Govt Sues Company for Back Social Security, Owner Eats Instant Noodles

Another Chinese consumer is upgrading to the convenience of instant noodles. He happens to be famous because his Changzhou, Jiangsu glass factory was sued for 10 years of back social security. Now it is closed.

iFeng: 独家调查：常州工厂被追缴十年社保背后

Li Liangda, the boss of Changzhou Yuhua Glass Co., Ltd. (hereinafter referred to as "Yuhua Glass"), did not expect that he would be famous for not paying social security.

On August 23, the People's Court of Xinbei District, Changzhou City, Jiangsu Province issued an administrative ruling showing that Changzhou Yuhua Glass Co., Ltd. owed basic pension insurance premium, basic medical insurance premium, and work injury insurance from December 2007 to November 2017. Fees, unemployment insurance premiums, and maternity insurance premiums totaled 2,011,134.15 yuan. The Fifth Taxation Bureau of the Changzhou Local Taxation Bureau of Jiangsu Province made a decision on the collection of social insurance premiums and imposed social insurance premiums on Yuhua Glass. After the levy decision takes effect, the tax authorities apply to the court for enforcement because the company has not fulfilled its payment obligations.

There's roughly 2 trillion in back payments across the Chinese economy.

On July 20, 2018, the China Office and the State Council issued the “Regulations on the Reform of the Taxation and Administration System of National Taxes and Local Taxes”. The "Proposal" stipulates that from January 1, 2019, all social security payments will be levied by the tax authorities. Prior to this, the tax department levied a tax, and the human and social departments collected social insurance premiums, leaving an “operating space” for enterprises to pay less wages. According to estimates by Guotai Junan, after the social security reform is levied by the tax bureau, enterprises and individuals will pay a total of nearly 2 trillion yuan.

As covered recently in Social Security Change Could Cause Layoffs and Shave 1.5pc Off GDP in 2019, and Chinese SMEs Can Only Survive Through Tax Evasion, Social Security Reform Could Be Killer and State Council Heard the Lamentations of the SMEs, Li Keqiang Call for More Cuts to Taxes, Fees, SMEs greatly fear the impact of the law. They fear they could end up like Yuhua Glass.

When the Changzhou court verdict came out, it caused a huge response. Many voices believe that the recovery of Changzhou Local Taxation Bureau has a symbolic significance, which means that local tax bureaus will recover social security from enterprises, given small and micro enterprises barely survive today, it is likely they will die.

Li Liangda did not particularly care about the impact on himself, he is more concerned about the future of his factory. Since the factory was shut down at the end of June, more than 100 workers in Yuhua Glass have left the factory to find, at present, there is almost only one person in Li Liangda, and the canteen chef is no longer coming to work. Li Liangda bought a few crates of instant noodles to allay his hunger.

For Yuhua Glass, Li Liangda said that he has deep feelings and has been working in this factory since he was founded in 1975. He has been working for more than 40 years.

For the future, Li Liang said that if the government can take over Yuhua Glass, he will wash his hands and retire, but he still hopes that Yuhua Glass will be able to reopen and pay the workers' social security.

...Li Liangda said that Yuhua’s glass debt has reached 30 million, but the assets are 30-40 million yuan, and the assets can still be repaid.

For the future, Li Liangda is quite confused and looks forward to regaining production through rectification and thus getting out of trouble. If production cannot be resumed, it is hoped that the local government will take over and he can retire.

The article gives an in-depth history of the factory, from state-ownership to the privatization 10 years ago, to recent troubles as customers in the pharmaceutical industry switch to plastic bottles.

"This factory is inseparable from people. Although it is not producing, the inventory still needs to be sold, and some of the accounts need to be recovered. I can only stare at it every day." In the Yuhua Glass Factory, after Li Liangda learned this reporter also hadn't eaten, invited me to eat instant noodles together.