China labor laws in “strategic” context!

Doing business in China is tricky for most foreign entities and individuals, and understanding China’s labor laws are a perfect illustration!

China market-entry, legal, and commercial consultants are a cornucopia of agencies ranging from boutiques serving niches to industry stalwarts like McKinsey.

“Anti-discrimination is prohibited by China law.”

…stated a reputable agency in a webinar today, and the list of prohibited discriminatory actions was quite comprehensive, covering age, sex, appearance, and even disease carriers.

“But there is NO PENALTY for violations!”

Hum…

So what is the reality (situational context), and how should we structure our HR practices?

• REALITY#1 - The lack of specific penalties and selective enforcement leaves Chinese authorities a tremendous amount of discretion and leverage.
• REALITY#2 - Most Chinese firms have tactics to violate discrimination laws while maintaining compliance, and the more savvy ones have Guanxi connections to avoid any potential enforcement. In other words, they can do what they want.
• REALITY#3 - Foreign firms could never developed a strategy nuanced enough to be safe, nor could they ever develop the Guanxi needed to avoid time and resource draining penalties.

OUTCOME

• RESULT#1 = Advantage Local Chinese Firms!
• RESULT#2 = Local talent has subconscious affinity for foreign employers

APPROACH

• ADVICE - Follow Chinese laws! Don’t complain!

Please leave your comments and let me know what you think about my observations.