In March 2007, the New Express Daily, a mainland Chinese newspaper, published a report claiming that several large US corporations are underpaying local Chinese employees. The report targeted fast food giants McDonalds, KFC, and Pizza Hut, stating that these companies had been paying wages 40% below the minimum wage in Guangdong Province.

The minimum wage in Guangdong Province's largest cities, Guangzhou and Shenzhen, was raised significantly on January 1, 2007 to 7.5 yuan (just under $1) per hour. The rate had previously been 4.3 yuan (about 53 cents) in Guangzhou and 5 yuan (about 63 cents) in Shenzhen. The fast food companies were reportedly paying workers around 5.3 yuan, and had failed to make appropriate wage increases in January. They also reportedly avoided providing additional benefits by classifying all employees as "part-time, even those who worked as many as 13 hours per day. According to Chinese law, only those who work 5 hours or less per day can be considered part-time employees.

After investigation of this particular case, government authorities concluded that many of the workers in question are students, who are not technically covered by China's labor contract laws. The companies will be required, however, to make up wages to those employees who have been underpaid according to the province's minimum wage laws.

This case brings to light an extremely important HR issue for foreign companies in China. With the recent push for unionization throughout the country, labor issues have been in the media spotlight. The ACFTU, China's state-run labor union, is currently establishing unions at McDonalds in Guangzhou and was instrumental in bringing this incident to the public's attention. The ACFTU is known to specifically target foreign firms. Thus, it is essential that HR managers stay abreast of both local and national labor regulations, including those affecting even the lowest-level employees. Firms found in non-compliance can face both legal repercussions and damaging negative publicity.