My friend Dan Harris writes on his China Law Blog:

China's Labor Contract Law (which law applies to every employment relationship in China) is very clear: employers must pay their employees for overtime.

Though there are some exceptions, these exceptions are not nearly as broad or as easy to obtain as is widely believed.

Overtime payments are 150 percent for each overtime hour worked on a normal work day, 200 percent for each overtime hour worked on a day off, and 300 percent for each overtime hour worked on a statutory holiday. China considers forty hours per week as generally considered standard.

Though high level management and other staff can be considered exempt from overtime pay, to be so, prior government approval is typically required. To make matters even more complicated, local regulations definitely can vary on what constitutes an exempt employee and what is required by way of approval.

My firm has handled around a half a dozen cases where foreign companies came to us after having been sued for having failed to pay overtime. In every single instance, our advice and eventual action was to settle the claims because they were all valid. Interestingly, despite all of them having been valid, we were able to settle them for considerably less than full value because the employees were so desirous of getting a lump sum payment and fast.

I thought of these cases today after a reader sent me a China Daily article entitled, "Labor Disputes Skyrocket in Beijing." The article talks about how "about 80,000 [Beijing] workers had been involved in disputes with their employers by the end of November, double the number of last year" and up from 26,000 disputes in 2007. The article then noted how "about 50 percent of the cases were related to overtime rates and payment" and the reader asked me if I had been seeing the same thing elsewhere in China with respect to foreign employers.

Read more at the link.

The FT reports:

The World Bank and Beijing are in discussions about setting up low-cost factories in new industrial zones in Africa to help the continent develop a manufacturing base and reverse its declining share in global trade.

Robert Zoellick, the president of the World Bank, said Beijing had shown “strong interest” in proposals to set up manufacturing bases to help African countries achieve high growth paths similar to Asian ones.

Read more at the link.

Bruce Einhorn writes at Businessweek:

A month after the Chinese government finally gave the okay for Shanghai Disneyland, skeptics are pointing out the park’s success is hardly a sure thing. The latest edition of the Beijing Review (“China’s National English Weekly”), just out today, proudly states how China “will be the first country to host more than one Disneyland.” (First country outside the U.S., that should be, since the U.S. has parks in Anaheim and Orlando.) However, the Beijing Review adds, “amid the profit frenzy and hopes for commercial and industrial growth brought by the little mouse from overseas, doubts and uncertainty also arose. Shanghai’s local newspapers reported that it will cost 24.4 billion yuan ($3.6 billion) for the first phase of construction of Shanghai Disneyland. Disneyland had long been regarded as the most expensive theme park in the world, especially compared to its profitability. To date, out of the three overseas Disneylands in the world, only the Tokyo park has seen profits.”

The weekly even indulges in some French-style Disney bashing. “Targeting children as its major visitors, Shanghai Disneyland will hardly attract the millennium-born generation, which has not developed a close link with the classic Disney cartoon characters. ‘I doubt whether Chinese children will be interested in the septuagenarian and octogenarian Mickey Mouse and Donald Duck,’ said Shi Jianxiong, a professor at the School of Economics and Management of Tongji University.” Sorry, professor, but as senior citizens go, Mickey and Donald look pretty sprightly, and I doubt Chinese kids care any more than American kids do when the characters first got their start. Moreover, the quality of Disney’s rides and other attractions are really what pulls in customers, and it’s a pretty safe bet that Shanghai Disneyland’s will be much better than what local rivals can offer.

The real concern for Shanghai Disneyland is the news that the park, despite earlier hype about it being the world’s largest, is going to start off very modestly: Just 116 hectares in the first phase.

Read more at the link.

The China Econonic Review reports:

Who would believe it? Manufacturers in China's export heartlands are complaining that they cannot find enough workers.

From the factory towns of Dongguan to the trestle tables of Wenzhou, bosses are moaning about labor shortages. Suzhou reported 150,000-200,000 job vacancies in September, while vacancies in Shenzhen rose from 23,000 in April to 120,000 in August.

Back in the heady days of 30% export growth, labor shortages were an understandable phenomenon. Greedy US consumers, who couldn't wait to buy the latest Made-in-China clothes or gadgets, simply slapped the bill on their credit cards. But the good old days, as everyone keeps on telling us, have gone. The US savings rate has crept into positive territory, and the British are now saving more than the famously frugal Japanese.

One would think, therefore, that finding enough hands to churn out goods would be a thing of the past. After all, for the past year the stories from China's export sector have been unremittingly grim. The financial typhoon that swept across eastern seaboard last autumn floored thousands of weaker manufacturers, and more than 20 million migrant workers lost their jobs in factories.

Although the mass factory closures and lay-offs failed to generate the social chaos predicted by many excitable commentators, the gloom shrouding the factory towns of the Pearl and Yangtze River deltas has failed to lift. Exports remain more than 20% below their level of a year ago.

So what is going on?

Read more at the link.

YaleGlobal Online says Chinese workers are creating problems in India:
Across the country, several thousands of Chinese workers are at work on infrastructure projects bagged by Chinese contractors. But the arrangement is not without controversy—the hordes of unskilled/semi-skilled imports from China are taking jobs from the unemployed Indian. One estimate put their total number—skilled and unskilled together—at around 25,000. Things have come to a head of late—at least three instances of xenophobic violence have been reported between Indian and Chinese workers in less than a year. Differences arise notably out of language problems and the “obscene” pay disparities—domestic workers get Rs 87 a day while a Chinese co-worker, according to one account from an Indian worker, gets Rs 1,700 a day. Things get that much more tricky because these workers are here in complete violation of Indian visa guidelines which prohibit entry of such labour.

As an EIL worker put it, “About 25% of the Chinese are manual workers...not much to learn from them.”   

The upcoming steel factory in Chandankiyari for the Calcutta-based Electrosteel Integrated Limited (EIL) clearly illustrates the problem. The Indian firm has contracted the construction to two Chinese firms: China First Metallurgical Construction Company and 23rd Metallurgical Construction Company. With a contract valued at over Rs 11,000 crore, the plant will be spread over 2,500 acres and is expected to be completed in June 2010. Construction began in March this year. Working at breakneck speed to achieve this ambitious deadline, around 500 Chinese engineers and workers are currently at the site along with 3,000 Indian workers. Their presence has come down from about 1,200 earlier this year after Indian authorities cracked down on ‘illegal’ foreign workers.

What has caught the government unawares is that almost all of these ‘illegal’ personnel were here on ‘business visas’—explicitly meant for skilled people here on short-term visits who will not take up employment. This raises two worrying possibilities. The first: the Chinese are regularly passing off semi-skilled labour as skilled to bypass Indian regulations. The second: the Indian visa-issuing authorities in Beijing have been slipshod with their work.

Read more at the link.

Joel at the China Observer blog writes:

Due to pressure from the financial crisis, MNCs in China are not just expected to grow, they’re under pressure to achieve profitable growth. Thus, companies can no longer assume the existence of a homogenous “China market” and monolithic block of 1.3 billion consumers, adopting a one-size-fits-all strategy. They are forced to recognize the fact that while China is one country, it is comprised of distinct regions, cultures, dialects, and consumer preferences. Just like my Chinese vocabulary expanded over the years, so has that of the executives charged with leading growth in China.

In addition to “Beijing,”  “Shanghai,” and “Guangdong,” they are learning to pronounce new cities such as “Hefei,” “Yantai,” and “Changzhutan.” They have finally come to the conclusion that a handful of forward-thinking MNCs reached a while back: there is no such thing as a “one China strategy.”

As McKinsey fittingly titled their 2009 Annual Chinese Consumer Study – “One China, Many Markets.”

So, if you can’t consider China’s market at the country level, then what is the most appropriate way to divide up China? At the provincial level? At the city-tier level?

McKinsey's answer is neither.

Read more at the link.

Suzhou-based Bill Dodson writes on his This is China! blog:
A GM told me in Shanghai recently that one of his local Chinese suppliers cancelled production of an order my friend had queued weeks before. The supplier explained the factory had chosen instead to fulfill and order from an American company that had ordered the maker’s full kit, not just some components. The Americans were going to pay a lot more, too, and the order was going to put pressure on the the factory’s capacity. Of course, my friend was not pleased by the change, especially as his order was to begin production at the beginning of November.

Read more of the post at the link.

China's exports are rebounding somewhat better than expected, and bringing with them sudden market expectations for RMB appreciation. The Staff at ChinaStakes.com write:

Quotations of overseas NDF (non-deliverable forwards) show that from Tuesday to Wednesday this week, the price of one-year USD against RMB declined hundreds of basis points. The NDF price of one-year US dollar against RMB was 6.6470 yesterday, the lowest this year.

 

Compared to the medial rate of 6.8269 yesterday, the new NDF price means the market sees the RMB/USD rate in one year rising by 2.71%, while at the end of September the NDF price showed RMB appreciation expectations to be about 1.5% for the same period. Prior to this, the RMB NDF prices had remained relatively stable for some time.

Read more at the link. 

Antoaneta Bezlova writes at Asia Times Online: 

BEIJING - As the United States talks about rebalancing global growth, China sees a covert agenda of trade protectionism. While Beijing seems to agree that there is a price to pay for its new ascent as a global power, it bristles at suggestions that it needs to let its export powerhouse fade from prominence by allowing its currency, the yuan, to appreciate faster.

The recent high-profile meeting of the Group of 20 in Pittsburgh and this week's annual gatherings of the World Bank and the International Monetary Fund (IMF) in Istanbul have provided a stage for cross-talking between the United States and China, illustrating how far apart their agendas about helping shore up the world economy's recovery remain.

Read more at the link.

Bill Dodson writes at the This is China! blog:

Several Financial Times articles over the past month have pointed to a domestic business trend in China involving State-owned Enterprises (SOEs) coming in to gobble up private Chinese firms. The phenomenon in Chinese is called guojinmintui; literally, “the state advances as the private sector recedes”. One article cited:

Leaders have repeatedly denied that the government is implementing a policy of renationalising parts of the economy and most analysts agree there is no formal policy to support guojinmintui. But some argue that the government’s response to the financial crisis has allowed state-owned enterprises, which are often controlled by powerful political families and already monopolise the commanding heights of the economy, partially to reverse the privatisation that has occurred in China over the last 30 years of economic reform.

SOEs have become quite rich in the last five years because many avoid paying corporate taxes, many list on domestic bourses, they have low requirements for repaying surpluses back to the government, and free-flow bank loans on offer to extend their reach. Private companies in China, however, have few recourses to official means of gaining loans to grow or diversify, and must either bootstrap themselves or go to the gray market for loans.

Continue reading at the link.