Admittedly, I am supposed to be on a business trip and therefore there is no excuse for not hauling my arse out of bed on a chilly Saturday morning to go to the office.

I had only returned to China on Thursday at 5pm, which left me with 1 hour and a Friday to get shite done which was not nearly enough. Sometimes I think that they keep all the exciting shite-that-blows-up-in-your-face waiting until I step back into my office in China, before they spring it on me.

So anyway, I had hauled everybody’s arse back into the office. If I was going to be working on a Saturday then begorrah be damned, eveyrbody else was going to keep me company.

Over the course of the meeting, I learned something. We hire labour agencies to supply us with a constant stream of contract workers (hard-working indigenous natives from frozen villages in northern mountain areas). At any one time, we hire about 2000 contract workers whom are also provided with lodgings, 3 meals a day and 2 days off per week.

For each person the labour agencies give us, we pay them a fee of RMB100 (USD16) every month.

What we’ve discovered is that the labour agencies don’t actually make money from the fees.

You see every month, we calculate the wages that are due to each worker. We also calculate how much social insurance (a statutory contribution which is the China equivalent of EPF, CPF or 401k plan) are due. But we don’t actually pay the workers because they are not employed by us. Instead, we hand over all the dough to the labour agency and expect them to disburse the cash.

So the labour agencies have actually been paying the salaries, but pocketing the money for the social insurance. This comes out to a lot of money every month (think 6 figures).

How we found out was a lot of contract workers have been resigning and complaining about being bilked out of wages. So we did some checking and found out that it is true.

The truth of the matter is that the RMB100 monthly fee was too good to be true. The labour agencies were never making money off my company, their true cash cow was the poor worker’s social insurance.

This is a lot like the problem with corruption in the police force in developing countries like China and Malaysia. Policemen are paid peanuts, so they have to make money elsewhere. Overtime, it becomes de rigeur that policemen salaries are low, because they must be making money doing illegal shite.

Now I have to figure out how to make sure the labour agencies pony up the social insurance money every month, but still remain in business. It’s no point punishing them because it’ll just mean I have lost a source of manpower.

Doing business in China is not only getting more expensive, it’s getting more complicated.