That time of year is upon us – Chinese New Year! Never on the exact dates as it’s following the Lunar calendar, but we can expect it to be around the end of Jan to mid Feb timeframe.
Chinese staff love it, but the management always has some complex things to prepare. Such things as how to balance their project roadmaps. Its stuck on hold with this big block of holiday between and dealing with customer service on the Western world. But more important, how much bonus to give their team before they go back to their hometowns.
Why Is Bonus Giving Stressful in China?
I know I’m not alone.
Many business owners ask how much is normal to give a Chinese staff on Chinese New Year. But it’s not only us lao wai (foreigners) but also Chinese business owners too.
The stress is because if you don’t give enough, maybe you will insult the staff. This long holiday makes people reflect on the year they had and decide if they want to continue with this company or not. Many pick a new career or a new company to work for when they return from their hometown.
So an owner of a Chinese company is always worried what percentage of his or her staff will return!
Then, a week or so after everyone is back in the office or factory, who didn’t come back? Management starts to hire new staff to replace those who decided not to come back.
Pretty insane right?
So, if you want someone to quit, this might be helpful. Give them a low or no bonus and most likely that will give them the hint to find somewhere else to work. But most managers want to keep their staff, so what is a good amount to pay?
Some Normal Ranges
So let’s do some averages. My experience and from what people share around in their personal networks is about 1 to 2 months of that staff’s salary is average.
In the Philippines, there is a 13th month salary requirement. Meaning you must give each person working for you 1 extra month salary at the end of each year.
In China, it isn’t required, but maybe we can think of this Chinese New Year bonus as the 13th month bonus.
Of course you can do lower or none or higher. It is also on not just how much you give, but the way you give it.
Show Each Team Member You Care
In most cases the business pays bonuses in cash money. Yes, a month of salary in 100 RMB “red notes”. So it will be a thick stack of cash. Everyone loves cash, and you will be in line at the bank getting a big stack of money if you have a big company.
When you give these bonuses, it is nice to put them in the traditional Chinese “red pocket” for the coming new year’s Chinese animal. This follows the lunar year calendar, for example 2016 is the year of the monkey!
Showing them you care, invite each one into your office, one by one. Give them a year end review of how they worked, and get their feedback too. After you finish the review, you can then take out the red envelope and issue it to them. I would recommend explaining to them how well the company did that year, and if it was a good year they would expect a good bonus. If it was a rough year and the company didn’t earn much or lost money, you can explain that way if your bonus isn’t what they are expecting.
Make them feel part of the company. That if the company does well, so do they. But that if the company had a tough year, the team member is also going to have to share some of that hardship.
Be Honest And Transparent
A lot of times in life it is the small things that matter. That you took the time to get a proper red envelope. That you sat down with them one on one and see how they are feeling.
I assume you’re a foreigner (non-Chinese) as you’re reading this English blog. For us, we can differentiate because we are foreign. A lot of times Chinese staff enjoy working with us because we are more open and transparent.
So use that to your advantage when you’re issuing your year end bonus. If you’re comfortable, show them the company financials. Show them some of the big projects and milestones the company has reached. In my experience, most Chinese companies are not this open – and amaze your staff as they will love to see the insides.
Again, this is your call, but it may also be a non-monetary way to make them feel like sticking around with your company after the new year.
Oh Yea, They’ll Tell Each Other How Much They Got
Sure, you may tell each one not to tell anyone how much you gave them. But don’t expect that to work. When they go back to their desk, I’m sure there is a a QQ group or a Wechat group of people in the company talking about it.
So keep this in mind when picking the amounts to give people.
But not only between other staff members, but they will most likely compare with their friends in other companies. They will want to see how much better (or worse) they did from the average of their friends.
And last but not least, they’ll talk about it during Chinese New Year holiday. Their family will do a checkup with them, see how they are doing in their career. A lot of times that means they will be asking how much money they have made and how much they have saved to buy their house.
And if the staff member is being private, their parents definitely aren’t! Imagine the hometown, with the Chinese parents talking to other parents in the town about their children. You can picture a dinner table of different family’s parents talking about their kids. What may seem crazy to you, but is somewhat common in China, is talking about financials!
So long story short, there are no secrets! The amount of Chinese New Year bonus you gift your staff will become somewhat public knowledge in a quick amount of time.
Chinese New Year Gifts Via Wechat Red Envelopes
I have been getting quite a bit of questions about paying Chinese New Year bonus via Wechat. Sure! Everyone in China is on wechat. There are 2 ways you can pay someone, either as transfer, or as a red packet. I recommend to use the red packet function, as it just looks more like a gift than a payment. Technically both the same, but the way it is delivered to the employee seems much more – happy – if that makes sense? I think I’ve been in China too long.
I’d love to hear how you have been paying your staff. Have you still gotten the red envelopes at the shop downstairs and then gone to the ATM for boatloads of cash and then paid them?
How Do You Handle Your Chinese New Year Bonus Giving?
So you have my style and my tips – I’m curious to hear from you! How many Chinese staff do you employee? Have you been through a Chinese New Year bonus round for a year or more? Having trouble retaining them each year?
Let’s use this comment section below to share some “war stories” and help each other out. If you have a different experience or perspective, please don’t be shy and correct me! Each person has a different experience, and different cities and cultures in China vary as well.
Paying Chinese Workers From Overseas
You may not have a Chinese company to pay a New Year bonus to your Chinese contractors.
There are plenty of cross border payment services that can help you send RMB to your Chinese bonus-receiving colleagues. Check our extensive cross border payment guide out today!
Feedback From a Reader!
We have never met. But believe it or not, you helped to almost double the new year bonus for myself and my staff in Shenzhen.
I am the OM of a small foreign-invested co in Shenzhen. I forwarded your excellent article on CNY bonus to my boss, who is based abroad, and it seems he was able to clearly understand the points you made.
If you are in Shenzhen or HK anytime after Feb 6th, let me know. I have to buy you at least a beer or something. My number is [removed]. Thanks and keep up the good work!
Xin nian kuai le!![name withheld upon request]
Questions From Readers
We will be posting questions here from our readers with our answers as well hoping that these will be of more value to you.
Here’s one from a GFAVIP member, Hapa:
Hey Mike, I was doing some research on bonus amounts in China and found your article. Would you say that a months salary is still standard? And which, if any cross border payment systems still work for sending money to individuals? Any opinions on what that benchmark might be for a typical sales person making hard goods?Hapa
1 month is about a good base for full time in China. Almost an expectation like a 13 month policy for full time staff working a typical office job
For payments we use Goremit (read more here)
Another input from someone in our community Wechat:
If my sales person makes the numbers, then one month. For every 30% over them, I give them another month. Under book? Give them nothing.
That is awesome, I’m meeting him soon! Keep the amazing-ness happening everyone.