Global HR Update: Asia

News Updates

New Five-Year Visas for Doing Business in China

China’s Legislative Affairs Office of the State Council issued a proposal on May 3, 2013, that would introduce two new visas for qualified foreigners. Each visa would be valid for up to five years, significantly longer than the current options.

There are two types of visas for doing business in China: a business (F) visa and a work (Z) visa. A business visa is issued for three, six or 12 months and can be used for multiple entries. Normally, the duration of stay permitted is no more than 30 days unless the visa office approves a longer visit.

A work visa is issued to foreign employees of a company in China who intend to stay for more than six months. This visa is valid for three months and typically only one entry. The holder then must apply for a residency permit, which serves as a kind of visa that specifies the length of stay and number of entries permitted.

The new visa classifications, R1 and R2, will be valid for up to five years. The R1 visa is a residence visa that would include residency rights similar to those in the work visa. The R2 is a visitor’s visa, which, like the business visa, is intended for professionals who frequently travel to and from China for business. The R2 also allows multiple entries, and with this visa, a professional may stay in China for up to 180 days at a time.

These new visas would be designated for senior-level expatriates who possess skills that are in high demand in China. No specific list of skills has been released, though one is expected soon. Candidates for the new visas must be recognized as experts in their fields by provincial-level governments.

Chinese Workers Leaving Manufacturing for Service Sector

Today the service sector in China is growing at a faster rate than the industrial sector. According to figures released by the Chinese government, the service sector created 37 million jobs in 2012, while the industrial sector, which includes manufacturing, construction and mining, created 29 million.

JPMorgan Chase predicts that in 2013 the service sector will account for more of China’s gross domestic product than the industrial sector—a first for the nation.

The industrial sector is losing workers to the service sector for two reasons. First, there are simply more job openings in the latter. Second, for many Chinese, service-sector jobs are more attractive than industrial-sector jobs. Migrant workers who once filled factory floors are starting to work in small businesses, hotels and restaurants. Even if the hours are longer and the pay is lower, working as a hostess or receptionist sounds better to friends and family than toiling in a factory.

Minimum Wages Rise Across ASEAN Countries

Countries in Southeast Asia are following China’s lead and raising minimum wages. The reasons vary by nation, but common ones include allaying labor unrest and increasing worker productivity.

Indonesia. Minimum wages across all provinces increased by an average of 20 percent in 2012 and 13 percent in the first half of 2013. Minimum wages vary by region from $85 to $226 per month.

Malaysia. Malaysia introduced a mandated minimum wage for the first time in January 2013. Depending on the location, the minimum wage varies from about $265 to $298 per month.

Singapore. Though Singapore has never had a minimum wage, the idea has recently gathered momentum and was discussed at parliamentary talks in March 2013.

Thailand. On Jan. 1, 2013, Thailand instituted a national minimum wage, rather than setting minimum wage by region. The minimum wage is now about $10.34 per day. The change meant only a 6 percent increase for Bangkok and six other rich provinces; however, for some poorer provinces, the adjustment resulted in a 60 percent or more increase in wages , narrowing the geographical income gap.

Vietnam. In January 2013, Vietnam issued its first minimum-wage increase since 2011. Average minimum wages across the country rose by 17 percent or more, ranging from $79 to $113 per month, depending on the region.

Japanese Firms See Midlevel-Management Turnover

According to a new research report from Hays, a global human resources company, 85 percent of Japanese firms are losing valuable midlevel managers to opportunities at other companies. This trend has been increasing over the past 10 years in Japan, where lifetime employment with a single company had been the norm.

To discover the reasons behind the turnover, Hays surveyed both firms that had lost midlevel employees and the employees themselves. Nearly half of the employees surveyed cited the opportunity for new responsibilities at a different company as their main reason for moving on. Other reasons included better career opportunities, more money and a better work-life balance.

Mandatory Retirement Age Increases in Japan

Life expectancy in Japan is among the highest in the world. But more than 80 percent of Japanese companies impose mandatory retirement for their employees at age 60. As of April 2013, however, Japanese firms have to keep workers until they turn 65 or rehire them as nonregular workers after they officially retire.

The revisions go into effect as Japan increases the age at which workers can withdraw from corporate pensions. That age used to be 60, but, starting in April 2013, it is gradually increasing to 65. As Japanese citizens rapidly age, the Ministry of Health, Labor and Welfare is considering raising the pension-collection age to 70.

The new laws have already had a significant impact on Japanese companies. Most of them have raised their mandatory retirement age. Some have replaced their uniform wage systems with merit-based systems to recoup increased labor costs. Others have chosen to reduce wages for workers under age 60. Toyota is studying a plan for a half-time system, under which rehired employees over 60 would see their regular working hours halved.

Representatives of Japan’s Business Federation say that by 2018, Japanese companies will have to spend 2 percent more on wages because of the new law.

Indian High Court Rules ‘Hire and Fire’ Practices Unconstitutional

The Supreme Court of India ruled that the arbitrary dismissal of employees is unconstitutional, even in instances when such dismissals are included in employees’ contracts. In the case recently brought before the court, Balmer Lawrie & Co. Ltd, a government-owned manufacturing and exporting company, let an employee go without giving any reason. A clause in the employee’s contract stated that his services could be terminated without any reason, provided the employer gave him three months’ notice before termination.

The Supreme Court ruled that this kind of hire-and-fire policy was unreasonable and unjustifiable and violated Article 14 of the Constitution of India, which guarantees equal rights under the law.

Pacific Bridge Recruiting is a leading Asia executive recruiting and human resources consulting firm based in Bethesda, Md.