I recently heard a story about a German-owned travel company in Shanghai from a friend who works there.Â The company has been operational in Shanghai for 5-10years.Â When the company started, China forbid foreign-owned travel businesses so the company operated as a ‘consultant’ who just also occasionally booked trips.Â (Note: This has changed somewhat since China began implementing the policies of the WTO.)
The company had 4 Shanghainese employees, who kept wanting more and more money for less and less work.Â One of them was the flight specialist who had good relations with the airlines.Â Each time she booked another trip, she kept pushing the airlines to give her more and more commission, in addition to pushing the company to pay her more.Â Eventually the company had to let her go.Â When she left she took the entire database of clients with her, then contacted all of them and told them not to use the German-owned company anymore but instead to go through her.
One of the other, now former, Shanghainese employees disgruntled over not being paid more, goes to the police.Â One morning she brings the police back to the company and the police demand that the company hand over its server.Â The company refuses, saying the police have no search warrant nor other documents allowing them to take the server.Â However, the company can’t do anything, so the police take the server.
The 4 Shanghainese employees get together and go to the labor and work bureau and complain that the company never paid any social security for them.Â Throughout the term of their employment, the company offered all of the employees the option of paying the social security into the system or giving it to the employees as part of their salary; of course, all of the employees wanted it as salary.Â Now, these employees come back saying the social security was never paid for any of them over the last few years.Â As such, now the company has to repay all of these 4 employees social security again for the entire length of their employment.
Operating in China is difficult, whether it be because of employee issues or government and legal issues.Â This company was by no means operating strictly in the legal realm, which of course is difficult because there are so many gray areas in business and law in China.Â But that made them vulnerable when other issues came up.