; expected graduates at the end of the year
New college graduates New urban jobs
4. Labor Market Developments
The ratio of job vacancies to job seekers in urban areas
remains above 1, indicating labor shortages (higher demand
than supply). However, the ratio contracted in the second
quarter of 2016 (1.07 to 1.05). The fall in the global figure is
due to labor market conditions in the central region (1.11 to
1.07); in western China it went up from 1.13 to 1.15. In the
coastal regions the ratio remained flat at 1.02.13
The Caixin / Markit PMI on employment in the service
sector saw three consecutive months of growth in the
second quarter of 2016, falling in July and stabilizing again
in August. The PMI on employment in the manufacturing
sector for July dropped again, adding to 33 months of
continuous decreases,14 as companies are reducing
headcount to cut costs and raise efficiency.
New urban job creation is going well: 7.7 million new jobs
were created in the first half of the year (77% completion of
this year’s target). Survey-based unemployment in July was
around 5% according to the National Bureau of Statistics,
whereas the unemployment rate as reported by the Ministry
of Human Resources and Social Security (MOHRSS) was
4.05%.
7.65 million new college graduates are expected to enter
the labor market by the end of the year, in addition to
another 4.35 million graduates from secondary vocational
schools.15 This adds pressure to the labor market and the
central government in Beijing is supporting
entrepreneurship not only to reboot growth in the economy
but also to alleviate tensions due to unemployment that
could potentially lead to social unrest. RMB 2.1 trillion have
been earmarked to support technology start-ups; tax
rebates and simplified administrative procedures have also
been introduced to promote creation of new companies.16
The State Council issued a circular in September,
encouraging investors to set up venture capital firms, while
further policy support is to be expected.17
Ratio of Job Vacancies*
Overall China and by Region 2016 Q1 vs. Q2
1.07
1.02
1.11 1.13
1.05
1.02
1.07
1.15
China East Central West
2016Q2 2016Q1
Source: China Ministry of Human Resources (MOHRSS) based on the tracking of 98 cities. *A value above 1 indicates labor shortages (demand greater than supply); below means oversupply
New Urban Jobs and College Graduates 2010-2015
In Millions
Migrant Workers
Flows of migrant workers are key to understanding China’s
labor market conditions. They highly correlate with
economic growth and reflect labor market dynamics better
than unemployment rates.18
Growth rates of migrant worker populations have been
continuously declining since 2010, from 5.4% then to 1.3%
in 2015, when migrant workers totaled 277.5 million. This
downward trend signals the end of surplus labor from rural
areas. During the last five years the decline in growth has
been steeper for migrant workers moving outside their
home province (0.4% in 2015), although they still represent
the majority (60.8%). A closing gap in wages between
regions (especially between eastern and western China)
paired with lower consumption expenses in western and
central regions compared to the East (11.4% and 0.3%
lower, respectively) have rendered the coastal areas less
appealing. Additionally, unclear property rights and limited
reforms of the hukou system (see also in this chapter: 3.
Labor Market Structure) help explain the decline of outside
province flows.
The coastal regions accounted for 38.8% of the total
5.4 4.4 3.9
2.4 1.9
1.3
5.5
3.4 3.0
1.7 1.3 0.4
5.2
5.9 5.4
3.6 2.8 2.7
2010 2011 2012 2013 2014 2015
Growth Rate of Migrant Workers (%)
Source: NBS. Outside province: Working in a province other than their household registration; Inside province: Working in the same province of their household registration
Inside province Outside province Total
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31.1
21.1
11.9
6.4 5.8
10.6 9.8
West 26.6
East 38.8
Central 34.6
Source: NBS
Secondary Primary Tertiary
38.4 39.4 47.1 49.0 52.1 55.2
61.2 60.2 52.5 50.7 47.1 44.1
0.4 0.4 0.4 0.3 0.8 0.7
2014 2015 2014 2015 2014 2015East Central West
0.9
1.7 1.3
2015 Variation over 2014
migrant worker population in 2015, a 0.9% increase from
2014, the lowest increase among all regions due to the
reasons exposed above. In coastal regions, migrant workers
mostly find employment in manufacturing and construction
(60.2%) industries, whereas in central (34.6% of migrant
workers, 1.7% increase) and western (26.6%, 1.3% increase)
areas they are mostly employed in low-skilled services: 49%
and 55.2% respectively.
Overall, the most important employers of migrant workers
are manufacturing and construction industries: 52.2% in
2015 (1.4 p.p. below the previous year). Certain low-skilled
service industries have been gaining weight among the
employment distribution of migrant workers: retail (11.9%,
+0.5 p.p.) and real estate (10.6%, +0.4 p.p.); meanwhile,
hospitality and transport have experienced labor losses
among this segment of the workforce: -0.2 p.p. and -0.1 p.p.
All in all, the latest labor market developments show
employment doing well. New urban jobs will surpass this
year’s target, with demand in urban areas staying above
supply. The growing role of the services sector in the
economy and postponed reforms of SOEs alleviate the
negative pressure on employment that might come with
slower growth. However, efficient allocation of resources
and productivity growth still need to be improved in the
future.
Manufacturing & Mining
Construction Retail Transportation Hospitality Real estate Other services
Tertiary Secondary
Migrant Workers Distribution of Employment by Sector
and Region (%)
Migrant Worker Distribution and Evolution (%)
By Region in 2015 and Evolution Versus 2014
Source: NBS
Migrant Workers Distribution of Employment by
Industry in 2015 (%)
Source: NBS. Agriculture (0.4%) and other secondary industries (2.9%) have not been included in the graphic
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5. Notes
1. “China second-quarter economic growth seen cooling
to 6.6 percent, weakest in seven years”. 11th July 2016.
http://www.reuters.com/article/us-china-economy-
gdp-idUSKCN0ZR0KI
2. Margit Molnar, Wei Wang. “A Snapshot of China’s
Service Sector”. OECD Economics Department
Working Papers No. 1217. 29th October 2015.
http://www.oecd-ilibrary.org/economics/a-snapshot-
of-china-s-service-sector_5js1j19lhbkl-en
3. For the purposes of this report we follow the Caixin /
Markit PMI, which has a stronger focus on small and
medium sized firms. The NBS PMI has a stronger focus
on state-owned enterprises, health and heavy industry
and might not come as relevant to German companies
as the former. For more information about the Caixin /
Markit PMI visit http://english.caixin.com/
4. Dominic Barton, Yougang Chen, Amy Jin. “Mapping
China’s Middle Class”. McKinsey Quarterly, June 2013.
http://www.mckinsey.com/industries/retail/our-
insights/mapping-chinas-middle-class
5. “China imports unexpectedly climb in August, export
slump eases”. 7th September 2016.
http://www.cnbc.com/2016/09/07/china-economy-
news-august-yuan-denominated-exports-imports-rise-
on-year.html
6. Scott Kennedy, Christopher K. Johnson. “Perfecting
China, Inc. The 13th Five Year Plan”, Center For
Strategic & International Studies. May 2016.
https://www.csis.org/analysis/perfecting-china-inc
7. David Lipton. “China’s Corporate-Debt Challenge”.
Project Syndicate. 18th August 2016.
https://www.project-syndicate.org/commentary/china
-corporate-debt-problem-by-david-lipton-2016-08
8. http://english.gov.cn/state_council/ministries/2016/0
3/01/content_281475299145295.htm
9. “China’s pension fund under pressure with raising
payments: Xinhua”. 6th September 2016.
https://www.reuters.com/article/china-economy-
pensions-idUSL3N1BI39B
10. “China’s new two-child policy not enough to cope with
aging population”. 19th April 2016.
http://newsroom.iza.org/en/2016/04/19/chinas-new-
two-child-policy-not-enough-to-cope-with-aging-
population/
9
11. http://english.cntv.cn/2015/11/11/VIDE144721860
0844615.shtml
12. W. Raphael Lam, Xiaoguang Liu, Alfred Schipke.
“China’s Labor Market in the “New Normal””. IMF
Working Paper, Asia and Pacific Department. July
2015.
https://www.imf.org/external/pubs/cat/longres.aspx?s
k=43072.0
13. The National Bureau of Statistics region’s official
classification is as follows: East: Beijing, Tianjin, Hebei,
Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian,
Shandong, Guangdong and Hainan; Central: Shanxi,
Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei and
Hunan; West: Inner Mongolia, Guangxi, Chongqing,
Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu,
Qinghai, Ningxia and Xinjiang.
14. http://www.tradingeconomics.com/china/manufacturi
ng-pmi & http://www.cnbc.com/2016/08/02/china-
caixin-july-services-pmi-declines-employment-
falls.html
15. http://www.eol.cn/html/c/2016gxbys
16. “China puts faith in start-up boom”. Financial Times. 9th
June 2016. https://www.ft.com/content/11aed256-
1209-11e6-91da-096d89bd2173
17. http://english.gov.cn/policies/latest_releases/2016/09
/20/content_281475446836280.htm
18. See note 12.
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10
II Wage Developments in China 1. National Wage Developments
China closed out 2015 with an average wage increase of
10.1%, recovering from a lower than two digit growth in
2014, and therefore growing faster than the previous year
for the first time since 2011. The average annual urban
wage was RMB 62,029, up RMB 5,669 from 2014. Note
that NBS wage statistics only consider urban wages.1
Disposable per capita income of households2 in 2015 was
RMB 21,966, representing a 7.4% in increase in real terms
from 20143 and outpacing GDP growth (6.9%). The
disposable per capita income for urban households was
RMB 31,195 (6.6% increase in real terms versus 2014),
whereas per capita disposable income for rural households
averaged RMB 11,422 (7.5% increase in real terms).
Efforts by the government to reduce the income gap –
mostly via the implementation of minimum wages since
2004 have been successful. China’s Gini Coefficient4 was
reduced from 0.481 in 2012 to 0.462 in 2015. (To provide
some context, according the latest data available from the
OECD, the Gini index for the US was 0.394 (2014) and
0.292 for Germany (2013).)
14.2
9.6 9.2 10.4
9.3 7.7 7.7 7.4 6.9 6.6
18.5 16.9
11.6 13.3
14.4
11.9 10.1 9.5 10.1 9.6
2007 08 09 2010 11 12 13 14 2015 2016*
GDP and Wage Growth (%)
2007-2016
Wage Growth Indicators China (%)
2012-2016. Nominal Growth
Wage growth (nominal) GDP growth
Source: German Chamber of Commerce in China analysis. *National wage growth estimate. The number of provinces issuing adjustments for wage guidelines and minimum wages varies every year
11.9
10.1 9.5 10.1 9.6
14.0
13.6
11.6 10.2
8.5
20.2
17.0
13.1 12.4 12.8
2012 2013 2014 2015 2016*
Source: NBS & German Chamber of Commerce in China analysis. *2016 GDP growth: IMF forecast. Wage growth 2016: Estimates from the Chamber’s own analysis
Minimum wage National wage Wage guidelines
Average Wage and Wage Growth
2007-2016
Wage growth in % (nominal) Average wage RMB
Source: NBS & German Chamber of Commerce in China analysis. * Average wage and wage growth: Estimates from the Chamber’s own analysis. Note: Annual wages based on 12 months; all wages are pre-tax
24
,72
1
36
,53
9
62
,02
9
67
,95
6
0%
4%
8%
12%
16%
20%
24%
0
15,000
30,000
45,000
60,000
75,000
2007 08 09 2010 11 12 13 14 2015 2016*
Source: NBS & German Chamber of Commerce in China analysis.* Regional wage developments estimates
0%
4%
8%
12%
16%
2010 2011 2012 2013 2014 2015*
West Central East National North East
Wage Growth by Region (%)
2010-2015. Nominal Growth
2. Provincial Wage Developments
Regional wages during the period 2010-2015 grew at fairly
similar levels across China’s main regions.5 Again, note these
statistics refer only to urban wages.
Urban wages in eastern and central China grew by 11.6%
and 11.7%, respectively. Western areas averaged at 11.5%
and the northeastern region (Jilin, Heilongjiang and Liaoning)
saw an average wage increase of 11.1%. However,
differences can be observed within regions at the provincial
level. Starting with the northeastern provinces, Jilin and
Heilongjiang urban wages increased 12.2% and 12.0%
respectively, while in Liaoning wages grew at 9.3%. In the
East, salaries were raised the least in Hebei (10%), in China’s
biggest export region, Guangdong (10.2%), and in Tianjin
(10.5%), while Hainan and Fujian stood out with biggest
increases: 14.9% and 13.1% respectively.
In general, the least developed regions are catching up with
the richest ones, as they have seen salaries growing faster
due to the government’s efforts to reduce regional gaps.
From 2010 to 2015, of the 12 provinces grouped under the
western region, 7 saw wages growing at faster speed than
the national average of 11.5% (Guizhou, Xinjiang, Sichuan,
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Chongqing, Gansu, Yunnan and Qinghai); Inner Mongolia,
Guangxi and Shaanxi reached between 11% and 11.4%;
Ningxia 10.4%; finally, only Tibet (6.8%) fell far behind
China’s average wage growth during that period.
By the time of publication of this report, 14 provinces were
identified releasing new wage increase guidelines for this
year, in addition to the Guangdong government announcing
that the 2015 guidelines will also apply to 2016 and 2017.6
The overall increase for these provinces is 8.5%, with a
strong downward trend in the medium (average) and
maximum tranches (see table Regional Wage Increase
Guidelines 2016). For instance, in 2015 Tianjin
recommended a minimum wage increase of 3%, an average
of 10.0% and a maximum of 18.0%; in 2016 the new
recommendations are 3%, 9% and 16% respectively. This
comes following the 13th Five Year Plan in an attempt to
stabilize wage adjustments and increase China’s wage
competitiveness (eroded recently against other neighboring
developing economies) and to better couple business
conditions with wage growth. Under the current five year
plan minimum wages will be adjusted at an average increase
of 10% every year, and should remain within 40-60% of the
respective area average monthly wage.
The introduction of the minimum wage in 2004 has been
Regional Wage Increase Guidelines 2016 (%)
Average Regional Wage Developments (%)
2010-2015
Province Minimum Average Maximum
Beijing 4.0 9.0 15.0
Tianjin 3.0 9.0 16.0
Hebei 3.0 8.0 13.0
Shanxi 4.0 7.0 11.0
Inner Mongolia 3.0 8.5 13.5
Liaoning 3.0 8.0 12.0
Shanghai 4.0 10.0 16.0
Jiangxi 3.0 8.0 -
Shandong 3.0 8.0 13.0
Guangdong - 8.5 12.5
Hainan 4.0 11.3 12.3
Sichuan 3.0 8.0 13.0
Guizhou 3.0 8.0 13.0
Yunnan 3.0 8.0 13.0
Xinjiang 3.0 8.0 10.5
Average 3.3 8.5 13.1
Average 2015 3.5 10.2 16.2
Average 2014 4.0 11.6 17.3
Source: German Chamber of Commerce in China research and analysis. Annual averages for each tranche are calculated on basis of the regional adjustments identified during the year. * Guangdong has not modified wage guidelines but on 28th February the provincial government issued a communication extending 2015 guidelines to 2016 and 2017
Province 2014 2015* 2016* Factor*
Shanghai 8,354 9,534 10,698 1.94
Beijing 8,522 9,435 10,396 1.89
Tianjin 6,064 6,655 7,204 1.31
Zhejiang 5,131 5,744 6,332 1.15
Jiangsu 5,072 5,611 6,073 1.10
Tibet 5,103 5,593 6,008 1.09
Guangdong 4,957 5,437 6,007 1.09
Qinghai 4,757 5,315 5,917 1.07
Chongqing 4,632 5,245 5,885 1.07
Guizhou 4,398 5,029 5,681 1.03
Sichuan 4,380 4,925 5,463 0.99
Fujian 4,452 4,925 5,427 0.98
Shandong 4,319 4,850 5,394 0.98
Xinjiang 4,456 4,916 5,380 0.98
Ningxia 4,572 4,945 5,346 0.97
Hubei 4,153 4,696 5,325 0.97
Hainan 4,157 4,716 5,291 0.96
Inner Mongolia 4,479 4,841 5,159 0.94
Shaanxi 4,211 4,593 4,934 0.90
Gansu 3,913 4,408 4,895 0.89
Anhui 4,241 4,566 4,867 0.88
Hunan 3,926 4,357 4,814 0.87
Guangxi 3,785 4,267 4,744 0.86
Yunnan 3,842 4,299 4,733 0.86
Jilin 3,876 4,301 4,711 0.85
Jiangxi 3,852 4,258 4,662 0.85
Liaoning 4,016 4,330 4,607 0.84
Shanxi 4,081 4,311 4,527 0.82
Heilongjiang 3,670 4,068 4,440 0.81
Hebei 3,760 4,087 4,430 0.80
Henan 3,515 3,763 4,075 0.74
Provincial Wage Levels
2014-2016. Average Monthly Wages, in RMB
Source: German Chamber of Commerce in China analysis based on 2014 NBS data. *2015 and 2016 are estimates considering GDP growth, inflation and wage increases in the past. Factor represents how much the regional wage is above/below national average for 2016. Note: all wages are pre-tax. Monthly wages are based on 12 months
14.9
14.1
13.6
13.4
13.3
13.2
13.1
12.8
12.2
12.1
12.1
12.0
12.0
12.0
11.9
11.9
11.9
11.5
11.5
11.4
11.4
11.2
11.1
11.0
10.9
10.5
10.4
10.2
10.0
9.3
9.1
6.8
Hainan
Guizhou
Xinjiang
Hubei
Jiangxi
Sichuan
Fujian
Chongqing
Jilin
Gansu
Shandong
Yunnan
Hunan
Heilongjiang
Shanghai
Qinghai
Beijing
CHINA
Anhui
Jiangsu
Inner Mongolia
Zhejiang
Guangxi
Shaanxi
Shanxi
Tianjin
Ningxia
Guangdong
Hebei
Liaoning
Henan
Tibet
Source: NBS & German Chamber of Commerce in China analysis
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Region Category Last Increase
A B C D E F (%) Valid since
Beijing 1,890 - - - - - 9.8 Aug 2016
Tianjin 1,950 - - - - - 5.4 Aug 2016
Hebei 1,650 1,590 1,480 1,380 - - 12.5 Jul 2016
Shanxi 1,620 1,520 1,420 1,320 - - 13.2 Jul 2016
Inner Mongolia 1,640 1,540 1,440 1,340 - - 10.4 Jul 2016
Liaoning 1,530 1,320 1,200 1,020 - - 24.6 Jan 2016
Jilin 1,480 1,380 1,280 - - - 12.2 Dec 2015
Heilongjiang 1,480 1,450 1,270 1,120 1,030 - 34.3 Oct 2015
Shanghai 2,190 - - - - - 8.4 Apr 2016
Jiangsu 1,770 1,600 1,400 - - - 8.5 Jan 2016
Zhejiang 1,860 1,660 1,530 1,380 - - 13.0 Nov 2015
Anhui 1,520 1,350 1,250 1,150 - - 28.8 Nov 2015
Fujian 1,500 1,350 1,230 1,130 - - 16.3 Jul 2015
Jiangxi 1,530 1,430 1,340 1,180 - 10.5 Aug 2016
Shandong 1,710 1,550 1,390 - - - 6.8 May 2016
Henan 1,600 1,450 1,300 - - - 16.2 Jul 2015
Hubei 1,500 1,320 1,225 1,100 - - 24.7 Sep 2015
Hunan 1,390 1,250 1,130 1,030 - - 9.3 Jan 2015
Guangdong 1,895 1,650 1,510 1,350 1,210 - 20.6 May 2015
Guangxi 1,400 1,210 1,085 1,000 - - 17.2 Apr 2015
Hainan 1,430 1,330 1,280 - - - 13.5 May 2016
Chongqing 1,500 1,400 - - - - 20.8 Jan 2016
Sichuan 1,500 1,380 1,260 - - - 10.7 Jul 2016
Guizhou 1,600 1,500 1,400 - - - 55.0 Jun 2016
Yunnan 1,570 1,400 1,180 - - - 10.4 Sep 2016
Tibet 1,400 - - - - - 19.2 Jan 2015
Shaanxi 1,480 1,370 1,260 1,190 - - 18.6 May 2015
Gansu 1,470 1,420 1,370 1,320 - - 9.4 Apr 2015
Qinghai 1,270 1,260 1,250 - - - 18.9 May 2016
Ningxia 1,480 1,390 1,320 - - - 14.2 May 2016
Xinjiang 1,670 1,470 1,390 1,310 - - 11.5 Jul 2016
Shenzhen 2,030 - - - - - 12.3% Mar 2015
Minimum Wage Rates in China 2016
Source: Provincial Human Resources and Social Security Bureaus and German Chamber of Commerce in China analysis. Categories refer to different wage districts or jurisdictions within a province. Local governments are responsible for setting minimum wages, *Increases are calculated as the average increases of adjustments for all categories in the region. With the exception of Shenzhen, only provinces and province-level municipalities set minimum wage levels.
China’s main way to tackle social inequality. Minimum
wages may have also contributed to structural reform of the
economy by means of pushing out low-wage firms and
freeing resources to be allocated in higher-income and
higher value added activities for which the country is
looking up to.
Minimum wage developments do not usually affect high-
wage firms, and recent developments will most likely not
impact German companies. Indeed, when asked again in this
year’s labor and salary survey (on which this report is based),
government wage guidelines ranked low among the factors
considered when fixing wage adjustments (see next
chapter).
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SOEs Hong Kong, Taiwan, Macau Shareholding LLC
Average Annual Wages by Form of Ownership (%)
2012-2015
3. Wages by Ownership and Industry
Foreign-owned companies remain the highest paying
average wages in China, with wages up to 37% higher than
the lowest paying domestic limited liability companies (LLC)
in 2014. Average wages in Chinese shareholding companies
are at similar wage levels as foreign-owned companies: They
caught up in 2008, and outpaced them between 2009 to
2011. It was not until 2013 that foreign-owned companies
regained their ground to become again the highest paying,
albeit with a narrower salary gap compared to shareholding
companies.
The average wage differential between state owned
companies (SOEs) and foreign-owned companies widened
after 2012. In 2013 and 2014 average wages at SOEs
experienced slower growth (around 8.9% each year) than in
the previous years: From 2009 to 2012 they grew at an
average of 12.4%. Mostly concentrated around industries
such coal, cement, steel or heavy manufacturing that are
being left behind by a weakened global economy and are
not well suited to meet domestic demand in the more
dynamic services sector (technology, entertainment and
healthcare). It is likely that in the future average wage
growth in SOEs will continue to slow down, as a trade-off in
order to maintain jobs. So far, Beijing’s SOE reform efforts
appear to point in the direction of consolidation.
0
20,000
40,000
60,000
80,000
100,000
2010 2011 2012 2013 2014 2015* 2016*
SOEs Hong Kong, Taiwan, Macau Shareholding Foreign LLC
Source: NBS & German Chamber of Commerce in China analysis. Average wages in RMB. *Estimates
Industry 2014 2015* Growth
(%)* Factor*
Finance 9,023 9,801 8.6 1.90
IT 8,404 9,300 10.7 1.80
Technical services 6,855 7,366 7.5 1.42
Utilities 6,112 6,676 9.2 1.29
Business services 5,594 6,009 7.4 1.16
Culture 5,365 5,820 8.5 1.13
Transport & logistics 5,285 5,774 9.3 1.12
Healthcare 5,272 5,750 9.1 1.11
Mining 5,140 5,279 2.7 1.02
CHINA 4,697 5,169 10.1
Retail & wholesale 4,653 5,152 10.7 1.00
Education 4,715 5,133 8.9 0.99
Real estate 4,631 5,039 8.8 0.97
Manufacturing 4,281 4,610 7.7 0.89
Construction 3,817 4,154 8.8 0.80
Residential services 3,490 3,802 8.9 0.74
Water & environment 3,267 3,544 8.5 0.69
Hospitality 3,105 3,396 9.4 0.66
Agriculture 2,363 2,592 9.7 0.50
Wage Developments by Industry 2014-2015
Ranked Based on 2015 Wages
Source: NBS & German Chamber of Commerce in China analysis. *2015 wages and growth rates are estimates considering overall GDP growth and inflation in 2015 as well as growth rates in the past. Factor represents how much the average wage for an specific industry is above/below national average for 2015. Note: All wages are pre-tax. Monthly wages are based on 12 months
Wage Levels by Ownership in Relation to Foreign
Companies Foreign companies=100
40%
50%
60%
70%
80%
90%
100%
110%
2003 04 2005 06 07 08 09 2010 11 12 13 14 15* 2016*
Source: NBS & German Chamber of Commerce in China analysis. Average wages in RMB. *Estimates
While the NBS has not yet released official wages at specific
industry levels for 2015, the German Chamber of
Commerce in China estimates that there will not be major
differences between how wages have behaved in the recent
years. Salaries in finance might take a small hit, following the
market turmoil experienced last year; however, performance
for this sector during the first semester of this year suggests
that the impact will be limited. Other high-end services such
as IT or healthcare will continue to fare well. In the industry
sector, manufacturing and mining will present the slowest
growth rates of the economy.
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Source: NBS & Chamber of Commerce in China analysis. GDP deflator (rebased, 2010=100) has been used to deflate prices. Productivity increase refers to the percent variation in output per worker (total) compared to the previous year
0%
3%
6%
9%
12%
15%
18%
0
20,000
40,000
60,000
80,000
100,000
120,000
2003 04 2005 06 07 08 09 2010 11 12 13 2014
Primary Secondary Tertiary Total Productivity increase (%)
4. Productivity
The 13th Five Year Plan sets a labor productivity7 target of
RMB 120,000 per worker in 20208 (total GDP divided by
total employment population). To achieve this would require
a 6.6% annual increase in productivity every year.9 Although
productivity gains have been high, this seems a relatively
ambitious goal.
Drawing from research by the International Labor
Organization (ILO), average compensation per employee in
China grew in real terms by 8.2% in the period 2000 to
2012.10 The output per employed person, as a measure of
labor productivity, grew by 9.6% during the same period. As
a consequence, productivity gains outstripped real
compensation growth by 1.4 p.p. annually.
It is not clear how this relationship has evolved after 2012,
because the NBS stopped providing employment data at the
township and village level (making it impossible to get an
estimate of the total number of employees). However, what
seems clear is that productivity gains have been decreasing.
Output per employed person11 grew by 6.9% in 2014 and
just by 5.2% in 2015,12 below the 6.6% yearly target
pursued by the 13th FYP.
China’s growth has been accompanied by, and is possibly
due to, increases in productivity as labor moved from the
barely productive agricultural sector towards manufacturing
and other high-productivity activities. Better training and
education, especially among younger migrant workers,
facilitated labor productivity increases together with
increased automation in the secondary sector.
However, economic growth is the result of labor input,
capital input and total-factor productivity (TFP).13 TFP is
often used as a measure of efficiency growth in an economy
as it accounts for growth achieved by improvements in the
combined use of diverse input (usually labor and capital) as
opposed to growth that comes from just adding more capital
or labor. TFP contribution to growth in China has
deteriorated: From 41% in 1985-2000 to 38% in 2000-
2013,14 suggesting the need for higher innovation, for a
more efficient use of resources in the economy. In fact,
China’s growth has become increasingly dependent on
capital: 59% in 2000-2013 (see section 2. A Bird’s Eye
Perspective: China’s Macroeconomic Indices in the previous
chapter for more on the contribution of capital to growth).
Finally, in comparison with other economies in its vicinity,
China’s labor productivity surpassed Indonesia’s for the first
time in 201415 and remains fairly ahead of the Philippines,
India or Vietnam, but is still lagging behind more
industrialized neighbors in the region.
China’s Output per Worker: Overall and by Sector
RMB per Employed Person at 2010 Prices
Sources of Economic Growth (%)
Contribution to GDP Growth of Capital, Labor and Total
Factor Productivity (TFP)
Source: Asian Productivity Organization. Asian Productivity Databook 2015
27 41 38
54 46 59
20 13 3
1970-1985 1985-2000 2000-2013
Labor input Capital input TFP
International Productivity Comparisons
GDP per Employed Person, at 2011 PPP USD
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2010 2011 2012 2013 2014 2015
Japan
Rep. of Korea
Malaysia
China
Philippines India
Vietnam
Source: World Bank. World Development Indicators database
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5. Notes
1. China’s wage statistics cover only employees in urban
units and in urban private enterprises (the latter only
since 2008). Total employment in China in 2014 was
772.5 million; the estimated total number of
employees in urban units and privates enterprises was
259.1 million, 38% of China’s total employment.
2. Disposable personal income is the amount of money
households have available after income taxes and
subsidies received have been accounted for.
3. http://english.gov.cn/archive/statistics/2016/01/19/c
ontent_281475274674444.htm
4. The Gini Coefficient measures how income is
distributed in a society. Values range from 0 (complete
equality, a society where all its members have the
same income) to 1 (complete inequality, a society
where only 1 member has all the income and the rest
nothing). Real values move between 0.250 for the
more income-balanced societies (Iceland, Norway,
Denmark) and 0.600 in countries such as South Africa
or Haiti.
5. East: Beijing, Tianjin, Hebei, Shanghai, Jiangsu,
Zhejiang, Fujian, Shandong, Guangdong and Hainan.
Central: Shanxi, Anhui, Jiangxi, Henan, Hubei and
Hunan. West: Inner Mongolia, Guangxi, Chongqing,
Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu,
Qinghai, Ningxia and Xinjiang. North East: Jilin,
Heilongjiang and Liaoning.
6. “China’s great wage boom is starting to fade”. 23rd
March 2016. http://www.bloomberg.com/news/
articles/2016-03-22/china-s-great-wage-boom-seen-
subsiding-with-unemployment-rising
7. For a definition of productivity see: “Measuring
Productivity” OECD Manual, Paris 2001.
(https://www.oecd.org/std/productivity-stats/235245
8.pdf). Productivity, in general terms, is defined as “a
ratio of a volume measure of output to a volume
measure of input use”. Labor productivity is a single-
factor productivity measure in which the input unit is
labor and the output measure is either gross output or
value added; capital productivity is another single
factor productivity measure, where the input is capital.
In addition to single factor productivity measures,
multifactor productivity measures (MFP), sometimes
referred as total-factor productivity (TFP), use multiple
input measures (capital-labor, or capital-labor-energy-
materials).
15
8. “China’s NPC Approves 13th Five Year Plan”. NPC
Magazine. Issue 1. April 2016. National People’s
Congress of China. http://www.npc.gov.cn/npc/
zgrdzz/site1/20160429/0021861abd66188d449902.
9. “Wages, productivity and labour share in China”. ILO
Regional Office for Asia and the Pacific. Regional
Economic and Social Analysis Unit (RESA). International
Labour Organization, April 2016.
http://www.ilo.org/wcmsp5/groups/public/---asia/---
ro-bangkok/documents/publication/wcms_475254
10. See Note 9.
11. In NBS terminology total employment does not
amount to the total number of employees in the
economy. The latter is compounded by employees in
urban units and urban private enterprises (not
including owners of individually owned businesses)
plus the number of employees in township and village
enterprises (not including employers or employees in
rural private enterprises). The latest data available from
which it was possible to estimate total number of
employees (urban and rural units) is from 2012. Back
then, total employment was 767 million people,
whereas total number of employees was 390.5 million
(51% of total employment). The total number of
employees is required to estimate a measure of labor
compensation per employee, that can then be
compared with labor productivity.
12. According to press release “China’s Economy Realized
a Moderate but Stable and Sound Growth in 2015”
from the National Bureau of Statistics on 19th January
2016 (http://www.stats.gov.cn/english/PressRelease
/2016 01/t20160119_1306072.html) total GDP in
China in 2015 was RMB 676.7 billion and total
employed population 774.51 million. Labor
productivity (the economy’s output divided by the total
number of workers) at 2015 prices was RMB 87,372 /
worker. Using the GDP deflator (2010=100;
2015=113.98), the output per worker was RMB
76,658 / person, a 5.2% increase in the output per
worker compared to the same data in 2014. If using
the CPI to deflate prices (2010=100; 2015=114.9)
instead of the GDP deflator, the increase in the output
per worker from 2014 to 2015 went up by just 3.4%.
13. See Note 7.
14. APO Productivity Databook 2015. Asian Productivity
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1. Organization
2. http://www.apo-tokyo.org/publications/wp-content/
uploads/sites/5/APO-Productivity-Databook-2015
15. China’s output per worker was USD 21,630.08 in
2014 (in constant 2011 PPP USD); Indonesia’s was
USD 21,182.62. Data from Indonesia has not been
included in the graphic Wage Levels by Ownership in
Relation to Foreign Companies presented in this report
to allow for a better visualization of China’s evolution,
since both series appear almost identical given the
range of values considered in the vertical axis of the
graphic.
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German companies Consumer prices National wage GDP
-3%
0%
3%
6%
9%
12%
15%
18%
21%
2005 06 07 08 09 2010 11 12 13 14 2015 2016 2017
Wage Growth Indicators (%)
GDP, Consumer Price Index and Wage Growth (%)
III General Survey Results 1. Wage Developments at German Companies in China
The average wage growth in percentage for German
companies in China is expected to be at 6.23%1 in 2017,
0.87 percentage points (p.p.) below last year’s figures. This
year represents the lowest growth expectations since the
German Chamber began collecting data in 2012.
There is a high correlation between GDP increases and
salary growth rates: the latter are reflecting a cooling
economy. For 2017 wage increases almost mirror the
expected growth of the economy (IMF estimates).
The slowdown in wage growth among German companies in
China is more acute in some industries than others.
Similarly, differences are also observed across the different
company sizes, levels of seniority, or city tiers measured in
this survey (for more detail on cities included under each tier
see 1. Introduction in the next chapter of this report).
Although senior professionals2 are experiencing the slowest
growth in salaries (5.89%), the highest drop compared to last
year’s figures comes from production workers. Expected
growth for them in 2017 is at 6.41%, compared to 7.80% in
2015. On the opposite end, wage growth for junior
professionals presents the highest rate (6.62%) making them
the segment that remains most stable compared to 2015.
Wage Increases by Seniority (%)
7.80 7.10 6.90
6.50 6.41 6.62 6.18 5.89
ProductionWorkers
Junior Mid-Level Senior
2016 2017
Wage Growth Development at German Companies in
China (%) Nominal Growth
10.20
8.90 8.80
8.10
7.10
6.23
2012 2013 2014 2015 2016 2017
5%
8%
11%
14%
17%
20%
23%
2012 2013 2014 2015 2016* 2017
Source: German Chamber of Commerce in China analysis. * Estimate for national wage growth salary
Source: German Chamber of Commerce in China analysis. 2016 Consumer inflation is average from January to August. 2017 GDP growth: 6.2% IMF forecast
Minimum wage National wage Wage guidelines German companies
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6.52
6.27
6.01
<50 50-250 >250
2017 Wage Increases by Company Size (%)
Company Size by Number of Employees China average
5.88
7.01 6.46
6.10
7.10 6.37 6.61
5.10
7.03
China average
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Looking at industries, consulting & legal services (7.10%),
medical supplies (7.03%) and automotive (7.01%) are
projecting the highest wage growth rates, beyond the 7%
mark. At the other end, construction (5.10%), machinery /
industrial equipment (5.88%) and plastic / metal products
(6.10%) present the most modest increases, below the
overall average of 6.23%.
Despite the fact that labor costs amount to almost 40% of
total costs at companies with fewer than 50 employees (see
in this chapter 4. Productivity) it is here that the highest
wage increases can be expected (6.52%). Larger firms (more
than 250 employees) are expected to raise salaries at a
lower pace (6.01%) than smaller organizations.
By city tiers, the highest salary increase (6.41%) will come
from tier-2 cities, such as Dongguan in the south, or Suzhou
in the east. The lowest increase is expected in tier-3 cities
(5.59%).
2017 Wage Increases by Industry (%)
6.24
6.41
5.59
Tier 1 Tier 2 Tier 3
China average
2017 Wage Increases by City Tier (%)
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6.90 6.30 6.10
7.80
6.00 6.60
5.76 5.90 5.41 5.76
7.03
5.81
Shanghai Other East Beijing OtherNorth
SZ / GZ OtherSouth
Regional Wage Increases: Mid-Level Positions (%)
2. Regional Wage Developments
The slowdown in salary growth is common to all regions,
except Guangzhou and Shenzhen. In Guangzhou salaries are
expected to grow by 7.08%, whereas in Shenzhen growth
will be 7.17%. Within these two cities only production
worker positions present a growth rate below last year’s
(7.70% to 7.46%). For all other positions, growth rates will
go up, especially among junior professionals.
In general, the steepest decline in wage growth is expected
in North China with an average wage increase of 6.18%,
1.32 p.p. below 2015.
7.30 6.90 6.70
7.50 6.60
7.20
6.11 6.20 5.66
6.18
7.12 6.39
Shanghai Other East Beijing OtherNorth
SZ / GZ OtherSouth
2017 2016
SZ / GZ: Shenzhen & Guangzhou
Regional Wage Increases (%)
7.10 7.90
6.40 7.10
6.60 6.90 6.05 6.16
5.46 6.28
6.97 6.61
Shanghai Other East Beijing OtherNorth
SZ / GZ OtherSouth
2017 2016
SZ / GZ: Shenzhen & Guangzhou
2017 2016
SZ / GZ: Shenzhen & Guangzhou
Regional Wage Increases: Senior Positions (%)
7.40 6.90 7.00
7.50
6.10
7.30 6.74 6.48
5.85 6.47
7.37 6.86
Shanghai Other East Beijing OtherNorth
SZ / GZ OtherSouth
7.70 7.80 7.30
7.80 7.70 7.90
6.12 6.30 6.86
6.28
7.46 6.49
Shanghai Other East Beijing OtherNorth
SZ / GZ OtherSouth
2017 2016
SZ / GZ: Shenzhen & Guangzhou
Regional Wage Increases: Junior Positions (%)
Beijing salaries are forecasted to grow by 5.66% (-1.04 p.p.).
Shanghai joins the pack with a decrease in growth that
exceeds 1 p.p. as compared with last year’s: 6.11% vs.
7.30%.
Other locations in the East (Nanjing, Taicang, Suzhou,
Kunshan or Hangzhou) and South China (Dongguan, Foshan,
Jiangmen) will also slow down their wage growth rates,
although variations to last year will not go beyond a 1 p.p.
loss. “Other South” regions forecast a wage increase of
6.39% (7.20% last year) and “Other East” will increase wages
by 6.20%.
Regional Wage Increases: Production Workers (%)
SZ / GZ: Shenzhen & Guangzhou
2017 2016
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1.24
0.89
1.29
0.88 0.75 0.63
Shanghai Other East Beijing OtherNorth
SZ / GZ OtherSouth
Comparison of Wages by Company Size
China average= 1.0
3. Wage Levels
As in previous editions, compensation levels are highest in
Beijing and Shanghai, respectively 24% and 29% above the
surveyed average. The novelty in this edition is that salaries
for Beijing have surpassed those in Shanghai.
Compensation levels in Eastern and Northern China,
excluding Shanghai and Beijing, are around 11% to 12%
below China’s average. In South China, the lowest levels of
compensation are prevalent. Guangzhou and Shenzhen are
the only two regions where wages are expected to grow at a
higher pace than last year, record current salary levels at
25% below national average, while in previous editions they
were more aligned. The gap to China’s overall compensation
level is most pronounced in “other south,” with salaries 37%
below.
When analyzing compensation from an industry
perspective, the highest wages are in consulting / legal
services, medical supplies, automotive and chemicals. These
results are in line with last year’s findings, and it is
interesting to note that the first three are also the ones
where salaries are expected to grow the most in 2017.
Salaries in consumer goods are the lowest (17% below
average), followed by compensation in construction and
electronics (both approximately 12% below the average).
The majority of German companies believe that they are
paying average salaries when comparing themselves with
competitors: 66% of companies agree when evaluating blue
collar workers’ level of pay; 65.1% in the case of white collar
workers. However, there has been an increase in the
percentage of companies that believe that they are paying
more than competitors: 26.% of respondents agree with
regards to the level of pay for white collar workers, up from
17.6% last year; and for blue collar workers, this percentage
is 22.6% (19.4% last year).
Companies with fewer than 50 employees consider in a
higher proportion that they offer higher salaries than their
competitors: 25% when it comes to blue collar workers;
36.4% for white collar. These results are in line with
compensation levels collected this year, with small
companies paying the highest salaries: 18% more than
companies of 50 to 250 employees, 9% more than firms
with more than 250 employees.
Comparison of Wages at Regional Level
China average = 1.0
SZ / GZ: Shenzhen & Guangzhou
Comparison of Wages at Industry Level
China average= 1.0
1.02 1.07 0.88 0.89
1.22
0.83
1.12
0.88
1.12 M
ach
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1.11
0.93
1.01
<50 50-250 >250
1.15
0.87 0.77
Tier 1 Tier 2 Tier 3
Comparison of Wages by City Tier
China average= 1.0
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26.5
16.3 17.6
26.0
64.1
72.5 73.4
65.1
9.4 11.1 9.1 8.9
2013 2014 2015 2016
White Collar Workers
Perceived Salary Level in Comparison to Other Companies (%)
26.2 22.0 19.4
22.6
63.1 66.5
70.7 66.0
10.7 11.4 9.9
11.4
2013 2014 2015 2016
Low Average High
Average High Low
Average High Low Average High Low
11.3
64.0
25.0
10.5
67.4
22.1
12.9
66.2
21.6
<50 50-250 >250
8.7
54.9
36.4
10.8
67.2
22.0
6.8
76.9
16.3
<50 50-250 >250
Blue Collar Workers
Evolution Average Low High
Average High Low
5.7
7.4
11.7
14.5
12.1
15.2
63.7
71.1
66.7
58.2
62.1
66.7
30.7
21.5
21.7
27.3
25.9
18.2
Shanghai
Other East
Beijing
Other North
SZ / GZ
Other South
8.8
6.8
20.5
15.4
17.8
15.2
68.8
66.1
59.0
67.3
57.8
69.7
22.5
27.1
20.5
17.3
24.4
15.2
Shanghai
Other East
Beijing
Other North
SZ / GZ
Other South
Evolution
SZ / GZ: Shenzhen & Guangzhou SZ / GZ: Shenzhen & Guangzhou
Results by Region
Results by Company Size
Results by Region
Results by Company Size
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20.3
17.3 62.4
4. Productivity
62.8% of the companies contributing to the survey indicated
that their overall productivity has increased this year. Only
for 12.8% has it remained the same; and it has decreased for
24.3%.
Additionally, 48.5% consider their productivity increase to
be similar to wage increases and 22.7% rate productivity
gains as higher than salary growth. Overall the sentiment
remains positive about productivity being able to match
wage increases in the future, with almost 50% of the
participants considering it likely and only 16.3% thinking it is
unlikely (2.1 p.p. below last year’s).
However, not all trends point in this direction. Companies
report an average increase in productivity of 7.6% , which is
below last year’s figure of 8.1%. There has also been a surge
in the proportion of companies who consider wage levels
high when taking productivity into account: From 21.3% in
2015 to 30.3% this year (and a drop of 5 p.p. among those
who consider wages are low). Small companies are most
critical when comparing productivity to wage levels. With
labor costs amounting to nearly 40% of their total costs,
40.3% of small companies believe that salary levels in China
are high compared to productivity. Subsequently, they are
more skeptical about productivity increases matching wage
increases in the future.
Looking at results per region, companies in Shanghai and
Beijing state that wage levels are high when taking
productivity into account. This is well in accordance with the
fact that these cities register the highest compensation
levels. Most striking is the case of “other south,” where
36.4% consider wages to be high, despite compensation
being moderately below China’s average. To understand
why this is happening it is worth looking at how productivity
has evolved there: 38.7% mention that it has decreased
(14.4 p.p. more than overall average), and 42.4% consider
their productivity gains to be lower than salary increases,
compared with the China average of 28.8% .
24.3
12.8
62.8
Decreased Remainedthe same
Increased
Evolution of Productivity Compared to 2015 (%)
27.9
10.3 61.8
23.2
12.4
64.4
<50 50-250 >250
Results by Region
Results by Company Size
23.3
24.1
22.0
19.6
27.5
38.7
12.6
11.2
13.6
23.5
9.8
6.5
64.1
64.7
64.4
56.9
62.7
54.8
China
Main Factors for Productivity Increase (%)
Ranked by Very Important and Important
35.1
18.1
19.5
18.1
13.0
20.3
9.8
50.6
64.2
58.0
53.5
51.9
39.6
46.3
Very important Important Neutral Not important n/a
Improved Internal Processes
Better Internal Training
Better work experience
Use of KPI’s
Improved Retention
Increased Automation
Improved General Education
Share of Labor Costs over Total Costs (%)
Overall China and by Company Size
31.9
39.9
28.0 24.4
China <50 50-250 >250
Shanghai
Other East
Beijing
Other North
SZ / GZ
Other South
SZ / GZ: Shenzhen & Guangzhou
Same Increased Decreased
Same Increased Decreased
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12.2
32.7
55.1
Neutral Likely Unlikely
Evolution
33.5
42.4
21.3
28.8
48.5
22.7
Lower Similar Higher
2015 2016
Neutral Likely Unlikely Similar Higher Lower
Similar Higher Lower
Will Productivity Increase Match Wage Increases? (%) Productivity Increase Compared to Wage Increases (%)
26.7
53.8
19.5 30.2
41.8
28.0
30.1
49.3
20.5
<50 50-250 >250
19.5
32.9
47.6
15.9
35.7
48.4
<50 50-250 >250
19.0
11.1
19.7
8.9
12.5
30.3
34.7
30.8
31.1
37.5
33.9
36.4
46.3
58.1
49.2
53.6
53.6
33.3
Shanghai
Other East
Beijing
Other North
SZ / GZ
Other South
30.4
27.6
21.3
18.2
35.7
42.4
48.4
48.3
57.4
58.2
39.3
33.3
21.2
24.1
21.3
23.6
25.0
24.2
Shanghai
Other East
Beijing
Other North
SZ / GZ
Other South
Evolution
18.4
32.5
49.2
16.3
33.8
49.9
Unlikely Neutral Likely
2015 2016
As main drivers for productivity increase, companies see
improvement of internal processes and better internal
training: 85.7% and 82.3% as very important or important,
respectively. An overall better work experience (77.6%) and
the use of KPIs (71.6%) follow suit.
Results by Region
Results by Company Size
Results by Region
Results by Company Size
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24
Evaluation of Wage Levels Considering Productivity (%)
Reasonable Low High
38.1
22.1
32.8
16.1
25.9
36.4
42.2
54.1
44.3
48.2
50.0
33.3
19.7
23.8
23.0
35.7
24.1
30.3
40.3
39.3
20.4 28.7
46.8
24.5
<50 50-250
Reasonable Low High
18.1
54.4
27.5
>250
21.3
49.9
28.8 30.3
46.0
23.7
High Reasonable Low
Shanghai
Other East
Beijing
Other North
SZ / GZ
Other South
2015 2016
Results by Region
Results by Company Size
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50.1
52.1
20.4
9.8
8.5
5.4
5.1
6.0
4.5
11.8
5.8
3.3
45.6
40.7
51.5
55.0
50.3
48.1
44.7
35.6
35.4
25.3
29.8
16.3
21.2
27.8
32.4
38.9
38.7
38.7
37.6
23.7
30.2
36.2
2.2
3.8
6.0
4.5
7.2
9.8
7.8
19.2
17.7
20.3
4.3
9.9
14.6
20.1
16.5
24.1
5. Wage Determination
Company as well as individual performance are, by far, the
two most important elements when it comes to determining
salary adjustments: 52.1% and 50.1% of respondents rated
them as very important, respectively. Third, although lagging
far behind, comes inflation: 20.4%. The rest of the data is
less conclusive. Minimum wage adjustments, with 11.8% of
companies considering it a very important factor. However,
another 19.2% consider this factor to not be important. It is
because of these divergences that we consider it better to
look at the combined rates of very important and important,
and this is how we have ranked the graphic Importance of
Factors for Fixing Wage Adjustments (%). Looking at data this
way, it is competition with other companies that comes as
the fourth most relevant factor for salary adjustments.
Minimum wage adjustments, other government wage
adjustments and other government policies close the
ranking, with relatively low impact for German companies.
Concerning the importance of the factors in negotiating
wages, individual negotiations remain the most influential
(68.5% very important or important). Negotiations with the
rest of the department follow at a certain distance (41.0%
very important or important). The rest of the factors
measured in the survey – collective bargaining, labor
bureau, work council, or the official trade union – are not
critical elements and their relative importance ranges from
13-15%.
Most Important Factors for Wage Negotiations (%)
Ranked by Very Important + Important
19.3
6.0
2.5
3.4
3.3
2.0
49.2
35.1
12.8
10.1
9.9
8.0
Very important Important
Individual Negotiations
Department Wide Negotiations
Collective Bargaining
Labor Bargaining
Work Council
Official Trade Union
Individual Performance
Importance of Factors for Fixing Wage Adjustments (%)
Ranked by Very Important + Important
Company Performance
Inflation
Competition with Other Companies
Seniority of Staff
Meeting Expectations of Staff
Retention of Staff
German Chamber Wage Report
Other Wage Reports
Minimum Wage Adjustments
Government Wage Adjustments
Other Government Policies
Neutral Very important Important Not important n/a
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6. Collective Action and Trade Unions
Only 0.9% of participating companies have experienced
strikes in 2016, down from 12.2% in 2013. It is also
uncommon to find work councils: Only 6.2% of survey
participants report to have established them voluntarily; and
another 3.5% established them after being pressured. Only
29.4% of the companies have been unionized: Voluntarily
20.5%; and 8.9% have been forced to do so (10.8% in 2015).
Among firms with an official union, 89.4% pay the
membership fee (2% of the total wage bill), almost identical
to last year’s data. The presence of collective bargaining
agreements for firms with a trade union is at 23.6%, slightly
above last year’s result (22.5%) but far from the 34.9%
reported in 2014.
Strikes (%)
Prevalence of Work Councils (%)
Trade Union Membership (%)
87.8 89.8 93.0 99.1
12.2 10.2 7.0 0.9
2013 2014 2015 2016
No Yes
80.4
12.1 5.3 2.2
77.5
12.8 6.2 3.5
No No, butdemanded
Yes, voluntarily Yes, pressured
2015 2016
65.7
4.9
20.5
8.9
10.6
89.4
65.2
11.2
23.6
No
No, but approached
Yes, voluntarily
Yes, pressured
Yes
No
No, but approached
No
Yes
Membership
Membership Fee
Collective Bargaining
16.7
37.4
4.2 9.1
17.7
41.8
3.8
9.6
7. Additional HR Data
Turnover rates have remained fairly stable across the latest
measurements, with 17.7% for blue collar workers and
12.8% for white collar workers, which represents just a
slight increase compared to 2015. Employment stability for
blue collar workers has improved: On average they remain
with their companies for 41.8 months (4.4 months above
data from last year); white collar workers stability remains at
the same level reported in 2015 (44.5 months). Annual sick
leave days reported have been reduced, from 4.2 to 3.8
days for blue collar workers; white collar workers again
show similar results to 2015. There are no major changes in
the reported levels of annual leave.
Turnover (in %)
White Collar Workers
Blue Collar Workers
2016 2015
Average duration in company (months)
Average annual sick days
Average annual leave
11.6
44.5
3.8
11.7 12.8
44.5
3.9
11.7
Turnover (in %)
2016 2015
Average duration in company (months)
Average annual sick days
Average annual leave
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56.3
36.1
7.7
61.5
31.1
7.5
High Neutral Low
27
8. HR Challenges, Retention and Recruitment
The top 3 HR challenges German companies face in China
remain fairly consistent edition after edition: Increasing
labor costs, hiring qualified staff and retaining talent are the
issues having the highest impact in business operations:
86.4%, 85.2% and 81.9%, respectively (combining high &
medium impact scores). Followed by concerns over cost of
social insurance / housing funds, considered by 63.1% of
the survey participants as having high or medium impact on
operations. Staff turnover (58.4%) and high cost of training
(51.4%) once again following at a close distance. The rest of
the items measured in the survey with regards to HR
challenges have low to no impact on business operations for
73% to 84% of the participants. Among these, strikes, when
occurring, have a relatively high impact (11.6%). However,
as measured in this edition, their presence is marginal.
Reliability (74.8%) and work ethics (70.1%) are the two
qualities for which local staff is most often credited. Very
closely followed by their set of technical and professional
skills (69.3%). Their English and communication skills as well
as the ability to exercise more critical thinking have a more
balanced distribution between good and fair. This year there
is an increase of 5.2 p.p. among companies who perceive
that strong efforts in training to be necessary in order to
obtain the desired qualification levels.
Effort Needed to Train Staff (%)
To Reach the Desired Qualification Level
Impact of HR Related Issues in Business Operations (%)
Ranked by High + Medium impact
38.2
39.2
32.7
14.1
19.0
8.1
4.3
3.4
11.6
2.9
1.4
48.3
45.9
49.2
49.0
39.4
43.2
19.7
18.1
8.7
17.2
13.9
10.7
8.9
13.4
26.6
26.9
38.0
34.5
37.6
15.2
31.8
34.2
1.6
4.9
3.3
8.5
12.5
9.2
39.2
39.1
62.0
46.1
48.5
High Medium Low No impact n/a
Rising Labor Costs
Recruiting Qualified Staff
Retaining Qualified Staff
Social Insurance / Housing Fund
High Staff Turnover
High Cost for Training
Union Organization
Dealing with Labor Bureau
Labor Arbitration Cases
Strikes / Unrest
Collective Bargaining
Evaluation of Local Staff Skills (%)
Ranked by Good
74.8
70.1
69.3
64.9
64.0
52.3
51.2
44.1
20.6
25.5
27.6
31.5
29.0
38.9
40.9
43.0
4.6
4.4
3.1
3.5
7.0
8.8
7.9
12.8
Reliability
Work Ethics
Technical & Professional Skills
Ability to Learn
Team Working Ability
English Skills
Communication Skills
Good Fair Poor
Independent Thinking
Strategies for Retaining Qualified Staff (%)
Ranked by Very Effective + Effective
52.0
44.7
41.8
21.0
23.3
19.5
13.4
14.3
13.7
36.5
41.2
42.0
53.7
47.9
46.5
43.8
40.9
34.5
Very effective Effective
Salary Adjustments
Bonus System
Career Advancement
Training / Education
Work-life Balance Programs
Flexible Working Hours
International Placements
Additional Annual Leave
Paid Overtime
2016 2015
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Reasons Why Positions Cannot Be Filled (%)
Ranked by Major Problem + Problem
The most effective strategies to retain qualified staff are
cash-related: Salary adjustments (52%) and bonuses (44.7%).
Career advancement plans take third place (41.8%).
When it comes to recruitment the hardest profiles to come
by are engineers / R&D professionals, with 50.3% of
companies rating it very difficult or difficult to fill these
roles. Management (48.8%), technical sales (46.8%) and
sales (45.9%) complete the set of positions that are very
difficult or difficult to recruit.
The two main reasons why companies cannot fill open
positions are an insufficient level of professional skills, with
33.1% considering it a major problem, and high salary
expectations (31.5%). The latter has been extensively
reported in several studies and it is common to a wide array
of companies in China regardless of industry. However, the
lack of sufficient professional skills particularly impacts on
German companies in China due to the industrial nature of
their activities.
Most Difficult Positions to Recruit (%)
Ranked by Very Difficult + Difficult
18.1
14.6
17.4
14.3
5.6
4.0
3.1
2.0
2.4
1.8
32.2
34.2
29.5
31.6
18.1
13.6
12.3
11.9
11.2
5.8
Very difficult Difficult
Engineering / R&D
Management
Technical Sales
Sales
Marketing
IT
Finance
Procurement
HR
Administration
33.1
31.5
17.5
15.2
11.2
5.6
4.7
10.3
49.9
47.7
54.4
54.4
41.2
33.1
32.0
25.9
10.7
14.8
18.8
23.3
30.2
34.5
40.1
30.6
3.4
3.1
5.6
3.8
13.4
22.4
17.9
28.8
Major problem Problem Small problem No problem n/a Insufficient
Professional Skills
High Salary Expectations
Insufficient English Skills
Insufficient Work Experience
Not Enough Applications
Lack of Experience at Foreign Company
Company Location
Company is Not Competitive Enough
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83.2
72.0
88.9 92.0
16.8
28.0
11.1 8.0
All <50 50-250 >250
9. Foreigners
83.2% of surveyed companies are employing foreigners. The
frequency goes up as company size increases, ranging from
72.0% at smaller firms to 92.0% for those with more than
250 employees. Conversely, the weight of foreigners over
total headcount dilutes as the company dimension rises:
13.3% of the staff are foreigners in smaller companies,
whereas the average for larger firms is just 2.7%. Overall,
non-Chinese staff in German companies amounts to 7.1%.
Percentage of Foreign Employees (%)
Overall Results and by Company Size
Share of Companies Employing Foreigners (%)
Overall Results and by Company Size
7.1
13.3
4.7 2.7
All <50 50-250 >250
Yes No
46.9
20.1
12.0
6.0 4.3 4.2 6.5
Positions Held by Foreigners in Company (%)
Type of Contracts for Positions Held by Foreigners (%)
54.2 39.0
25.0 22.6 7.8
16.9 20.8
43.1
50.0 69.2 73.0
88.2 76.3 69.8
2.7 11.0 5.8 4.4 3.9 6.8 9.4
GM / Senior Management
Senior Engineer
Junior Management
Senior Sales
Junior Engineer
Junior Sales
Other
GM / Senior Management
Senior Engineer
Junior Management
Senior Sales
Junior Engineer
Junior Sales
Other
5.8
37.6
43.7
10.3
2.6 5.5
32.6
44.1
13.9
4.0
SignificantlyImproved
Improved Unchanged Worsened SignificantlyWorsened
Evaluation of Visa Process (%)
2016 2015
Project Local Expat
Local contracts are the preferential choice for employers
when it comes to junior positions for foreign employees,
whether it is in sales, engineering or management roles.
For GMs and senior management roles, expat contracts
are the most common (54.2%, +2.2 p.p. compared to
2015). Senior engineers are most often hired via local
contracts (50%), as opposed to the 25.2% gathered in last
edition; expat contracts account for 39% of senior
engineers. Project-based contracts are least common,
being used more frequently for senior engineers (11%)
relative to any other positions.
With regards to the intention to replace foreigners with
local staff, 44.6% declare they have no changes planned,
32.6% will likely replace some (+4 p.p. versus 2015); and
4.4% aim to replace all positions currently held by
foreigners with local staff (+0.9 p.p.).
Perception about the complexity regarding the application
processes for visas has deteriorated slightly, with a higher
proportion of German companies considering that overall
it has worsened (17.9% this year, 12.9% in 2015) and a
lower proportion perceiving that it has improved (38.1% in
the present edition, 43.8% last year).
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030
10. About the Survey
Data for this year’s edition was collected officially between
19th July and 24th August via an online questionnaire
accessible by email invitation. The questionnaire remained
open for late submissions until 29th August. Only
contributions from members of the German Chamber of
Commerce in China have been recorded and 553 responses
were registered. The sample amounts to around 22% of the
Chamber’s membership, yielding statistically representative
results with a 3.7% margin of error for a confidence level of
95%.
11. Profile of Companies and Contributors
Reflecting on the overall German Chamber membership,
most of the contributions come from the machinery /
industrial equipment and automotive industries (45.2%).
Shanghai and other locations in the Yangtze river delta
account for 62% of contributions, whereas Beijing and other
northern regions amount to 21.3%. Shenzhen, Guangzhou
and other locations in the South make up the remaining
16.6%. The survey is mainly based on contributions from HR
professionals (44.4%) whereas submissions from GMs
account for 37%. The latter’s increase in the frequency of
responses (+13.4 p.p. compared to last year) comes as a
consequence of a higher contribution from small companies
in this edition (38.7% this year, 30.8% in 2015).
Industrial Distribution (%)
28.6
16.6
6.9
6.2
5.4
4.3
3.4
2.4
2.0
24.2
Machinery
Automotive
Electronics
Plastic / Metal Products
Consulting / Legal Services
Consumer Goods
Chemicals
Medical Supplies
Others
Construction
Regional Distribution (%)
Main Focus of Activity (%)
58.4
53.3
53.2
31.8
28.0
26.6
24.2
4.2
Sales & Marketing
Services
Production
Sourcing/ Procurement
Trading
R&D
Production-related Engineering
Others
Profile of Contributors (%)
Position of the Company Representatives Participating in the
Survey
37.0
44.4
18.5 General manager
HR professional*
Other
* HR manager: 40.4%; HR specialist / supervisor: 4.1%
Nationality of the Company Representatives
69.9 22.5
7.6
Chinese German
Other nationality
38.7 34.2
27.1
<50 50-250 >250
Company Size (%)
By Number of Employees
62.0 21.3
16.6
East
North
South
SZ / GZ: Shenzhen & Guangzhou
39.8
22.2
11.0 10.3 10.7 6.0
Shanghai OtherEast
Beijing OtherNorth
SZ / GZ OtherSouth
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12. Notes
1. The China overall percentage is calculated as the
average of all 2017 salary increases collected in the
survey for the following positions: Production Workers
(Blue Collar, Operator, Shift Leader, Supervisor and
Production/ Plant Manager); Specialists (IT Staff, IT
Manager, Legal Staff, Legal Manager, Driver); and
Administration, Sales, Purchasing, Finance, HR,
Engineering / R&D / Quality, Project Manager /
Consultant professionals, regardless of seniority. For
this year’s edition the total sample collected for the
above positions is 6,113 observations. Only data from
University Graduates positions has been left out of the
calculations.
2. For the purpose of this report: Junior professionals are
those with 0 to 3 years of work experience; mid-Level
professionals have 4 to 7 years of work experience;
senior professionals, 8 years or more of work
experience. See also Note 1 for more detail on
Production Workers.
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IV Appendix: Definitions Wages and Wage Increases I Gross Base Salary per Employee
Pre-tax basic monthly salary in RMB based on 40hr
working week and a 12-month year period
II Total Company Cost per Employee
Gross base salary plus variable costs such as social
insurance, performance bonuses, cash allowances and
other benefits. Pre-tax, monthly in RMB based on 40hr
working week and a 12-month year period
III Forecast Salary Change from 2016 to 2017
Salary increase in percentage of Total Company Cost per
Employee. Includes merit increase and market adjustments
Work Experience Junior: 0-3 years
Mid-Level: 4-7 years
Senior: 8 or more years
Definitions for Job Positions PRODUCTION
Blue collar worker: Responsible for line work, packaging,
basic assembly; limited work experience.
Operator: Special but limited skills, operate machinery;
some work experience.
Shift leader: Responsible for managing parts of assembly,
scheduling, training new employees, performing limited
quality control, overviewing safety regulations.
Production supervisor: Project planning, overall production
supervision, resource allocation (e.g. overtime and material),
quality control.
Production manager / Plant manager: Managing
production, planning new production methods, investment
and maintenance issues.
ADMINISTRATION
Junior admin staff: Responsible for basic administrative
and secretarial tasks; 0-3 years of work experience
Mid-level admin staff: Responsible for administrative tasks,
secretarial and support tasks; 4-7 years of work experience.
Senior admin manager: Responsible for acting as secretary
to GM or similar, assistant to senior management; 8 or
more years of work experience.
32
SALES
Junior sales staff: Responsible for general sales / marketing,
limited technical knowledge; 0-3 years of work experience .
Mid-level sales staff: Responsible for sales / marketing
activity, basic technical knowledge; 4-7 years of work
experience.
Senior sales manager: Responsible for advanced technical
knowledge, managing customers and key accounts /
marketing; 8 or more years of work experience.
PURCHASING
Junior purchasing staff: Responsible for general purchasing,
limited technical knowledge; 0-3 years of work experience .
Mid-level purchasing staff: Responsible for purchasing,
some quality control, some technical knowledge; 4-7 years
of work experience.
Senior purchasing manager: Responsible for advanced
technical knowledge, managing purchasing / quality control;
8 or more years of work experience.
FINANCE
Junior accountant / controller: Responsible for general
accounting, supporting senior accountant; 0-3 years of
work experience.
Mid-level accountant / controller: Responsible for
accounting, writing reports, taxation; 4-7 years of work
experience.
Senior finance manager: Responsible for accounting, dealing
with tax bureau, controlling payments and receivables,
preparing financial reports; 8 or more years of work
experience.
HUMAN RESSOURCES
Junior HR staff: Responsible for basic administrative HR
tasks, support of HR management; 0-3 years of work
experience.
Mid-level HR staff: Responsible for administrative HR tasks,
training, pay-roll, overtime management; 4-7 years of work
experience.
Senior HR manager: Responsible for managing the HR
department, hiring / firing, developing training / bonus
system; 8 or more years of work experience.
LOGISTICS
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Junior logistics officer: Responsible for basic shipping
preparation, basic communication with customers and
service providers, supporting more senior staff; 0-3 years
of work experience.
Mid-Level logistics officer: Responsible for preparing
customs forms, tracking shipping, account management,
contact with customs officials; 4-7 years of work
experience.
Senior logistics officer: Responsible for managing all import
and exports activity, negotiations with service providers,
direct communication with upper management, direct
contact with customs officials; 8 or more years of work
experience.
PROJECT MANAGER / CONSULTING
Junior level: Responsible for basic research, assisting on
projects; 0-3 years of work experience.
Mid-level: Responsible for business intelligence, custom
research; 4-7 years of work experience.
Senior level: Responsible for key accounts, acting as senior
analyst; 8 or more years of work experience.
SPECIALISTS
IT staff: Responsible for system analysis, SAP, IT
administration.
IT manager: Responsible for programming, SAP, senior IT
administrator.
Legal staff: Responsible for client counseling, business
development.
Legal manager: Responsible for key accounts, legal cases.
Driver: Responsible for transportation of goods and
passengers.
UNIVERSITY GRADUATES
Undergraduate level: Basic tasks, no work experience.
Graduate level: High potential, limited work experience.
German/Chinese interns: Basic support tasks.
ENGINEERING &
OPERATIONS
SALES &
MARKETING
FINANCE &
ACCOUNTING
Recruiting Professionals in China
Since 2007, a Top 10 China-focused recruitment firm
serving over 700 foreign and Chinese clients, from
multinational to SMEs, to get the right talent for their
organizations.
We are specialized in recruiting professionals from the
following practice areas:
Engineering & Operations
Sales & Marketing
Finance & Accounting
Our Team
We are a team of over 50 recruiting professionals and
operate through four offices in China: Shanghai,
Beijing, Shenzhen & Ningbo.
Recruitment Firm of the Year 2012
Finalist
We have been recognized by Wolters Kluwers (China
Staff Awards 2012) as 1 of China’s Leading Recruitment
firms.
ISO 9001:2008 Certified
By the International Certification Network (IQNET) and
the China Quality Certification Centre (CQC) in 2013.
Shanghai [email protected]
86 021 6010 5081
86 156 2498 1224
Ningbo [email protected]
86 574 8848 7007
Shenzhen [email protected]
86 755 2238 5221
www.directhr.cn
Connect with us
Beijing
The German Chamber of Commerce in China
The German Chamber of Commerce in China supports German
companies in their activities in China. Divided into the regional
centers of Beijing, Shanghai and South & Southwest China, it
assists all together about 2,500 companies.
It is thereby one of the largest foreign chambers in China. The
Chamber offers a broad range of seminars, workshops and
events to German companies, in addition to access to an
enormous network and assistance with matters in relation to
the local and regional government offices.
www.china.ahk.de
The Delegation of German Industry & Commerce (AHK) Greater China
The Delegation of German Industry & Commerce Greater China
is the key representative body for German economic interests in
China, working on behalf of the German Federal Government.
With offices in Beijing, Shanghai, Guangzhou, Hong Kong and
Taipei, the AHK represents German corporate interests in
Greater China and supports the expansion of German-Chinese
economic relations. The AHK is part of a network of more than
130 German economic representations worldwide, which has
been active abroad for more than 150 years. The first office in
the Greater China region was opened in 1981 in Taipei.
German Chamber of Commerce
in China | North China
Landmark Tower 2, Unit 0818
8 North Dongsanhuan Road
Chaoyang District, Beijing 100004
Tel. +86 10 6539 6688
German Chamber of Commerce
in China | Shanghai
25/F China Fortune Tower
1568 Century Avenue
Pudong District, Shanghai 200122
Tel. +86 21 5081 2266
German Chamber of Commerce
in China | South & Southwest
China
Room 1903, Leatop Plaza
32 Zhu Jiang East Road
Tianhe District, Guangzhou 510620
Tel. +86 20 8755 2353
www.china.ahk.de
Labor Market & Salary Report
2016 | 2017
Contact Person
Dr. Sigrid Winkler
Executive Chamber Manager
Tel. +86 21 5081 2266