When we plan to enter a new market, we will do a lot of research into the market. Costs in the new market are always important for us to figure out the expected financial target in the new market. Employment costs and business fees are two critical costs for any business.
When you plan to develop foreign markets, China is always on the top list, due to the size of the Chinese market. Even if there is a trend of de-globalization, China’s market is still negligible.
To be successful in the new market, local talents are critical, especially in Asia. When you hire local talents in China, employees and employers are mandatory to pay for health insurance (includes maternity), pension fund, employment insurance, and occupational insurance. For some cities and provinces, the housing provident fund is also mandatory. Here is the cost of employment in Shanghai.
| Name | Paid by employee | Paid by employer |
| Health insurance | 2.00% | 10.00% |
| Employment insurance | 0.50% | 0.50% |
| Pension fund | 8.00% | 16.00% |
| Occupational insurance | 0.00% | 0.16% to 1.52% |
| Housing provident fund | 5.00% | 5.00% |
In the above table, the percentage is against an employee’s salary. For occupational insurance, the detail is industry to industry. Besides a housing provident fund, employers can also pay supplementary housing provident fund as a benefit to employees. There is a cap on the housing provident fund monthly contribution.
The data is for your reference. There are difference between provinces and cities. The details may also change.
For taxes related to business, there are income tax, value-added tax, and others that are related to the nature of your business.
Here are the details of income tax:
- General enterprises: 25%
- Non-resident enterprises: 20%
For value-added tax, there are four categories based on the nature of businesses: 13%, 9%, 6%, and 0%.
Now you have a rough idea about employment cost, business income tax, and value added tax. All data provided here is for your reference. When you make your plan, you may need to check for more details and updated data. Or you could work with professionals.