Labor Market & Salary Report 2016 | 2017 - AHK Greater...

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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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

[email protected]

Contact

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49

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51

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54

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37

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39

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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

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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

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FE

B

MA

R

AP

R

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Y

JUN

JUL

AU

G

SE

P

OC

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NO

V

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JAN

FE

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MA

R

AP

R

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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

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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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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.

pdf

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

.pdf

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

.pdf

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

Mach

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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


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


SZ / GZ OtherSouth

2017 2016


2017 2016


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


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


SZ / GZ OtherSouth

2017 2016


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 (%)


2017 2016

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1.24

0.89

1.29

0.88 0.75 0.63


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


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

ine

ry

Au

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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


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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


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


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 Region


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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


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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


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


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

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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


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

[email protected]

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

[email protected]


in China | Shanghai

25/F China Fortune Tower

1568 Century Avenue

Pudong District, Shanghai 200122

Tel. +86 21 5081 2266

[email protected]


in China | South & Southwest

China

Room 1903, Leatop Plaza

32 Zhu Jiang East Road

Tianhe District, Guangzhou 510620

Tel. +86 20 8755 2353

[email protected]

www.china.ahk.de

Labor Market & Salary Report

2016 | 2017

Contact Person

Dr. Sigrid Winkler

Executive Chamber Manager

Tel. +86 21 5081 2266

[email protected]

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