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How Big Is Your Year-End Bonus?

Nothing says more about China's booming auto market than the generous bonus given by the FAW-Volkswagen Automotive Co. The joint venture carmaker awarded its employees with a bonus that equals to 27 months of salary. On top of that, employees also received double salary for eight months this year.

The news broke in the online community with an internal PowerPoint file posted by an anonymous user. Other online users said that employees who logged full attendance this year could have received up to 63 months of salary.

The Legal Evening News then contacted FAW-VW and confirmed that the file was authentic and the facts were true.

I used to think that type of pay structure - annual total income equally many times of base salary - only happens in the financial sector. Boy, I was wrong.

The trend of pay increases in the past five years is phenomenal. In 2007, FAW-VW gave employees double-salary for two months of the whole year. That number has since been on the rise steadily - five months in 2008, six months in 2009, seven months in 2010, and eight months in 2011.

In an attempt to play it down, FAW-VW explained to the Legal Evening Newsthat base monthly salary only accounts for about a third of the total take-home monthly income. The year-end bonus is 27 months of base monthly salary, not 27 months of total monthly income. The source added that a "normal employee" has 3,000 yuan of monthly base salary.

It's ambiguous whether the double pay is included in the "take-home monthly income" the source referred to. If it is, a "normal employee" would have taken home 189,000 yuan (US$29,814) in 2011. That is equivalent to about $39,752 (pre-tax, assuming 25 percent tax rate) in the U.S.

If the double pay is not included in the "take-home monthly income," a "normal employee" would have taken home 261,000 yuan (US$41,141) this year. That is equivalent to about US$54,854 (pre-tax, assuming 25 percent tax rate) in the U.S.

Keep in mind, also, that the FAW-VW workers are located in cities like Changchun and Chengdu, where living expenses are relatively low.

If the average Chinese worker at an auto plant makes that much, no wonder many Chinese consumers are now able to afford soaring property prices, overseas vacations and education, and luxury goods.

Now, if you didn't get a fat bonus like that, perhaps it'd be smart to think about how to get into a business that serves China's new middle class and wealthy groups.

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