Growth market China: How European companies manage the delegation of power

Extract:
Chapter 2.3.3, Labour market:
Economically speaking, labour should be utilised where it realises the highest return. In other words, labour should go to where it is the most productive and where the best-paying jobs are. However, China s household registration system, called hukou, and its locally administered insurance and pension systems make mobility difficult (The World Bank, 2012a, p. 32).
Since 1986 China has made an effort to set up a social system. The major pillars should be health insurance, unemployment insurance and retirement provision. In former times, these issues fell under the responsibility of state-owned companies creating a situation where employees were bound to a particular state-owned company for their entire life. This hindered or even made it impossible to transfer the acquired claims to a different employer and lead to reduced mobility among employees (Kraus, 2004, p. 44). Similarly, the current household registration system foresees no or only reduced access to social entitlements, including healthcare, education and household for rural migrants in urban areas. Only urban residents receive these social entitlements. As a result, in the year 2010 only 19.5 per cent of the population migrated across provincial boundaries as per official records, compared with 45 per cent within the Republic of Korea (The World Bank, 2012a, pp. 32-33).
Unofficial migratory labour is another phenomenon. In 2007 it is estimated that approximately 250 million workers migrated from a rural area to an urban area. However, these workers are not registered. Beside other preconditions, a work contract has to be presented. These are mostly non-existent although workers have a right to one. The majority of workers have long working hours and a low salary. As they are not registered in the new location, as highlighted in the previous chapter, access to health services or education services for their children is denied or only available at high prices that

Sebastian Hindelang was born in 1983. He holds a Master of Business Administration degree of FOM University of Applied Sciences.
His professional career is focused on the Transaction Banking market. He is currently employed by a major German bank. Among positions in Cologne, Frankfurt and New York, he currently holds the position of a Product Manager in Frankfurt.

Dominik Hedrich was born in 1984. He holds a Master of Business Administration degree of FOM University of Applied Sciences.
He works as an external IT consultant and software developer for various larger and medium sized enterprises.
His main focus is the architecture and development of collaboration platforms such as web-based portals.