As China continues to develop into an economic powerhouse, more and more foreign companies are looking to set up operations and factories in China. A key consideration is the salary levels they need to pay local Chinese staff. There are several key factors that influence salary levels at foreign invested enterprises in China. With proper planning and research, foreign companies can develop competitive and fair salary packages to attract talent. Some of the key influencing factors include location, industry, company scale, and candidate experience levels. By understanding these key drivers, foreign invested enterprises can benchmark salaries and remain competitive in China’s thriving job market.
Coastal cities offer higher salaries than inland cities
Location is a major driver of salary levels in China. Large coastal cities like Shanghai, Beijing and Guangzhou tend to offer higher salary levels compared to smaller inland cities. The increased development and higher costs of living in big cities lead to higher salary expectations. Foreign companies should research average salary ranges in the specific city they are establishing operations in. Comparing Shanghai to a second tier city, salaries could differ by 20-30%. However, reduced labor and real estate costs in smaller cities can offset the salary savings.
Technology and finance sectors pay higher than manufacturing
The industry that foreign invested companies belong to influences average salary ranges. For example, finance and technology related companies tend to pay higher salaries compared to manufacturing and services companies. Fields like investment banking, software engineering and semiconductor design are highly coveted by graduates, driving up salary expectations. Foreign companies entering hot job sectors should benchmark against industry averages. Those setting up manufacturing operations can get away with slightly lower salary ranges.
Larger companies offer higher salary growth prospects
The scale of foreign invested companies also influences salary levels in China. Larger multinational corporations with extensive operations and significant market share often pay higher than smaller companies. Candidates view larger companies as more stable and offering better promotion prospects. As companies grow in China, they should re-evaluate compensation levels to remain competitive. Smaller startups may not match salaries of MNCs initially but can remain attractive through equity options.
Experienced candidates warrant higher salary packages
A key factor is the experience level and skills of candidates that foreign invested enterprises plan to hire. Entry level graduates usually have lower initial salary expectations compared to seasoned professionals with 5+ years of experience. Specific technical skills and management experience also command higher salary packages. Companies should tailor packages to required skill sets for roles. Hiring experienced, bilingual managers may involve salaries 20-30% higher than entry level hires.
In summary, foreign invested enterprises in China can remain competitive in hiring by benchmarking their salary ranges against factors like city, industry, scale and experience levels. With China’s vast talent pool, foreign companies can get excellent value by structuring appropriate packages.