ABSTRACT
For decades, Chinese workers in state-owned enterprises were served with an “iron rice bowl,” that is, they enjoyed virtually lifetime employment, lived in enterprise housing, received medical care at little or no cost, and were provided with pensions and various fringe benefits. However, with the intensification of economic reform and the restructuring of state-owned enterprises, the “iron rice bowl” has been smashed. Nowadays, employment security is no longer guaranteed, a social security system has been introduced to replace the old enterprise-based welfare system, and labor mobility has greatly increased. During the course of labor reform, FIEs have played an important role because labor surpluses from the state and collective sectors have been absorbed considerably by the foreign sector. Moreover, with China’s accession to the WTO, further growth of foreign trade and foreign direct investment is expected. Through whatever investment vehicles foreign investors choose to do business in China, they must staff their establishments. As a result, it is imperative for foreign investors to understand the basics of Chinese labor laws.
