Labor cost is one of the factors that many investors take into consideration when doing business in China. Shanghai, Shenzhen, Beijing, and Guangzhou are among the top tier cities in China which are most popular investment destinations. Foreign investors need to keep a close eye on labor metrics to maintain cost efficiency and business viability. In this exposition, Tannet compares the relative wage structures of the four first-tier cities in China, focusing on the minimum and average wages.
I. Minimum Wages
Shanghai, Shenzhen, Beijing, and Guangzhou have recorded the highest minimum wages in China this year, with all four cities having adjusted their minimum wage rates within the last 12 months.
1. Shanghai
Shanghai is the city with the highest monthly minimum wage in China. This year, the monthly minimum wage and hourly minimum wage increased by 5% to RMB 2,420 and RMB 21 respectively.
2. Shenzhen
Shenzhen, the city with the second highest minimum wage, raised its minimum by 3% to RMB 2,200. Similarly, its hourly minimum wage for part-time labor increased by four percent to amount to RMB 20.30.
3. Beijing
Beijing’s monthly minimum wage is RMB 2,120 and hourly minimum wage is RMB 24, increasing by 6% and 9% respectively.
4. Guangzhou
Guangzhou has the lowest monthly minimum wage. Guangzhou has adjusted both its monthly minimum wage and hourly minimum wage for part-time employment by 10%, to RMB 2,100 and RMB 20.30 respectively.
II. Average Wages
In contrast to minimum wages, average wages can often reflect a city’s strategy for upgrading and stimulating industrial transformation.
1. Shanghai
In Shanghai, the monthly average wage in 2017 was RMB 7,132, a 9.7% increase from the previous year. In 2016, the monthly average wage in non-private units was RMB 9,994.
2. Shenzhen
In Shenzhen, the monthly average wage in 2017 for all types of businesses was reportedly at RMB 8,421. The average wage in non-private units in Shenzhen was RMB 8,261, while the average wage in private units was RMB 4,941.
3. Beijing
In Beijing, the monthly average wage for all types of businesses was RMB 8,467. In urban areas, the monthly average wage in all types of non-private units was RMB 10,975, an increase of 9.8% from 2016. In contrast, the monthly average wage in foreign-funded enterprises was considerably higher at RMB 14,615. Consistent with other first-tier cities, the average wage in private units was also lower at RMB 5,894, a 7% increase from last year.
4. Guangzhou
In Guangzhou, the average monthly wage in 2017 was RMB 7,210. Within non-private units (mostly state-owned enterprises, foreign-invested enterprises, and large and medium-sized enterprises) the average monthly wage was slightly higher at RMB 8,126. Conversely, the monthly average wage in private units (businesses registered and controlled by individuals and labor-intensive small-medium enterprises) was lower at RMB 5,103.
In China, average wages in listed companies and joint ventures tend to be the highest. The larger the scale of the enterprise, the higher the average wage level. Before setting up a business in China, investors should have an overview of the targeted city/region. Tannet can help conduct market research and issue a market entry report which will ensure you a safe operation in China.
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