An insider’s view on HR in Shanghai vs Hong Kong: Which is more challenging?

閱讀中文版本

Human Resources talks exclusively to a senior HR leader at an industrial real estate company – with extensive Greater China experience – to compare the respective challenges that HR pros face in Hong Kong and Shanghai.

1.Is there any difference between what talent looks for in employee benefits when comparing Shanghai/China and Hong Kong?

There is a different context in total rewards that talents in China and Hong Kong are looking for. In China the talents look for close proximity, the company prospects and culture and total rewards – which should include employee engagement and the overall compensation & benefits package.

They also look at compensation in such a way that they have a much bigger jump in base salary if they move around. Since salary increment in market comparison is close to GDP, it makes sense to understand that they would demand a very significant increase, otherwise it does not make sense for them to ‘take the risk’ in changing jobs, in particular in the recent economic situation.

Hong Kong talents will of course look at total rewards as well. However, this is quite a contrast to Hong Kong where a typical pay increase when changing jobs is generally of much less significant increment, it does create a difference if the job can offer an increase on top of the annual increase.

In terms of other benefits, a lot of companies in China are providing what is called supplementary medical insurance, which will help to cover or top up medical benefits beyond the medical system. For example, in China there is a certain amount of money that you can get from the company and the employee will contribute the same.

The amount is relatively small – good for general outpatient clinical treatment. Also in China if you need a course of antibiotics (in the form of a fluid drip), it will generally cost you 500-600 RMB. This is very expensive compared to Hong Kong so their social medical insurance may not be able to cover this – the supplementary insurance can meet the shortfall.

For special medicine in China the employees are not covered in the normal social medical system so you need better medical coverage. But most MNCs in China will have this medical benefit and so medical insurance is one important key part in China.

In answering to your question, it’s very much about the total rewards package – an overall company prospect, organisation culture and total rewards including compensation & benefits.

The other thing people look for in China is position title. This is how people judge you whether you are the right person senior enough to talk with the company leaders – it is also kind of ‘face’, so total rewards cover a lot of things – such as medical top up, fixed salary (or total compensation) and title.

2. How do you compare the approach to mental health in China with Hong Kong?

There are three aspects to consider here: Approach, attitude and legal responsibility. For MNCs , the approach is that you are not able to terminate an employee if they have a valid sick leave certificate. A general approach is to try to be understanding and caring as humanly possible.

In China, if someone has a long-term condition (like anxiety/depression), they can only take a certain period of time off for medical leave. After that they will be required to go back to work. Nevertheless, if we terminate people under these circumstances it will be very immoral.

In some rare occasions, people might abuse the system. If an employee gets sick leave for two to three weeks and continues to apply for sick leave for a long period of time, the company has the right to ask for a second medical opinion from a company doctor.

3. How do you compare the China/Shanghai equivalent to Hong Kong’s MPF?

Both places have social funds. In China, it is roughly 20% of the base pay of the total income but there is a ceiling. It will be higher than that of Hong Kong, something like 3000-4000 RMB per month on average. Assuming a mid-level income, the employees contribute the same amount.

Chinese social funds are composed of a general pension, unemployment, medical, housing and maternity. The amount of retirement contribution varies from province to province. It’s gradually moving towards the company paying more and the employee paying less. I am not sure there is a way to invest your pension with a commercial pensioner in China at the moment.

In Hong Kong, the maximum top up for the MPF is HK$1500 per month. The issue in Hong Kong is that the government asks fund managers to manage the provident fund – and the fee is extremely high. If you invest in the (MPF) fund you will pay 1-2% every year to the fund managers, so your potential earnings will be eroded because of these annual fees. That’s why the Hong Kong Government in April 2018 issued the Default Investment Strategy (DIS) system for less risk-averse investors, allowing them to be able choose the low fee and more secured option.

I found it absurd that these fees are so high. Some Hong Kong employees in the past did not want to contribute additional money to the funds because of these recurring high management costs.

4. How is China’s talent pool developing?

In China – in terms of talent – it’s been a bit like fishing in the same pond. In the last 20 years, I have observed more available talent in China. I believe with better training and development in terms of subject matter and leadership skills, we can expand the talent pool. Now the pond is much bigger but still not big enough for everyone. The talent is also moving from one place to another so employee retention has become a huge challenge.

5. How does job security for office jobs in China/Shanghai compare with that of Hong Kong?

Job security is all about performance management – the reason being that nowadays company performance is driven by employee performance. If such KPIs are not met, some companies may take the liberty of managing people out.

Hong Kong employees used to think government jobs are ‘iron-bowl’ (job for life) but given the recent social unrest, I’m not sure this is still the case.

A recent development on the mainland is that a lot of people are moving to Chinese PRC state-owned or private companies – especially the big e-commerce businesses like Alibaba and Tencent. Chinese returnees from overseas are finding good roles. They know the culture, they know the market. Therefore much of the talent in China is attracted to working at these Chinese corporate giants, because they are very big and very successful.