The “A” foreign company is registered in Shanghai. In order to expand businesses, the “A” company has employed local sales managers in the other main cities all over the China. These sales managers’ labor contracts have been signed with the “A” foreign company, but the social insurances have been declared and paid to local city by FESCO or CIIC etc. personnel service companies. However, since last year, FESCO and CIIC had stopped payment social insurances services. As a result that the “A” foreign company has insisted not willing to set branches out of Shanghai, so it has transferred these managers’ social insurances to Shanghai. Nonetheless, after these operations, the local medical insurances have had no way to be enjoyed by lots of out-of-town assistant managers. They haven’t applied the purchasing houses qualifications as well. This have enabled plenty of assistant managers to leave their positions and caused a huge loss to the company’s performance.

DongJin Remind:

Since last year, more and more cities in China had expanded a cleaning about Double-Non personnel (Non household registers, Non work locally) besides, non-local personnel hadn’t been allowed to pay social insurances in their own places. Local FESCO and CIIC etc. personnel service companies also had refused to provide payment social insurances.

If the enterprises have opened businesses activities out of the towns exactly, especially hired locally employees. DongJin suggests that thinking comprehensively from the perspectives of running compliantly and the stability of local employees, enterprises should settle branches out of the cities. If enterprises want to save costs as much as possible, in order to set and maintain braches. Here suggest, discussing with us about concrete solution.

Mike Chang

Partner

mikechang@shanghaiinvest.com