After expiry of this six month period, the company is free to select candidates from the general labour market. This legislation clearly seeks to prevent companies from using downsizing as a tool for replacing large numbers of unsuitable employees whom they may have been forced to accept earlier with more highly skilled workers. Despite reform of the legal structure, the present system still relies on consensus and on gaining approval of local authorities, which leaves employers uncertain of how to actually proceed with redundancy. Much of the received wisdom on successful downsizing comes from the United States. The American ideal assumes that all parties concerned will agree to firing staff and being fired, given enough information and communication.
Communication is the key in China also, but most of it takes place behind closed doors.
All Chinese parties from the Labour Bureau to the Chinese partner will have to be convinced that the reduction is unavoidable. The law is becoming clearer and can be expected to develop further in this area. Nevertheless, it is an unpleasant and difficult undertaking. A successful downsize should improve your company s fortunes and cement relationships with authorities by demonstrating good citizenship. Whilst the law is slowly giving clearer guidance, thoughtful planning and communication to the relevant parties is vital to complete the process smoothly and protect that most important of assets, your good name.