In 2007, there has been a growing trend among multinational firms in China to employ Western-educated Chinese returnees to fill shortages of skilled labor. Companies understand that employing Chinese returnees instead of Western expatriates is a good investment. These candidates are usually Western-educated, speak Chinese, and oftentimes do not need compensation for adapting to living in China.

In addition, multinational companies are no longer considering large Chinese cities like Shanghai and Beijing as hardship postings. Most Western expatriates receive little or no hardship allowance for working in these major Chinese cities today. China has an abundance of cheap, unskilled labor, but not enough qualified candidates to fill management and senior level positions. As a result, Chinese returnees have become more desirable hires for multinational companies in China.

In fact, recently, there have been several job fairs in China specifically designed to attract Chinese returnees. On December 28, 2006 the Guangzhou Science and Technology Exchange Fair for Chinese Overseas Students was held in Guangzhou, China. Job fair attendees were required to have masters degrees and experience working overseas. Hiring managers recruited for over 10, 000 jobs in China.

China is moving steadily in the direction of a market economy. With this shift, labor laws are becoming similar to those of developed Western countries, as evidenced by the Chinese governments 2005 revisions to the Labor Law of the Peoples Republic of China. The original labor law, which was passed in 1994, details regulations governing working hours, equal opportunity employment and hiring procedures. Working hours in Chinalike those in the United Statesare standardized at 40 hours per week for non-management positions. However, this law is not adhered to strictly. Equal opportunity laws also mirror U.S. laws, prohibiting discrimination based on sex, religion, nationality and race. The original Chinese labor law, however, focused on full-time permanent employees, while the latest regulatory revisions extend to part-time employees, making those workers eligible for the minimum wage, disability insurance and welfare benefits. However, these laws are not yet consistently enforced.

Termination of employment is a complicated HR issue in China, marked by nuances of national and local labor law. According to the Labor Law of the Peoples Republic of China, 30 days notice must be given under all circumstances when terminating a contract. The reason for termination should be stated explicitly; it can include redundancy, bankruptcy of the employer, incompetence, criminal acts or disciplinary violations. Of these, redundancy is the most commonly cited reason among companies in China. More importantly, HR managers should be familiar with the conditions for which Chinese labor law considers termination to be illegal. They are:

	Employee disabilities resulting from work-related injuries.
	Employee absence from work for treatment of work-related injuries.
	Pregnancy or nursing periods.

The Chinese income tax system has long been cumbersome and ineffective, but reforms over the past five years have made improvements resulting in Chinese citizens and foreign residents paying taxes on a variety of incomes, including:

	Salaries and wages.
	Production and business income derived by self-employed industrial and commercial households.
	Income from contracting or leasing operations.
	Remuneration for personal services.
	Income from authorship.
	Royalties.
	Interest and dividends.
	Income from leasing of property.
	Income from transfer of property.
	Casual income.
	Other income specified by the Ministry of Finance.

The Chinese economy continues to expand at a substantial rate. With a labor force close to 800 million, Chinas gross domestic product (GDP) has been steadily rising since the mid-1990s at an average annual rate of close to 10 percent. The GDP for 2006 is predicted to be the highest in the past decade. Foreign direct investment in China reached $72 billion in 2005, more than 12 times the amount of investment in India.

U.S., European, Australian and Japanese companies, among others, are vying for strategic positions in China. During this era of fierce competition, recruiting and retention of talent have become increasingly critical focal points. To be successful, HR managers need to familiarize themselves with recruiting trends and options as well as changes in Chinese labor law, housing and tax issues and other related HR matters.