The Chinese Hukou & Its Implications on Recruitment

Last updated: Jan 2021
The HR Regulations Guide for Foreign Companies in China

Ever heard of the Chinese Hukou system? If you’re recruiting employees for your foreign entity in China, you should. This article summarizes several important aspects you need to be aware of.

PTL Group specializes in HR solutions in China. Therefore, we’d like to share our important knowledge with you.

Read more about PTL Group’s HR management and recruitment services in China.

The Chinese Hukou & Its Implications on Recruitment

What is a Hukou? Rights & restrictions

In three words, Hukou is a household registration system. In practice, this is a legal certificate that classifies Chinese citizens into two groups in accordance with their place of birth: Rural Hukou holders, for those born in villages or small towns, or Urban Hukou holders, for those born in large cities.

Each Hukou holder, within its own locality, is granted exclusive local rights and welfare benefits, such as access to government jobs, healthcare services, housing, children education, etc. However, those benefits are limited, if given at all, to the other Hukou type holders.

For instance, an employee working in Shanghai with a rural Hukou will not enjoy the same scope of services as an employee holding a Shanghai urban Hukou (sometimes the services vary between cities even for urban Hukou holders). Therefore, this “internal passport” quite often affects Chinese job candidates’ employment priorities.

Why should you care?

The practical implication for employers and HR managers who deal with recruitment in China is that they may lose great potential employees. Tier-one based companies that wish to mobile candidates, either from other cities or remote rural areas, will have to deal with the Hukou conversion, but this is a long and costly process. Hence, many job candidates who are reluctant to move without local leverage, would prefer to stay where they enjoy the most rights and keep their Hukou, even at the cost of waiving an attractive job offer.

One solution to this obstacle is applying for a Residence Certificate, which gives similar benefits as those of the same locality Hukou holders. That way the “immigrants” are entitled to the same benefits as their peers. Yet, it should be noted that in order to receive this residence certificate, job candidates should meet certain qualifications such as level of education, technical experience, etc.

Another solution often preferred by international companies doing business in China is to attract talented employees through special packages that include various welfare benefits and insurances.

Here’s how you can do it

Supporting companies with Hukou modifications and residence certificates applications are just two aspects in the wide range of HR services in China we provide. Spread across China’s major and most desirable cities, PTL Group’s HR department can expedite this process.

As we relieve this burden from employees, they are able to focus on their job and contribute to the company’s persistent operation in China. And that is no less important.

Regulations in China change relatively frequently. For the most up-to-date regulations, please check in with us.