4 Challenging Workforce Factors for Oil and Gas companies in China

5 Challenging Workforce Factors for Oil and Gas Companies in China

China is a key destination for oil and gas companies, but the country has various labour and immigration policies that they need to understand. Here are four common challenges.

When energy companies look to construct or commission oil and gas projects, China represents a key fabrication yard location for global players.

Indeed, fabrication projects across Asia are showing sustained growth, with China hosting several large-scale projects including LNG Canada, Arctic LNG, Tortue and Penguins FPSOs to name a few.  Alongside this, the country’s first official Arctic policy white paper, released in 2018, highlights China’s ambitions for a ‘Polar Silk Road’ where energy and shipping projects could be focused. The fabrication for key elements of several large-scale projects exists within this space.

China’s potential is further underlined in the Oil & Gas Pipeline Fabrication & Construction Market Report 2019-2023, which highlights how the country is expected to reach 240,000 km of oil and gas pipeline by 2025; up from 112,000 km in 2017.

China is clearly a key destination for expansion for large scale fabrication projects, but while they may be keen to explore the country’s potential, there is one essential issue decision makers need to consider: workforce mobility.

Issues to consider when moving expat workers to China

Research published by AXA highlights that China is set to be the leading destination for global mobility until 2022. China is an attractive region, but it pays to have a Personnel Management Strategy in place when planning projects abroad.

That can be extremely difficult for the energy company that has no on the ground expertise in China.  China is undergoing a rapid pace of change, and the sooner you put a mobility plan in place to navigate any potential hurdles that your expat workers may face, the smoother your project will run.

Four mobility areas you need to look at for China include:

Immigration and Visa rules: The Chinese immigration process varies across different provinces and the approval timelines vary for each province. There is a significant amount to complete, submit and track including requirements for local medical, legalisation/notarisation of documents, filing services for work and residence permits and the translation of documentation into Chinese. This process for each non-local employee can be a tough task for many hiring managers.

Tax rules: Similarly, as an overseas employer looking to construct and commission projects in the region, you’ll have to familiarise yourself with some of the regions various and often fast-changing tax  and social contribution rules, especially where your employees are concerned. Foreigners working in China are taxed differently from nationals, and depends on how long they’ve been in the country, for instance.

Accommodation requirements: A Knight Frank report from 2017 showed China’s residential property values were rising faster than anywhere else in the world. Despite the rise in common expat destinations, residential prices were being outstripped by booms in 2nd tier cities. Information like that can be key when you need to find affordable accommodation for your personnel for long-term projects.

Cultural differences: This is possibly the most important factor in this list, especially if you’re relocating large numbers of personnel to a region to work on a project. China has one of the oldest cultures in the world and many distinctions within these due to its size, customs and traditions that vary by geography and ethnicity. Your personnel will need to adjust to local life, as well as seek help with accommodation, healthcare, schools, translation services and much more.

Airswift has been providing energy companies with leading global workforce solutions for 40 years, especially when it comes to providing relocation strategies, and has been operational in China for over a decade.

For businesses looking to set up energy projects abroad with minimal disruption Airswift has a tailored and effective solution.

Airswift’s experts can partner with hiring managers to provide them with personnel management services; immigration and destination services, helping them navigate the vast complexities.

We can also help with matters such as tax reporting with our payroll services.

Read about Airswift's experience with floating production vessels, FPSO units and other fabrication yard projects

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This post was written by Jessie Lai – Operations Manager, China