It is crucial for businesses that are planning to operate in China learn more about the eligibility for China social insurance, and the benefits it can lead to for their businesses. China’s Social Insurance Law which was passed in 2011 had established the first truly national basic social insurance framework that the whole of China could follow. It was specifically constructed for the employees of mainland China, but had many far reaching benefits for all employees. Under the law, all employers within China are required to enroll their employees in five insurance programs, including one mandatory housing fund. The five China Social Insurance and the single housing fund refer to the combination of several different types of guaranteed treatment that’s provided for the benefit of the employees by their employers. Some of the benefits that are required to be given by employers in China include: endowment insurance, medical insurance, unemployment insurance, industrial injury insurance and birth insurance, and housing accumulation fund.
There’s a reason why the Chinese Government has made it mandatory for companies in China to provide
their employees with the benefits of setting up social insurance for a WFOE. For starters, without proper social security or accumulation fund, the employees will experience several problems such as; medical treatment not being reimbursed, being unqualified for a home purchase, and more importantly, pension not guaranteed. Other difficulties that a business owner might face includes, being unqualified for the total self-payment of antenatal care, being unqualified for the points system for household registration, being rejection admission of children’s school, and having credit collection records.
- Medical Insurance
- Unemployment Insurance
- Work-related Injury Insurance
- Maternity Insurance
In China, the Social Security Law was propagated by the Central Government but the specific details, along with its administration, are governed by local authorities. Under China’s Social Security Law, it is paid by both the employer and the employee and is connected directly to the employee’s monthly salary. The process of a China Insurance Fund can get complicated, since there is no single rule for the entire country. What this means is, in China, social insurance is governed at a regional level. This means, the responsibilities of the employer will differ, depending on the location of the company.
Importance of China Social Insurance
- A China Social Insurance is a system in which the Chinese government is able to obtain certain material help from the society through the legislative means to guarantee the laborer's loss of life source due to their age, illness, injury and unemployment.
- For instance, with pension insurance, the individual payment of workers all credited to personal accounts, the company payment should also draw a part into the personal account. After retiring, the principal and interest of the personal account will be returned to the employee (or his/her family), on a monthly basis. In addition to this part of the "personal account pension", the employee's retirement benefits include monthly "basic pension" and ‘annual salary adjustment’.
- The benefits of other kinds of social insurance for employees are also made obvious: employees who participate in unemployment insurance can receive unemployment insurance benefits for up to two years after they lose their livelihood. If a worker suffers serious injury or death, he or she may receive a medical grant, or a pension, or a relief fee. Industrial injury insurance can enable workers in China to obtain free medical treatment, including hospital expenses, and disability compensation after a serious injury or accident.
Benefits of Purchasing Housing Accumulation Fund
following are some of the benefits of purchasing a housing accumulation fund;
Lower Threshold of Housing Accumulation Fund Benefits More Employees
Low Interest Rate to Cut Costs for Estate Buyer
Housing Accumulation Fund is Withdraw-able
Housing Accumulation Fund Reduces Post-Loan Repayment Pressure
If the borrower (including the borrower’s spouse) has entrusted the housing fund without changing the loan mode according to the monthly payment from the account of a personal housing provident fund, the public accumulation fund will be returned to the housing provident fund loan in the current month, while the insufficient part will be repaid by the bank from its repayment account.
The Down Payment is as Low as 20%
According to a notice issued by the Foshan Housing Accumulation Fund Management Center on January 14, from March 1, 2015, urban employees can apply for a housing accumulation fund loan as long as they have paid more than six months for the housing accumulation fund. Meanwhile, the maximum amount of personal loans has been increased to 400,000 yuan.
For foreign enterprises, China social insurance and housing accumulation fund are not only time consuming, but also means, having to deal with the complexities of different local policies, different social security bases. Business China is a full-service company providing expertise in establishing social insurance for a business. Business China has been approved by the Guangzhou Administration of Industry and Commerce to handle financial information consultation, financial information consultation and enterprise management consulting for foreign businesses looking to expand to mainland China.
- Start-up Company –A foreign business that is set up in China is expected to meet the needs of local employees' social security and provident fund requirements through a local quality agency service company.
- Development Company –During the expansion period, it is expected to devote more energy to the recruitment of employees and the management of retention.
- Proposed Listed Company -Traditional social security payment processes are complicated. It is considered that social security and accumulation fund can be paid more easily.
Document Checklist for China Social Insurance Application
- Original copy of your company's business license, and a photocopy
- List of all the employees of your company
- Employees' Personal ID or Passport Original
- Corporate Bank Account Opening Permit
- Company chop
Service Procedure of Housing Accumulation FundBusiness China will be with you every step of the way to ensure that your best interests are met. The following is the service procedure of Housing Accumulation Fund in China;
- To open an account for the housing provident fund;
- To ratify the base of the housing accumulation fund;
- Agent housing fund transfer procedures;
- Agent housing accumulation fund seal procedure;
- Procedures for the remittance of the housing accumulation fund;
- Repayments of the housing provident fund
- Agent housing accumulation fund withdrawal;
- Related policy consultation on housing accumulation fund.