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Why Changsha

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　Operating costs

Operating costs are key concerns for selecting plant or office locations. Compared with coastal cities in the east, Changsha has maintained its operating cost advantages.

There is an obvious economic location advantage with Changsha. It is a hinge to connect the inland to Guangdong & Guangxi Provinces, coastal areas in the east and the southwest boarder areas and it is also the joint part of the Yangtze economic belt and south China economic ring, enjoying the unique qualifications of conducting close economic and trading cooperation with two major economic regions. In recent years, Changsha has developed into a base to support developed regions along the coast and the Yangtze and a pilot city to promote development of inland and the west. It has become one of the major distributing centers for export of production factors including capital, product, technology, information and talents to the province, adjacent provinces in the southwest, Guangdong and Hong Kong and is playing a key role of connecting the east to the west and the south to the north in the national arrangement of economic strategy.

　Human resources

Changsha has a large workforce, with over 190,000 people entering the job market every year

·As the capital city in a populous province, Changsha has a sizeable workforce, supplemented by new graduates from middle schools, technical institutes and universities
·Changsha has 48 universities and Colleges with approximately 108,000 fresh graduates from universities in 2007

Salaries for locally-hired staff are generally below USD 5,000 p.a.
·The total cost of employment consists of a basic salary and "social welfare" benefits, such as pension contribution
·The range and average of annual salaries (including bonuses) for employees in common job categories in FIEs in Changsha are shown in Figure 2
·Salaries for higher-level staff (such as plant managers or marketing managers) tend to be related to the size and the performance of the company and thus have a wider range
Figure 2
Annual salary levels (USD)

“Social welfare” benefits must also be paid by the company and considered when estimating total staff costs
·All enterprises incorporated in Changsha must contribute to a range of benefits on behalf of employees, including pension, unemployment insurance, medical insurance, injury insurance, housing fund and maternity insurance

·The level of contribution is based on a percentage, set by the local authorities, of an employee’s salary (see below table)

Welfare obligations in Changsha
Composition items	% of salary
Pension	20%
Basic medical insurance premium	8%
Unemployment insurance premium	3%
Staff and worker’s injury insurance premium	1%
Housing fund	5%
Maternity insurance	0.7%
Total	37.7%

Sources:

(1) Changsha Labour and Social Security Bureau
(2) Changsha Housing Fund Administrative Centre
(3) KPMG analysis