A weekly on Indian business, featuring the stories on the latest issue and breaking stories. Indian businesses operating in China are upset by China's decision to impose social security obligations on foreign employees, which will push up the wage bill by over 40%. It has affected expansion plans of some companies as new investors may have to reconsider their plans.
"It will upset our cost calculations and affect business prospects. This will be on top of our existing expense on medical insurance," M V Rabade, chief executive officer of Adani Power China, said. China has extended the social security system to cover foreign companies and their employees. Under the law, employers are expected to contribute 37% of salary and employees 11% into the social security pool. The maximum amount to be paid per month varies between 9,000 yuan and 11,600 yuan ($1,415 to $1,837) in various cities.
The plan has several components with employers and employees expected to contribute towards pension and insurance for medical, unemployment, maternity and work-related injury. "Indian companies will think twice before bringing in more personnel at senior levels. This will affect knowledge transfer between both Indian and Chinese staff," E B Rajesh, head of China office of the Confederation of Indian Industry, said.
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