On 11 April, 2013, the Guangdong Federation of Trade Unions, Guangdong local taxation bureau and the People's Bank of China (Guangzhou branch) announced the Guangdong provincial government had decided that since the "Interim Measures on the Administration of the Collection and Payment of Trade Union Fund of the Guangdong Province", companies, from July 1, 2013, should pay 2 percent of all employee salaries as trade union fees to local taxation bureaus. After the announcement, Hong Kong-funded mainland companies responded instantly, claiming it further burdens their costs. Since there are still doubts about many issues, they hope the authorities will make reasonable arrangements after listening to more advice.

It is understandable the companies reacted drastically, given that they have to confront RMB appreciation, an upsurge in labor costs and the high cost of the insurance and housing funds; moreover, the weak economy in Europe and America has influenced export orders, meaning the companies are trapped at both ends.

According to the new measure, the taxation bureau is acting as a collecting agency and is in charge of examining and approving expenditures; as for the fee, 60 percent will be kept for the trade union in the company and 40 percent goes to the superior trade union. Many a little makes a mickle - 2 percent can be a considerable fund. Assuming that the monthly salary per capita is 3,000 yuan ($490) in Dongguan, a vital manufacturing center with no less than 2 million laborers, the annual trade union fee can reach 1.5 billion yuan. The actual usage of the money is a matter of concern.

Many Hong Kong firms say three aspects of the new measure warrant more discussion: sensibility, reasonability and legality. First of all, the business environment is becoming more and more challenging for company survival, and if the burden of a union fee is imposed on companies, it might stretch them too greatly. Additionally, trade unions are organizations launched by the workers to protect their legal rights and deal with labor disputes, so it doesn't make sense for the taxation bureau to collect the fees. What's more, the trade union fee is not legislated into the Constitution, and the Trade Union Law, strictly speaking, can only act as a reference. Therefore, it's hard to define whether there is a legal basis for local taxation bureaus to collect such fees.

The development of a company relies on the harmonious government-enterprise and labor relationships. As far as the new measure goes, I, along with other businessmen who invest in Guangdong, have the following suggestions:

First, postpone the new measure - several aspects of its implementation and charging details are not mature enough to be executed yet. For instance, when a worker shifts his/her job to another province or company, what will happen to the previously paid fees? And what if the emboldened labor unions are becoming too powerful and impede the normal development of the company? Now that there are multiple unstable factors, the government should put off the implementation.

Second, review the current charging mode, under which, public supervision is barely available. Instead of being arbitrary, the authorities should consider the principles of integration, simplification and standardization, so that the new measure can be sensible, reasonable and legal.

Third, be fair to all firms. Many private and individual enterprises are exempt from the measure, so it is not fair for those companies that are restricted to it, including the law-abiding Hong Kong enterprises.

With the expectation of a brighter future for Hong Kong investors in Guangdong, I hope the authorities can give careful consideration to the above-stated problems and suggestions.

The author is vice-president of the Chinese Manufacturers' Association of Hong Kong.

(HK Edition 09/28/2013 page6)