The Chinese Labor Contract Law, which was approved by the Chinese Government in June 2007 and came into force on January 1st,2008, is gradually affecting China’s air conditioning industry in both production and sales.

The law definitely obliges enterprises to pay overtime work allowances, annuities, social insurance premiums and retirement allowances, aiming at correcting the uneven distribution of wealth due to China’s rapid economic growth and to promote a new economic development. As a result, personnel expenses paid by companies are increasing noticeably. Since the Labor Contract Law also limits monthly overtime work to 36 hours at most, the Chinese AC industry is being affected considerably as it has depended much on seasonal labor fluctuations for securing high amounts of overtime work from the beginning of spring to summer, to ensure high production and a timely market supply.

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