Tag: China Economy

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Global Relocation Challenges Global Relocation Tips Global Relocation Trends Visas and International Travel

What is Good Guanxi in China’s Culture?

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Learn more about Relationships and Doing Business in China

What is good guanxi (pronounced gwon-she) in China’s culture? 

In some cultures, the task at hand is the primary focus of business. These cultures tend to use clear language and have direct communication styles. It is easy to see whether a product, a transaction, or an activity benefits each party. Relationships are not the primary driver of economic activity.

In China, the main priority in business is building and maintaining relationships rather than focusing solely on completing tasks. The culture in China places great importance on whether a relationship can bring about connections or benefits for both parties. The term “guanxi” embodies these relationships.

Parties that accept guanxi must return it in equal measures. While guanxi can take many forms, it should be seen as given voluntarily. Exemplary forms of guanxi may result in lower obstacles to doing business in China. Guanxi must also be maintained going forward to keep the relationship adequately positioned.

How Should a Company Build Good Guanxi?

A few general guidelines exist for companies that want to do business in China. The company should build a business network with a focus on good guanxi:

  • Introductions should be made by those who already have good guanxi with the prospect
  • First meetings should be in person, not by electronic devices
  • Remember that the relationship is at the personal level, not the organizational level
  • It may take longer to build good guanxi than you might expect
  • Dependability and reliability must be hallmarks of the relationship
  • Trust is with the network and the connections, not with the organization

What are Important Points to Consider for Good Guanxi?

While understanding guanxi will generally help those looking to do business in China, the concept has essential nuances. As a result, working to generate good guanxi may result in poor business relationships. Points to consider include:

  • The downsides to guanxi that sometimes correlate with questionable business practices
  • Fundamentals of business are essential, and good guanxi alone may not provide solutions
  • You must view guanxi across individuals, government structures, and corporate organizations
  • Good guanxi may vary by location, industry, and corporate focus

What Does This Mean?

Companies looking to develop operations or expand business opportunities in China must understand guanxi. China has a distinct culture and rich history, just as all countries do. 

As a result, there is rarely a single answer or a simple guide for a company seeking to do business in China. Research, education, and understanding the importance of business relationships and good guanxi will help companies determine how to proceed with their strategic objectives.

What Should Employers Do?

Companies with plans for business expansion should work with an experienced and knowledgeable Relocation Management Company (RMC). RMCs provide the necessary insight and solutions, including cultural and language training. A trusted RMC can help companies understand China’s culture, history, government, and industrial sectors. Companies should also learn the concept of guanxi and examine how to develop a network of business relationships.

Companies looking to test their expansion efforts in China might benefit from an International Professional Employer Organization. This is a global employment solution where a third party in a foreign country hires employees on your company’s behalf.

Companies contemplating the relocation of newly hired employees or transferees to China ought to assess their relocation schemes to guarantee their competitive edge and ensure that their employees receive top-notch relocation benefits and services.

Conclusion

GMS’ team of global relocation experts has helped thousands of our clients understand how they can quickly expand their business operations to new locations. Our team can help your company understand how to develop in China, focusing on good guanxi through relocation or utilizing an International PEO.

Learn best practices from Global Mobility Solutions, the relocation industry, and technology experts dedicated to keeping you informed and connected. Contact our experts online to set up a free consultation.

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Global Mobility Global Relocation Global Relocation Tips

Global Opportunities for Growth with the China Belt and Road Initiative

The China Belt and Road Initiative recently hosted its second forum. Over 5,000 delegates from over 150 countries, including  the leaders of 37 nations, attended the forum held in Beijing in April 2019. The infrastructure project began in 2013 as a way to rebuild several historical trading routes across Europe and Asia that had been lost over the years, previously known as the “Silk Road.” The road was basically a widespread network of routes that connected China to other nations in the Far East, Middle East, and Europe. The Han Dynasty opened trade with the West along these routes in 130 B.C. However, the routes were closed over 600 years ago when the Ottoman Empire boycotted trade with China.

China’s New Silk Road Created by the China Belt and Road Initiative

China’s “New Silk Road” is a signature project for President Xi Jinpeng. The project is officially known as the “One Belt, One Road” (OBOR) initiative. In addition to large infrastructure projects across the region, the hope is that trade along these routes will increase. China is looking for a global resurgence in a push to expand the country’s international influence. Some initiatives preceded the OBOR, such as China’s flagship economic corridor development with Pakistan. China is seeking to become the center of global economic activity, with all of the power and influence this status will bring. Additional benefits of the China Belt and Road Initiative include:

  • Opportunities to absorb China’s current excess industrial capacity
  • Access to new capital for large state firms that already carry a significant amount of debt
  • State banks avert any financial crises arising from large state firm’s non-performing loans
  • Larger State Owned Enterprises gain pathways to develop into internationally competitive firms

International Cooperation for the China Belt and Road Initiative

China has been developing strong international ties with nations critical to the success of its Belt and Road Initiative. China’s success is clearly seen in its interactions with the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NBD) for BRICS nations. In fact, China has long been considered one of the top emerging international markets. With the NDB headquarters in Shanghai, China’s influential role as a financial center among the BRICS nations is a certainty. BRICS nations include:

  • Brazil
  • Russia
  • India
  • China
  • South Africa

Increasing Imports from Nations Participating in the China Belt and Road Initiative

At the April forum, President Xi Jinping chose to address criticism of the China Belt and Road Initiative by publicly supporting several trade-oriented policies and frameworks. Specifically, China will:

  • Focus on the highest quality and sustainability for projects undertaken by the China Belt and Road Initiative
  • Increase its imports from developing countries to spur investment in those nations
  • Reduce existing barriers to trade to further open China’s markets to international imports
  • Implement structural changes to promote foreign investment in China

President Xi Jinping’s message on trade included a focus on implementation of trade and international agreements. While agreements can easily be made, implementation has been challenging without a sustained commitment from China to ensure full follow-through. As a result, such issues can be extremely difficult to understand and resolve, including:

As of the 2nd Forum, the nation has signed over 170 China Belt and Road Initiative agreements with 125 nations. China’s total investments may reach upwards of $1.3 trillion by the year 2027.

What Does the China Belt and Road Initiative Mean for Employers?

Employers in nations where the China Belt and Road Initiative projects are in planning stages may be able to leverage opportunities to participate directly or indirectly in various parts of the initiative. Although China’s focus is for its State Owned Enterprises to benefit from these projects, local firms in the countries will benefit as the projects come to fruition. The benefit may arise through direct investment in project-related activities. Alternatively, it may arise through increased trade resulting from the China Belt and Road Initiative.

What should Employers do?

Employers currently located in countries where China Belt and Road Initiative projects are planned or underway should investigate opportunities where they might be able to participate. They should also review future production plans that might need adjustment for potential increased trade opportunities with China.

Employers should review their talent acquisition and management programs to ensure they remain competitive to attract and retain new hires and transferees. Some countries may face talent shortages, so employers should look into global relocation as a solution to find and hire qualified employees. Relocation Management Companies (RMCs) can provide expert assistance to employers to benchmark their relocation policies and add enhancements that attract talent.

Employers not currently located in countries participating in the China Belt and Road Initiative might consider these countries as a strategic location for future corporate expansion. The services of an International Professional Employer Organization (PEO) may be useful to help an employer enter these countries and quickly test the local market.

Conclusion

GMS’ team of global relocation experts has helped thousands of our clients develop relocation programs that attract and retain qualified employees to various destinations. Our team can help your company determine how to attract and retain new hires needed to leverage opportunities arising from the China Belt and Road Initiative.

GMS was the first relocation company to register as a .com. The company also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation™ technology platform.

Global Mobility Solutions is proud to be named and ranked #1 Overall, and #1 in Quality of Service by HRO Today’s 2019 Baker’s Dozen Customer Satisfaction Survey.

Learn best practices from Global Mobility Solutions, the relocation industry and technology experts. Contact our experts online to discuss your company’s relocation program needs in countries that benefit from the China Belt and Road Initiative, or call us at 800.617.1904 or 480.922.0700 today.

Request your complimentary relocation policy review

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United States Economy

Leveraging the Growth of World Economies for Corporate Success

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How can a company grow and achieve corporate success as world economies change? Many companies think the answer is to determine how best they can get their products into these growing markets. While this seems straightforward, international trading laws, customs, and tariffs may drastically alter a company’s chances for success.

Local Market Preferences

Additionally, products should be suited to markets to ensure success. For example, clothing choices that are common in the United States would not necessarily find success in other markets. Another example is water filtration technology, where advanced markets seek to improve water taste and appearance, while emerging markets may seek to increase access to potable water or focus on basic filtration to ensure safe drinking water supplies.

Local tastes and preferences should always be considered to help ensure corporate success. Many successful businesses have struggled and failed to achieve success in their international growth initiatives. Much of this could have been prevented with stronger test marketing programs and in-depth local marketing research.

Alternate Routes to Success

Companies pursuing world economies as part of their corporate growth and success strategy might consider alternate routes to reach these markets. This may provide them with valuable market information to help increase their chances for success. Such information may include geographic area, general types of target customers and their demographics, information about local competitors, and information about government regulations, taxes, and requirements.

Which World Economies are the Fastest Growing?

Looking forward over ten years, the face of the world’s economic leaders will change. By 2030, the leading world economies will reflect the rise of Asia as a dominant economic force.

According to a Standard Chartered report, by 2030 Asian Gross Domestic Product (GDP) will account for approximately 35% of the global GDP. India is seen as the largest driver of this growth in Asia. This is due to the introduction of several reforms including the Indian Bankruptcy Code and a new National Goods and Services Tax (GST). Also, six of the largest world economies will be in Asia:

  1. China (Asia): $64.2 trillion
  2. India (Asia): $46.3 trillion
  3. United States (North America): $31 trillion
  4. Indonesia (Asia): $10.1 trillion
  5. Turkey (Europe/Asia): $9.1 trillion
  6. Brazil (South America): $8.6 trillion
  7. Egypt (Africa/Asia): $8.2 trillion
  8. Russia (Eastern Europe): $7.9 trillion
  9. Japan (Asia): $7.2 trillion
  10. Germany (Western Europe): $6.9 trillion

How can a Company Grow with World Economies?

There are several ways a company can grow with world economies. The traditional route of exporting goods into these markets has its limitations. As a result, examining alternatives is a valuable pursuit.

One way is to consider business expansion with a local operation. This may entail setting up a legal entity such as a Wholly Foreign Owned Enterprise, a foreign subsidiary, or a local distributor. A company might acquire a physical location through sale or lease. Staffing decisions may be made either through relocation, local direct hiring, or a combination of both. All of these activities may take a significant upfront investment in both time and funds.

Another way is to consider the services of an International Professional Employer Organization (PEO), an “Employer of Record” solution. International PEO is a global employment solution where a third-party in a foreign country hires your employees, acting on your behalf. The International PEO becomes an extension of your Human Resources Department. They manage all of the traditional HR functions including:

  • Payroll and Tax Withholdings
  • Remittances to Local Authorities
  • Benefits
  • Health and Social Security-Related Programs
  • Onboarding
  • Health Insurance
  • Pensions
  • Terminations and Separations

International PEO lets a company add full-time team members to their global operations within a matter of days. Companies can easily test new markets for their products without making significant investments in time or funds.

What Does This Mean?

The growth of world economies means that companies may have greater opportunities to find new markets for their goods and services. This also means that companies should examine market data from emerging economies. This information will help them determine if their products and services should be tailored to meet local demand. Companies may consider investing in local market research, conduct test marketing trials, and examine alternate routes to conducting business in world economies.

What Should Employers Interested in World Economies do?

Companies that are looking to leverage the growth of world economies should work with a Relocation Management Company (RMC) that has knowledge and experience in helping companies expand into new markets. Choose an RMC that provides ongoing employee support services, supplier management, relocation benefits, and expense management.

The RMC should also provide access to helpful solutions such as International PEO for companies looking to enter new markets to ensure:

  • Full compliance with local requirements on international employment.
  • The company expends the lowest monetary cost to save funds for use on other corporate objectives.
  • They spend the least amount of time so the company can identify and pursue valuable opportunities.

Conclusion

GMS’ team of global relocation experts has helped thousands of our clients understand how to grow their company’s international employment to leverage the growth of world economies. Our team can also help your company understand how to work with an International PEO. As a result, this will help your company gain all of the benefits this solution provides for international employment.

GMS was the first relocation company to register as a .com. The company also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation® technology platform.

Global Mobility Solutions is proud to be named and ranked #1 Overall, and #1 in Quality of Service by HRO Today’s 2019 Baker’s Dozen Customer Satisfaction Survey.

Contact our experts online to discuss your company’s international employment needs, or give us a call at 800.617.1904 or 480.922.0700 today.

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Global Relocation Global Relocation Challenges Global Relocation Tips Global Relocation Trends Visas and International Travel

China Residency Rules May Increase Taxes on Foreign National Employees

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China residency rules are changing with the implementation of a new law. The People’s Republic of China Individual Income Tax law has abolished the 5-year tax exemption period during which a foreign national employee does not have to pay income tax on their worldwide earnings. As a result, foreign national employees working in China may face higher taxes on their earnings.

What are the Current China Residency Rules?

Currently, foreign national employees have an exemption for five years before they must pay income tax on their worldwide earnings. Until the five year requirement is met, they only owe income tax on their earnings in China. Also, the current China residency rules require five full years before tax on worldwide earnings takes effect. Foreign national employees with absences are able to avoid the tax requirement if they break residency with one of the following scenarios:

  1. Have an absence of 30 or more days continuously on a single trip during the year.
  2. Have an absence of 90 or more days over multiple trips during the year.

What are the New China Residency Rules?

The new China residency rules eliminate the full year requirement for residency starting January 1, 2019. Instead, foreign national employees who are a resident in a People’s Republic of China-treaty country, and who work in China more than 183 days in a given year, will owe taxes on worldwide earnings. Foreign national employees receive an exemption for China income tax if they do not exceed 183 days residing in China.

Foreign national employees from a non-treaty country have a much shorter China tax exemption of only 90 days. After 90 days, these employees would owe tax to China on their worldwide earnings.

What Should Employers Expect?

Employers in China should expect that the new China residency rules may require employees to pay taxes on their worldwide earnings to China if they exceed 183 days residing in China during a year. Also, there is no mention of any five year period to determine residency, so employees may face immediate tax obligations.

What Should Employers do?

Employers should review their current employment situations in China to determine how the new China residency rules will impact their company and their employees residing in China. They should also provide information to their employees residing in China so the employees can prepare for possible tax obligations accordingly.

Conclusion

Global Mobility Solutions’ team of global relocation experts has helped thousands of our clients with their country-specific employment, visa, and residency requirements. We can help your company understand how to respond effectively to new China residency rules.

Learn how your company can mitigate the impact of China residency rules and resulting tax impacts on employees from Global Mobility Solutions, the relocation industry and technology experts who are dedicated to keeping you informed and connected. Contact our experts online to discuss your company’s relocation program needs, or give us a call at 800.617.1904 or 480.922.0700 today.

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Labor Force Talent Management Talent Mobility

China’s Labor Force Declines While Economy Transforms

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China’s labor force is in decline. After fifty years of continued expansion, the labor force in China declined last year. Although China still has over 20% of the world’s labor, the decline is indicative of how China’s economy is transforming.

Several other countries with major economies have declining labor forces similar to China’s labor force decline. Countries with declining labor forces include:

  • Italy
  • Japan
  • Russia
  • Spain

Since 2013, many other countries and regions with major economies, as well as several developing countries, have seen their labor forces expand. Countries and regions with expanding labor forces include:

  • European Union
  • India
  • Mexico
  • Turkey
  • United States

Additionally, China is increasingly expanding its level of capital stock. Whereas in 2000 the U.S. capital stock per person was 12 times the level in China, by 2014 the ratio had fallen to 3 times. Recent investment by China has probably pushed the ratio even lower. China is quickly moving on par with the U.S. level of stock per person, even as China’s labor force declines.

What does this mean?

The government in China continues to promote the nation as one that mainly exports lower-value consumer goods and finished products. However, this does not reflect the reality of China’s investment in capital stock. The decline in China’s labor force will further erode the country’s ability to use labor to support its growth as a trading partner of lower-value consumer goods and finished products. The U.S. is currently a trading partner that exports higher-value capital goods and intermediary goods to China. The future for China’s economy will be in this same higher-value market of goods.

What should employers expect?

Employers in China should expect to find it increasingly difficult to recruit and hire as China’s labor force continues to decline. Those with plans to expand into new markets should take this into account as they develop their hiring plans and corporate objectives. Employers should also expect the economy in China to increasingly expand into higher-value capital goods and intermediary goods. There may be significant opportunity in China for companies looking to expand in this market of goods.

What should employers do?

Employers finding difficulties in hiring and recruiting for positions in China should consider highlighting their relocation program’s benefits in their recruiting materials to counteract the effect of China’s labor force decline. The healthcare industry has been facing critical talent shortages for several years. Healthcare employers have responded in several ways, including:

  1. Providing Exceptional Candidate Experiences
  2. Using Data to Enhance Recruiting
  3. Recruiting for Cultural Fit
  4. Creating a Superior Employer Brand
  5. Speeding the Process to Keep Candidates Engaged

Relocation Management Companies (RMCs) are ideal sources for information on global candidate recruitment and relocation. Pre-Decision Services are critical for employers as they provide valuable information about a candidate’s ability to accept a position and be successful. Assessment data can be paired with structured interview questions to better understand the candidate’s interests, goals, and motivations.

Conclusion

GMS’ team of corporate relocation experts has helped thousands of our clients develop relocation programs that attract and retain qualified employees. Our team can help your company by using industry best practices to design your relocation program for the greatest appeal to positions in China. This will increase your company’s ability to attract and retain new employees as China’s labor force declines and its economy transforms.

GMS was the first relocation company to register as a .com. It also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation™ technology platform.

Contact our experts online to discuss your company’s relocation program needs, or give us a call at 800.617.1904 or 480.922.0700 today.

Request your complimentary relocation policy review

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About

Contact Us

About Us

GMS Client Login

Privacy Policy

Other Services

Our Technology

Global Relocation

Group Moves

U.S. & Canadian Relocation

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904
Available 24/7/365

About

Contact Us

About Us

GMS Client Login

Privacy Policy

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904
Available 24/7/365

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