China hiring cost structure comprises various components, including the employee’s monthly gross salary, employer contributions to mandatory social security, supplementary benefits provided by the employer, and required trade union fees for some of the companies in China.

About JSC – China PEO & Employment Expert.

JSC is a professional service company that assists foreign-invested companies in doing businesses in China.

Our core services China PEO and employment solution enables foreign investors to hire employees in China without setting up any company which allow them to expand into China market in days, not months. Our in-country local experts are also experienced in assisting businesses to compliantly establish their own legal entity in China.

Please contact us if you require any other information on China PEO.

Info@jscgroups.com

China’s dynamic business landscape has witnessed a significant policy shift, particularly concerning corporate formation. Effective July 1, 2024, a notable change in the China company law mandates that the subscribed registration capital must be paid within a span of five years, the official Xinhua News Agency said Friday.

The New China Company Law Change: Registered Capital Injection within 5 Years:

Previously, the process of China company registration allowed businesses to operate without an immediate injection of the registered capital. However, under the recent regulatory changes in China, companies are now mandated to inject the registered capital within a specified time frame, specifically within 5 years from the date of company registration in China.

This shift emphasizes the importance of careful consideration when setting the registered capital during the initial stages of company registration in China. Businesses must now strategically determine the appropriate amount of registered capital, taking into account their operational needs and financial capabilities in China. Failing to inject the required capital within the stipulated time frame could lead to regulatory non-compliance and potential repercussions.

This new requirement underscores the need for meticulous planning and financial foresight during the China company registration process. It adds an additional layer of complexity to the decision-making process for businesses entering the Chinese market, reinforcing the importance of understanding and adhering to the evolving regulatory landscape.

Solutions if a company in China is unable to inject the registered capital.

Solution I- Reduce the Registered Capital:

Reducing registered capital in China poses challenges due to complex legal procedures, creditor approval requirements, mandatory publication announcements, the need for debt settlement, and adherence to industry-specific regulations in China. Obtaining approvals from various authorities in China, settling outstanding debts, and navigating a time-consuming process are inherent difficulties. Moreover, transparency obligations may disrupt normal business operations, and industry-specific guidelines further complicate the process. Professional guidance is essential to navigate these complexities, ensuring compliance with regulatory requirements and minimizing potential disruptions or setbacks of reducing the registered capital in China.

Solution II- Close the Company in China and Adopt China EOR (Employer of Record) Solutions through the oversea parent company.

Evaluate the viability of closing the existing company, especially if the high registered capital requirement is prohibitive. Transition employees to the China EOR arrangement, enabling the company to maintain its workforce while avoiding the challenges associated with high registered capital injection. China EOR solutions provide a flexible and efficient way to continue operations without the need for a China company registration, offering a practical alternative for businesses facing capital constraints.

Suggestions for Foreign Companies Entering the Chinese Market

China’s company registration process has been traditionally known for its complexity. The intricate bureaucratic procedures, documentation requirements, and the need for adherence to specific guidelines often posed challenges for both domestic and foreign enterprises.

In light of the complexities associated with China company registration and dissolution, many businesses are turning to alternative solutions for China market entry. One such solution gaining popularity is the China Employer of Record (EOR) solution, which also called China employment solution. This solution not only accelerates market entry but also provides businesses with the flexibility to test the waters before committing to a more permanent establishment in China.

China EOR offers a streamlined and efficient way for companies to establish a presence in the Chinese market without the challenges of traditional registration. It allows businesses to hire and employ staff in China without the need for a legal entity, enabling a quicker market entry process. Companies can engage talents in China to conduct market research, leads/clients connection, communication, etc.

Understand more about China EOR – China Employer of Record Solution.

Understand more about How to Hire Employees In China Without Legal Entity?

About JSC – China PEO & Employment Expert.

JSC is a professional service company that assists foreign-invested companies in doing businesses in China.

Our core services China PEO and employment solution enables foreign investors to hire employees in China without setting up any company which allow them to expand into China market in days, not months. Our in-country local experts are also experienced in assisting businesses to compliantly establish their own legal entity in China.

Please contact us if you require any other information on China PEO.

Info@jscgroups.com

Terminating employment contracts in China is a delicate matter that requires a thorough understanding of Chinese labor laws and hiring practices in China. Termination in China can occur through various channels, each governed by specific rules and regulations. Let’s delve into the different scenarios of employment termination in China and the corresponding procedures.

1. Employment Termination in China: Mutual Agreement.

When both the employer and employee reach a consensus to terminate the employment contract in China, it can be executed smoothly through mutual agreement. This type of termination generally involves open communication and negotiation between the two parties.

2. Employment Termination in China: Termination Initiated by Employee.

a. Termination during the Probation Period.

An employee in China may terminate the employment contract during the probation period by providing the employer with a 3-day notice.

b. Employee-Initiated Termination Conditions: Severance payment applied.

Employees can terminate the contract in China under specific circumstances, including but not limited to:

• Employer failure to provide a safe work environment as per the employment contract.
• Employer delay or non-payment of salary.
• Employer failure to pay social insurance premiums.
• Employer violation of laws or regulations harming the employee’s rights.
• Employer coercion or deception in the formation or modification of the employment contract.
• Employer use of violence, intimidation, or endangering personal safety.

3. Employment Termination in China: Termination Initiated by the Employer.

a. Non-Wrongful Termination.

The employer can terminate the employment contract by providing 30 days’ written notice or one month’s salary in lieu of notice under certain circumstances, such as:

• Employee inability to perform original or newly assigned work due to illness or non-work-related injury after sick leave.
• Employee incompetence after training or adjustments.
• Employee unresolved disagreements after a major change in circumstances.

b. Termination Due to Employee Wrongful Activity.

The employer may terminate the contract if the employee:

• Fails to meet employment requirements during the probation period.
• Violates entity policies significantly.
• Causes severe damage due to neglect of duties or seeking personal benefits.
• Engages in concurrent employment affecting tasks for the current employer.
• Engages in deceptive practices during contract formation.
• Faces criminal liabilities as per the law.

c. Employment Termination in China: Economic Layoff: Severance payment applied.

Economic layoffs can occur under specific circumstances, such as restructuring, production difficulties, downsizing after contract alteration, or other major economic changes.

4. Employment Termination in China: Employment Contract Expiration.

a. Severance Payment Situations:

Severance payments are required when:

• A fixed-term or project-based employment contract expires.
• The employer goes bankrupt or faces business closure.

b. No Severance Payment Required:

Severance payment is not required if:

• The employer offers to renew the contract, but the employee refuses.
• The employee enjoys basic pension insurance benefits.
• The employee reaches the statutory retirement age.
• The employee is deceased or declared dead or missing by the court.
• The employee fails to conclude a written employment contract within one month after notification.

Employment Termination in China: Severance Payment

The severance payment shall be based on the number of years the employee has worked for the employer at the rate of one month salary for each full year worked. Any period of no less than six months but less than one year shall be counted as one year. The severance payment payable to an employee for any period of less than six months shall be one-half of his/her monthly salary.

If the monthly salary of an employee is higher than 3 times local average monthly salary where the employer is located, the rate for the severance payment to be paid shall be 3 times local average monthly salary and shall be for no more than 12 years.

Understanding the nuances of termination scenarios in China is crucial for both employers and employees in China. It is recommended to seek legal advice or HR expert and adhere to the latest China labor laws and regulations to ensure a fair and lawful termination process.

Termination under China EOR/Employer of Record hiring mode

In the China EOR (Employer of Record) hiring mode, employee termination follows specific procedures dictated by Chinese labor laws. Client shall inform the China EOR service provider immediately when there might be a termination happened. China EOR service provider will guide client the China labour laws, cost of termination, process of the termination to ensure the termination can be processed smoothly based on the local laws and regulations in China.

About JSC – China PEO & Employment Expert.

JSC is a professional service company that assists foreign-invested companies in doing businesses in China.

Our core services China PEO and employment solution enables foreign investors to hire employees in China without setting up any company which allow them to expand into China market in days, not months. Our in-country local experts are also experienced in assisting businesses to compliantly establish their own legal entity in China.

Please contact us if you require any other information on China PEO.

Info@jscgroups.com

China Employer of Record (EOR) solutions have become increasingly popular in recent years as more and more foreign companies seek to expand their operations into the Chinese market. EOR is a service that allows these companies to hire and employ local talent without the complexities and legal hurdles associated with establishing a legal entity in China. In this article, we’ll explore the most frequently asked questions about China EOR solution to help businesses navigate this essential aspect of global expansion.

How foreign companies can hire employees in China through China EOR solution?

Foreign companies looking to hire employees in China can do so through EOR solutions if they have no legal entity established in China. This involves partnering with a reputable and licensed EOR service provider in China, who will serve as the legal employer for the local employees selected by the foreign company, handling all employment, compliance, payroll, and HR-related matters, while the local employees are managed and reported to the foreign companies directly. By using the China EOR solution, foreign companies can hire and onboard employees in China legally without setting up a legal entity in the country.

What kind of companies shall use a China Employer of Record to ensure employment compliance in China?

Any foreign company looking to hire employees in China can benefit from using a China EOR. However, it is particularly useful for:

• Startups and small businesses in China: Companies that are just entering the Chinese market or who would like to test the China market and lack the resources to establish a legal entity can quickly get started with an EOR in China.
• Companies with short-term projects: For businesses that have short-term projects in China, China EOR services provide flexibility in hiring and terminating employees without the long-term commitments.

Whether special qualifications are required to provide EOR service in China?

Yes, EOR service providers in China are required to obtain the necessary licenses and meet certain qualifications to operate legally. These qualifications include China talent dispatching license and China human resource agency license. It’s crucial to work with a qualified and established EOR service provider to ensure compliance and smooth operations.

What kind of services are included in the China EOR Solution?

China EOR solution typically encompass a wide range of services, including:

• Employment contract management.
• Payroll processing and tax compliance.
• Benefits administration: including statutory social benefits and supplementary insurances.
• Pay slips
• HR support and management.
• Legal compliance and regulatory adherence.

Pros and Cons of using a China Employer of Record Solution?

Pros:

• Quick Market Entry: EOR solutions enable companies to enter the Chinese market rapidly.
• Compliance Assurance: These services ensure that all employment and tax regulations are followed.
• Flexibility: EOR allows for easier scaling up or down of your workforce.
• Reduced Administrative Burden: EOR providers handle HR tasks, leaving companies to focus on their core business.

Cons:

• Limited Control: Companies have less control over HR policies and decisions compared to having their legal entity in China.
• Employee sense of belongings: most of the EOR employees in China are working remotely, which will influence their sense of belongings.

What is the cost of using an EOR in China?

The cost of using an EOR in China varies depending on the service provider and the specific services, location required. Below is the normal cost structure of using the Employer of Record solution in China.

• Service fee
• Employees salary/bonus/commission/expense claim
• Statutory China social security contributions
• Local Tax: Value added tax in China.
• Refundable Deposit
• Onboarding and offboarding service fee depends on vendor.

For understanding the details of the hiring cost in China, please read the below article.

Complete Guide on Hiring Cost in China 2024.

How long is the term of the labor contract under the China employer of record hiring mode?

The term of the labor contract in China under EOR hiring can be flexible and depends on the agreement between the employer and employee. Typically, employment contracts in China are fixed-term, often for one to three years. However, they can be renewed or terminated according to the needs of the business.

How long does it take to onboard an employee through China EOR?

The onboarding process through China EOR is relatively quick. JSC usually onboard an employee within 1-2 weeks. This includes drafting employment contracts, handling paperwork, and setting up the necessary HR and payroll systems.

How long does it take to offboard an employee through China EOR?

Offboarding an employee through China EOR usually takes at least 30 days. This is because in China, the local law regulates that employee and employer shall give 30 days notice before termination. Once the termination request raised, the agency can start on handling the offboarding process. This includes handling termination paperwork, finalizing payroll, and ensuring compliance with labor laws.

Can I hire contractors or part-time employees through China EOR solutions?

Yes, EOR solutions in China can be used to hire independent contractors or part-time employees. The flexibility of EOR services allows companies to engage different types of employment arrangements as needed.

China EOR solutions provide a practical and compliant way for foreign companies to hire employees in China. They offer an efficient way to navigate the complexities of the Chinese labor market and ensure legal compliance. However, it’s essential to choose a reputable and licensed EOR service provider with expertise in Chinese labor laws and regulations to make the most of this solution. With the right partner in China, businesses can tap into the vast opportunities that China offers while minimizing risk and administrative burdens.

About JSC – China PEO & Employment Expert.

JSC is a professional service company that assists foreign-invested companies in doing businesses in China.

Our core services China PEO and employment solution enables foreign investors to hire employees in China without setting up any company which allow them to expand into China market in days, not months. Our in-country local experts are also experienced in assisting businesses to compliantly establish their own legal entity in China.

Please contact us if you require any other information on China PEO.

Info@jscgroups.com

China’s growing economy and large population make it an attractive destination for foreign companies looking to expand their business operations in China. However, navigating the complex legal and administrative processes involved in setting up a legal entity and hiring employees in China can be a daunting task. This is where the China Employer of Record (EOR) comes in.

In this article, we will provide a comprehensive guide on China EOR- China Employer of Record, explaining what it is, how it works, and its benefits. This guide will provide you with the information you need to make informed decisions about hiring employees in China through an China EOR.

Contents

What is China Employer of Record (China EOR)?

How do Chinese Employer of Record (China EOR) Works in China?

Benefits of Using An Employer Of Record In China

How much is cost to using an Employer of Record in China? What is the Cost structure of using a China EOR?

FAQ about China Employer of Record/China EOR Solution?

What is China Employer of Record (China EOR)?

An Employer of Record (EOR) is a service provider that acts as the legal employer of a company’s workforce, managing payroll, taxes, benefits, and other human resources (HR) operational functions. China EORs allow companies to expand their operations into China without having to establish a Chinese legal entity. This is particularly beneficial in China due to the complex employment laws and regulations.

In China, China EORs are also known as “Professional Employer Organizations” (PEOs). These organizations provide HR outsourcing services to companies that are looking to expand their business in China. PEOs hire employees on behalf of the client company and take on all the legal responsibilities and liabilities associated with employment in China.

Many US tech companies using EOR solution to hire software engineers in China.

About JSC – China PEO & Employment Expert.

JSC is a professional service company that assists foreign-invested companies in doing businesses in China.

Our core services China PEO and employment solution enables foreign investors to hire employees in China without setting up any company which allow them to expand into China market in days, not months. Our in-country local experts are also experienced in assisting businesses to compliantly establish their own legal entity in China.

Please contact us if you require any other information on China PEO.

Info@jscgroups.com

With the increasing demand of hire developers in China, more and more foreign companies are looking to expand their operations in China. This article is going to give you a guide of the cost-effective and efficient way for companies to access the software talents they need to grow their business in China and hire developers in China in a compliance and efficient method.

Contents

1. Why foreign companies are eager to hire software developers in China?

2. Different ways for foreign companies to hire software developers in China.

3. What is China PEO or China EOR?

4. Steps to using China PEO to hire software developers in China

Why foreign companies are eager to hire developers in China?

• Large Talent Pool: China has a large and growing pool of highly skilled software engineers, making it easier for companies to find the talent they need.
• Cost Effectiveness: The cost of living and salaries in China are lower compared to other developed countries like US, Europe, making it an attractive destination for companies looking to cut costs.
• Rapidly Developing Technology Scene: China has a rapidly developing technology scene and is home to many innovative tech companies and start-ups. Hiring software developers in China gives foreign companies access to this ecosystem and the opportunity to tap into the latest advancements in the industry.
• Growing Market: China has a huge and rapidly growing market, making it an attractive destination for companies looking to expand their business. Hiring software engineers in China allows companies to take advantage of this growth and develop products and services tailored to the Chinese market.

Different ways for foreign companies to hire developers in China.

1. Hire developers in China directly through your China Entity.

For foreign companies who already have an entity established in China or planning to hire software engineers directly after the China company established. Below are the most common ways to hire and find software developers.

Direct Hiring:

This involves advertising job vacancies through Chinese Job Portals, sourcing and interviewing candidates, and directly hiring employees. This option requires a significant amount of time and resources and can be challenging for foreign companies unfamiliar with Chinese labor laws and cultural differences.

Recruitment Agencies:

Recruitment agencies can help companies find and hire software developers in China by sourcing, screening, and interviewing candidates. Companies can choose from a variety of recruitment agencies that specialize in different industries and job types.

If you already have a legal entity in China, you can read this article to understand the important tips of hiring in China.

2. Hire developers in China without a legal entity established in China.

China Professional Employer Organization (China PEO) or China Employer of Record (China EOR): PEOs can help companies hire employees in China by acting as the legal employer and handling all HR functions, including candidates sourcing, China payroll, China social benefits, and compliance with Chinese labor laws when foreign companies have no legal entity in China. PEOs can help companies save time and resources by handling the administrative aspects of the hiring process with no legal entity required in China.

Freelance Platforms: Freelance platforms such as Upwork and Freelancer offer a convenient way to find and hire software developers in China. Companies can search for and hire developers based on their skills and experience and can negotiate terms and conditions directly with the developer. However, there is employment and tax compliance issue of hiring freelancers in the platform.

Hiring software developers through a China PEO or China EOR solution is more recommended if foreign company has no China legal entity or has no plan to setting up a China legal entity in China. This solution is flexible and ensure the employment compliance in China.

Read more about How to Hire Employees In China Without Legal Entity?

Complete Guide on China EOR – China Employer of Record

What is China PEO or China EOR?

PEO stands for Professional Employer Organization. It is a type of outsourcing service that allows companies to outsource certain HR functions, such as employment, payroll, benefits administration, and compliance with labor laws.

China PEO, also known as China Employer of Record, is a specific type of PEO service that is designed to help foreign companies hire employees in China when they have no legal presence in China. With China PEO, the PEO company becomes the legal employer of the employees in China and is responsible for handling all HR functions, including payroll, social benefits, and ensure compliance with Chinese labor laws.

Read more about What is China PEO & China EOR? How does it work in China?

Steps to using China PEO to hire software developers in China

1. Choose a reputable local China PEO service provider. An experienced local China PEO service provider is better than a global service provider as they are more familiar with the local environment and policies.
2. Define job requirements and responsibilities: Clearly define the job requirements and responsibilities of the positions you want to fill.
3. Post job advertisements: Work with the China PEO provider to post job advertisements in relevant Chinese job portals to reach potential candidates.
4. Screen candidates: China PEO provider will screen the candidates and arrange for interviews with the hiring company.
5. Hire employees: Once the hiring company has selected the best candidates, the China PEO provider will handle the onboarding and hiring process, including preparing and signing employment contracts, processing payroll, and enrolling employees in local social benefits programs.

For detailed steps of engaging a PEO in China, please read this article.

It is important to choose a reputable and experienced China PEO provider to ensure compliance with Chinese labor laws and to avoid any potential legal and financial consequences.

In conclusion, China has a great number of good software talents with cost effective hiring costs. Partnering with a China PEO to hire developers in China is a smart business strategy that can help companies tap into the country’s pool of talented software developers while minimizing the risks and headaches associated with setting up an independent operation. By leveraging the expertise and resources of a China PEO, companies can focus on what they do best, while leaving the administrative and HR functions to the professionals.

About JSC – China PEO & Employment Expert.

JSC is a professional service company that assists foreign-invested companies in doing businesses in China.

Our core services China PEO and employment solution enables foreign investors to hire employees in China without setting up any company which allow them to expand into China market in days, not months. Our in-country local experts are also experienced in assisting businesses to compliantly establish their own legal entity in China.

Please contact us if you require any other information on China PEO.

Info@jscgroups.com

When you are thinking about hire remote employees in China, your first question might be how can I hire remote employees and pay them legally in China? This article helps you to understand different ways to hire and pay your remote employees in China.

Is it compliance to hire remote employees and pay remote employees in China directly from overseas entity?

We don’t suggest foreign companies to hire and pay their remote employees or contractors in China directly due to the compliance issues listed below:

1. Tax compliance issue

Many international companies would hire remote employees or contractors in China directly from the overseas company and paying remote employees in China directly without declaring or contributing any income tax on their behalf, resulting in a tax compliance challenge and risk. Read the below articles to understand the difference of hiring full time employees and contractors in China.

2. Permanent establishment issue

If foreign companies directly hire remote workers in China and pay their employees or contractors directly in China, this will be easily triggering the permanent establishment issue where the foreign company will be required by the Chinese government to set up their own legal entity in China.

3. No employment relationship or business relationship protection

Since there is no employment relationship with the employees, or business relationship with the contractors in China, it is very difficult for foreign companies to manage their remote employees and contractors in China. Foreign firms will also lose control if their employees are not performing properly or are working with many corporations at the same time. Companies will also have to deal with the issue of confidentiality and intelligence property. This is also an big issue when hiring remote workers in China.

4. No mandatory social security contribution for full time employees in China.

If you hire remote employees in China and pay remote employees in China through your overseas company, you will be unable to enroll them in the China social security system, which will also trigger the compliance issue, as all full-time employees in China are required to participate in the China social security system. In the meanwhile, Chinese employees are reluctant to join the company who are unable to contribute the social security for them.

How can I hire and pay remote employees in China if we have no legal entity in China?

Using a China EOR or China PEO vendor allows you to effortlessly hire remote employees in China and paying remote employees in China while being compliant.

If you do not have a registered company in China or are in the process of establishing one, the best way to lawfully hire and pay remote employees in China is through a Chinese EOR or PEO service provider. While remote employees in China are working for your oversea company and managed directly by your oversea company, the China EOR or PEO vendor will operate as the China employer of record to hire remote employees in China, complete all of the mandatory hiring processes in China, and pay your employees on a monthly basis in China. To ensure employment compliance in China, China PEO and China EOR solutions typically provide the services described below.

• Complete onboarding and offboarding procedure based on each city’s local regulation for these remote workers in China.
• Sign China labor contract with each remote worker in China, or part-time contract with contractors.
• Individual income tax declaration and contribution for remote employees.
• Mandatory China social security contribution – 5 social insurance and 1 housing fund contribution for full time remote employees in China.
• China payroll processing and salary disbursement
• Expense reimbursement.

Read the article to learn:

5 Steps to engage a PEO in China.

How to Calculate Employee Salary in China? [China Payroll Guide]

Benefits of hiring and paying remote employees in China through a China EOR & China PEO agency?

• No registered company in China required.
• Fully compliance with the local laws and regulations.
• Ensure tax and mandatory social security compliance
• Avoid the PE, mandatory risks.
• Quick and flexible. Employees can onboard and get paid within 2 weeks.

How can I hire remote employees in China and pay remote employees through our own legal entity in China?

For foreign investors who want to doing business in China and test the China market, hire and pay your remote employees through a China EOR or PEO agency is a smart approach. For foreign companies who want to have a long-term business in China, set up a legal entity in China and hire remote employees in China directly through the legal entity shall be a appropriate method.

Things you shall consider when hire and pay employees through your own legal entity.

1. You shall set up a WFOE in China to ensure you are able to hire remote employees and pay remote employees directly in China. Representative office in China is not allowed to hire and pay remote employees directly.
2. Ensure you have your bank account, corporate tax account, corporate social security account fully settled before hiring and pay remote employees in China.
3. You shall pay remote employee once a month in RMB.
4. You shall withhold the individual income tax and contribute to the tax bureau monthly for all remote employees in China.
5. You shall contribute the social security based on the city policy where your remote employee in China is based on the monthly basis.

Given the complexities of China payroll and necessary social security policies, it is strongly advised that international companies hire a China payroll service provider to handle their employees’ monthly payroll in order to prevent compliance issues.

About JSC – China PEO & Employment Expert.

JSC is a professional service company that assists foreign-invested companies in doing businesses in China.

Our core services China PEO and employment solution enables foreign investors to hire employees in China without setting up any company which allow them to expand into China market in days, not months. Our in-country local experts are also experienced in assisting businesses to compliantly establish their own legal entity in China.

Please contact us if you require any other information on China PEO.

Info@jscgroups.com

What employers need to know when hiring in China? This article explains the most critical information that employers should have when hiring in China.

1. Company must sign a written employment contract with each employee in China.

In China, signing a labor contract electronically is uncommon when hiring in China, and E-labor contracts may increase the likelihood of future labor disputes. It is strongly advised that you have a written employment contract.

Employees must sign each copy of a labor contract in China, while the employer must sign and chop the company seal on each copy. One original copy must be kept by both the employee and the employer.

Read more about China Labor Contract.

2. You can set probationary periods for your employees in China.

3. Contribute China social security on time and in full is very important.

There are five social insurance and one housing fund in China’s social security system. The Chinese social security system is extremely difficult to comprehend. In China, each city’s social security contribution base and percentage are different when hiring in China.

The social security contribution base for each employee will be adjusted annually based on their average salary from the previous year.

Read more about China Social Security System.

4. 13th month salary is not mandatory but common in China.

Many overseas employers may consider that 13th month salary is obligatory when hiring in China. In reality, the employer can choose whether or not to make an offer. However, if the 13th month salary is clearly stated in the employment contract, the employer is required to pay the employee.

The smart option when hiring in China is to give annual bonus to employee based on their performance.

5. Getting to know the China termination policy in advance.

In contrast to the United States, employers can easily fire employees due to the employment at will. Termination is a difficult process in China. Employers must notify employees one month in advance or pay one month’s wages as notice period compensation. The severance payment must also be paid by the employer. The amount of severance pay is determined by the number of years a person has worked for the company; the standard practice is one month’s salary for one complete working year when hiring in China.

6. You cannot hire employees in China directly without company establishment.

Many foreign companies will pay their employees in China directly even they have no company registered yet. It is very important to know that only registered company in China are able to hire employees in China and handling employees’ payroll, mandatory social securities. The compliance way is to engage a China EOR (China Employer of Record) and PEO vendor to hire employees.

Read more on How to Hire Employees In China Without Legal Entity?

7. Contractors are not suggested in China.

Contractors are quite common in western world. Considering the culture in China, Chinese people is more prefer to work as a full-time employee instead of hiring as part time employees and contractors. In China, contractors are not protected under China labour law, and employees are unable to engage into the China social security system. You shall consider if you would like to hire them as contractors or employees when hiring in China.

Read more about Contractors in China.

8. Benefits of using a China PEO/China EOR – China Employer of Record.

Hiring employees in China through a China PEO or China EOR is one of the most flexible and cost-effective solution when foreign investors have no company established yet in China. The PEO/ China EOR vendor in China will act as the employer of record, handle employee’s labor contract, payroll, social security, individual income tax in China while employees are working for you directly in China.

Read more about What is China PEO & China EOR? How does it work in China?

9. You shall apply work visa for your foreign employees in China.

If you want to hire foreign workers in China, you must first learn about the China work visa and residence permit processes, which vary by city. It’s becoming more difficult to hire foreigners who are currently outside of China as a result of the Covid-19. Only foreigners who have received Chinese vaccinations are permitted to enter. In China, there is a scoring system for visa applications; foreigners with a score of more than 60 can obtain a work permit and a residency permit. The entire application process takes about two months. It is critical to understand that foreigners can only legally work in China after obtaining a work permit and a resident permit.

About JSC – China PEO & Employment Expert.

JSC is a professional service company that assists foreign-invested companies in doing businesses in China.

Our core services China PEO and employment solution enables foreign investors to hire employees in China without setting up any company which allow them to expand into China market in days, not months. Our in-country local experts are also experienced in assisting businesses to compliantly establish their own legal entity in China.

Please contact us if you require any other information on China PEO.

Info@jscgroups.com

Hiring employees through PEO and EOR agencies is quite popular globally especially during the COVID-19, international expansion is restricted due to the border restriction in each country. The most appropriate method for doing business in China is through a China PEO or China EOR agency. This article helps you to understand how China PEO and China EOR works in China

Contents:

What is PEO & EOR?

What is PEO and EOR in China?

What are the obligations from the China PEO and China EOR agency?

Advantages of engaging a China PEO and China EOR

Disadvantages of hiring employee through PEO and EOR agency In China

How to hire employees in China through China PEO & China EOR?

What kind of company shall use China PEO & China EOR?

Cost of hiring employees through China EOR?

What is PEO & EOR?

PEO is the abbreviation of professional employer organization, while EOR is the abbreviation of employer of record. PEO and EOR agency usually support on the employment, payroll, mandatory benefits, tax filing, social security, labor dispute, employment relationship, etc.

The PEO and EOR agency will enter into a co-employment relationship with the actual employer and employee. Through such co-employment, the PEO and EOR agency will act as the employer of record (EOR) and handling all the mandatory employment and payroll related issues on the name of legal employer, while employees are managed and work for the actual employer.

What is China PEO and China EOR?

PEO and EOR in China is also called labor dispatching, talent dispatching, labor leasing, employee outsourcing. It is usually provided by the licensed human resource agency or consulting firm in China.

Similar like global PEO and EOR agency, China PEO and China EOR agency will act as the employer of record to sign the local employment contract with the local Chinese employees that are selected by client. The China PEO and China EOR agency will complete all the compliance procedure of employee on-boarding, off-boarding and monthly payroll, China social security. However, employees daily work management is all managed by client who is the actual employer in China. Read more about How to Hire Employee in China Without a Legal Entity.

What are the obligations from the China PEO and China EOR agency?

As the China PEO and China EOR agency, below are all the mandatory things they shall complete to ensure the hiring compliance in China

• Sign a written Chinese labor contract with each employee in China
• Complete employee’s mandatory social security and housing fund registration in the first month of on boarding in the city where employee is located
• Employee payroll in China. Calculate employee’s salary and statutory benefits base on the policy of the city where employee is located on the monthly basis.
• Release salary to employee monthly on time
• Contribute the mandatory China social security and housing fund monthly
• Declare employees’ local personal tax/individual income tax monthly
• De-register employee in the social security and housing fund bureau when employee leave
• Handling employment relationship, labor dispute, termination issues in China
• Assist employee in declare the yearly annual tax return yearly

As the local HR and employment expert, China PEO and China EOR agency shall be a very important role between actual employer and employee, to ensure the hiring and payroll compliance in China.

Advantages of engaging a PEO and EOR in China

Engaging a China PEO and China EOR vendor to start doing business in China is a very smart approach. Especially for foreign investors, who have less knowledge of China market, local regulations, market situation. Below is the conclusion of the advantages of engaging a China PEO and China EOR.

1. Able to hire employees anywhere in China without setting up your own legal entity

In China, if you would like to legally hire employees, you shall have a China legal entity to hire employees. However, for foreign investors it takes time and efforts to setting up a WFOE in China. Therefore, engage a China PEO or China EOR vendor can easily hire employees working for them without the establishment of the legal entity.

2. Easy and quick method to start doing business in China

China PEO and China EOR allowed foreign companies to start business in China within 1 week. Once the candidates been selected by client, the China PEO agency i can complete the on-boarding process within 1 week so that client can have the employees in China to start their business.

3. Flexible China market entry and exit approach

Many foreign investors would like to test the China market in the very initial stage. Setting up a company in China like China WFOE indeed is time and cost consuming, and it is not easy to close if foreign investors finally decide to leave China market. China PEO and China EOR indeed is the most flexible option for foreign investors to test the China market by hiring some local Chinese employees working for them. They can make a decision after couple of months to stay in the China market by setting up a China WFOE or leave the China market by terminating the employment relationship with the employees through the China PEO and China EOR agency.

4. Limited cost and liability

As foreign investors who want to establish a legal entity in China, it usually cost the initial establishment and ongoing maintaining of the tax accounting. In the meanwhile, the corporate itself in China undertake the high liabilities. Engaging a China PEO and EOR in the early stage of doing business in China can help foreign investors to control the cost and liability.

5. Avoid facing complexity China local laws and regulations

The complexity of China local laws and regulations make it difficult for foreign investors to start doing business and hiring employee in China. China PEO and China EOR agency can be a bridge for foreign investors to understand the local regulations, practices, and ensuring the hiring compliance in China.

Disadvantages of hiring employee through PEO and EOR agency In China

Employee may have less sense of belonging since their actual employer and legal employer is different. In this case, we suggest foreign investors can offer some extra benefits to employees, for example, commercial insurance, family insurance, gifts during different festivals in China through the HR agency in China to compensate employees.

When the headcounts in China are increasing, hiring under China PEO might be not good. In this case, most of the companies will then set up their own China WFOE and transfer all the employees to the China WFOE.

How to hire employees in China through China PEO & China EOR?

As introduced, China PEO and China EOR solution is indeed a good approach for foreign companies to quickly and easily start a business in China. Below are the steps of engaging a China PEO and EOR agency to hire employees in China while you don’t have a presence establishment yet.

Step 1: Select a qualified China PEO/ China EOR vendor

Step 2: Find your candidate in China

Step 3: Collect the personal information and employment details of the candidate

Step 4: China PEO/China EOR vendor prepare local employment contract

Step 5: China PEO/China EOR vendor prepare the first month invoice with the employment cost breakdown

Step 6: Foreign company transfer the invoice payment to China PEO/China EOR vendor

Step 7: China PEO/China EOR vendor release register employee into social insurance and housing fund bureau

Step 8: China PEO/China EOR vendor release first month salary to employee and declare tax

Read more on 5 steps to engage a PEO in China.

What kind of company shall use China PEO or China EOR?

There is different situation that company can engage a PEO/EOR service provider in China to hire employees.

1. Foreign investors who have no legal entity in China

The most common situation to engage a China PEO/China EOR is when foreign investors have no legal entity in China. In this case, the only compliance method to hire Chinese employees are through a China EOR or PEO agency in China. Employees can be selected by foreign companies and employed by the local Chinese PEO/EOR agency, while employees can work on the market research, sales, client management, etc for the foreign investors.

2. Foreign investors who are in the process of setting up a company in China

While it takes couple of months to set up a company in China, sometime, foreign investors would like to hire someone in China first. In this case, hire employee through a China PEO/China EOR is also a good option. Employees can transfer to the new entity after establishment.

3. Companies in China that has no headcounts to hire employees directly

Some of the companies may have the limited headcounts for hiring their own staff, they might can choose to engage a China EOR agency to hire the other employees until they have more headcounts to hire by themselves.

4. Companies in China who want to outsource a function

It is also very common in China to outsource the supporting function like call center, account management team. More like a BPO case, the PEO/EOR agency in China will hire the whole function for clients in China.

Cost of hiring employees through China EOR?

The cost of hiring in China includes the employee’s monthly gross salary, employer contributions to social security, and additional employee benefits such as supplementary health insurance and medical check-ups. Additionally, the service fee from the China EOR (Employer of Record) provider and applicable taxes must be factored into the total cost.

Read more about Pay Employees in China through China Employer of Record.

China PEO and China EOR agency can be a bridge for foreign investors to understand the local regulations, practices, and ensuring the hiring compliance in China. Remotepad has independently judged JSC as one of the leading China EOR agencies.

No matter it is hiring employee through a China PEO agency/China EOR agency or by China WFOE directly, it is all very important for foreign investors to understand the tips and practices of hiring employee in China.

China, as one of the world’s fastest-growing economies, is luring more international entrepreneurs to invest and start business in China. Hire employees in China would be the first step in expanding into a new world. The following contents will assist you in understanding how to hire employees in China without forming a company, as well as provide you with valuable information for hiring and managing Chinese employees.

Contents:

• 4 Options of hiring employees in China.
• Hire employees in China without legal entity through China PEO/China EOR.
• Advantages of hiring employees in China through China PEO/ China EOR.
• Steps to start hiring employees in China with no registered company.
• Hiring Chinese employees after forming a company – China WFOE
• Hire employees in China under a Representative office- Ro
• Hiring staff in China through your local supplier or partner
• China Hiring Practices you need to know before hiring in China.

4 Options of hiring employees in China.

Before you hire employees in China, you must first learn about the various hiring options available in China and recruiting in China in order to ensure that your hiring and employment practices are legal in China.

1. Hire employees in China without legal entity through a China PEO/China EOR.

Using a China PEO or China EOR to hire employees in China is the quickest and most convenient way for foreign investors to start their business and build a remote team in China or recruiting in China. China employer of record, employee outsourcing, talent/labor dispatch are other terms used in China for PEO service, which means that a China employment agency (a China EOR/PEO company) can serve as the employer of employees who are selected and worked for foreign companies in China.
The employment agency (China EOR/PEO) like JSC will hire employees in China and sign the local employment contract with your employees in China, handling the monthly China payroll, mandatory benefits, China social benefits, expenses claim. China EOR and PEO agency will manage all of the necessary and mandatory operations that an employer must perform when hiring in China.
Due to the complexities of Chinese local laws, an experienced employment and China EOR/PEO agency will assist you in declaring all local taxes and benefits in accordance with the most recent policies in the cities where your employees are located.

Understand more on What is China PEO & China EOR? How does it work in China? Please click here.

Advantages of hire employees in China through China PEO/China EOR

Easy entry and exit into the China market

China EOR/PEO is the perfect solution for foreign investors who want to test the China market but hire employees in China but aren’t sure whether they want to make a long-term investment in China. You can easily hire employees in China or recruiting in China through the employment agency via China EOR/PEO within 2 weeks. If you are unhappy with the employee’s results or do not want to continue doing business in China, you may fire him or her through the China EOR/PEO and employment agency.

Focus on business

By hire employees in China through a China EOR or PEO in China, you avoid having to learn the intricacies of each city’s hiring and benefits policies, which are complicated, constantly evolving, and all in Chinese. You can outsource all of these administrative HR issues to an experienced China EOR/PEO & employment provider, who can assist you in hire employees in China and completing all of these necessary, mandatory operations effectively and efficiently, allowing you to concentrate on your own business.

Compliance

Doing business in China in a compliance way is one of the most important things for foreign companies. However, different cities in China has different polices regarding payroll, tax, benefits, and due to the language barriers, it is very difficult for foreign investors to know all these polices clearly and completely. Furthermore, since all of these policies are constantly evolving, it is important to stay up to date of the policies relating to hire employees in China.

Save time & Save money

Start doing business in China or recruiting in China or hire employees in China through China EOR/PEO can enable you to start the business within 2 weeks without setting a company in China. Setting up a company (WFOE) to start a business normally takes at least two months to complete, including the establishment of a bank account. You’ll also have to pay monthly tax accounting fees to keep the business running after it’s been founded.

Avoid language and culture barriers

One of the most important obstacles foreign businesses would encounter when doing business in China and hire employees in China is language and cultural differences. Selecting a qualified HR service provider in China will assist you in avoiding such stumbling blocks.

Steps to start hiring employees in China with no registered company.

1. Below are the different ways for you to find the right candidates in China.

Find through your own connections.

Post jobs in different job portals in China, e.g. Linkedin, zhaopin.com, liepin.com.

Leave the recruitment part to the China recruitment or China headhunting firm.

2. Sign local labor contract with employees

The HR agency in China you selected will hire employees in China and sign an official China labor contract with the candidates you selected.

3. Prepare the China Payroll Report

Your China EOR or HR agency will calculate the monthly employment cost based on the employee’s personal information, salary specifics, and social benefits contribution policies in each region, and submit a China payroll report to your company for payment in China.

4. Onboard Employee in China

The China EOR and HR agency will register the employee’s information into the government system including but not limited to the China tax system, China social security system which will enable them to complete all of the on-boarding procedures mandated by local regulations in China.

5.Pay Salary to Employee in China

The China EOR and HR agency will release the salary, allowances, expenses to employees on the monthly basis after receiving the payment from foreign companies.

2. Hiring Chinese employees after forming a company – China WFOE

For hiring staff in China, you need a local Chinese company to be the employer of your employees in China. If you have a long-term investment plan in China, or you are very confident of your China business, or you already have the signed client in China, setting a China WFOE is the best option for you before hiring employees in China or recruiting in China.

Before recruiting staffs in China, you must first create your own China WFOE, which takes about 2-6 months to complete China company formation process. Since different business practices in China necessitate different licenses, the entire process may take much longer. It is very important to find an experienced agency for you to set up a company in China.

After your China WFOE is completely operational, you must first set up your company’s social security and housing fund accounts, after which you will begin hiring employees in China and managing their monthly China payroll and China mandatory benefits.

3. Hire Employees in China under a China Representative office- (China Ro)

Many foreign investors prefer to setting up a representative office in China first. It is essential to understand that China representative offices are not permitted to hire employees in China directly. Hire employees in China through a licensed China dispatch/China EOR or PEO and employment agency is the only way to ensure compliance when hiring in China.

4. Hiring staff in China through your local China supplier or partner

Hiring employees in China through your China supplier or partner also can be an opportunity if you can locate a China local supplier or partner who is willing to hire employees in China for you. However, you must ensure that your China local supplier or partner is properly managing your employees’ payroll and employment in China; if they are not, your China employees’ experiences and feelings will be extremely negative, prompting them to leave the job. It is important for you to know what kind of contracts your China supplier signed with your employees in China.

China hiring practices you need to know before hiring in China.

1. China Hiring Practices: Employment contract term in China

In practice, employer in China shall sign a fixed term employment contract with their employees in China. However, when it goes to the third time renewal of the employment contract, then the contract becomes to a permanent contact.
Sign a two years or three years contract is more common in China.

No need to sign employment contract if you are hiring independent contractor in China.

2. China Hiring Practices: Mandatory benefits in China (China Social Security)

For hire employees in China or recruiting in China, you need to know the 5 China social insurance and 1 housing fund is mandatory benefits. Both employer and employee in China shall contribute the mandatory social security in China.
5 Social Insurances,
 Pension
 Medical Insurance
 Unemployment Insurance
 Work-Related Injury Insurance
 Maternity Insurance
1 Housing Fund

3. China Hiring Practices: Normal China payroll, salary structure/offer package in China

Below are the important components of China payroll for your understanding when hiring employees in China.

Gross salary: fixed base salary

Flexible salary: performance bonus, commission, allowances
13 Month salary/ Annual bonus: common in China but not mandatory
Mandatory benefits (China Social Security System): 5 social insurances and 1 housing fund
Supplementary health insurance: not mandatory, but very common among foreign employers
China Leaves: Public holidays, Annual leaves, Paid sick leaves

4. China Hiring Practices: Payroll Cost of Hiring Employees in China

For hiring employees in China, your monthly employment cost consist of:
+Employee monthly net salary
+Employer contribution of mandatory China social security contributions
+Employee contribution of mandatory China social security contributions
+Allowances
+Individual income tax
+Other benefits offered.

5. China Hiring Practices: Annual leaves in China

Employer shall aware all the full time employees in China shall enjoy the paid annual leaves when hiring in China. Company cannot give the China annual leave days lower than the below policy:
1 working years, at least 5 days annual leave.
10 working years, at least 10 days annual leave.
Employee working years>=20, annual leave >=15

6. China Hiring Practices: Public holidays employees can take in China

Employees in China shall enjoy the paid public holidays. Below are the public holidays in China and is paid holidays. The exact date will be announced by the government at the end of December last year.
New Year’s day: 1 day
Spring Festival/Chinese New Year: 3 days
Qing Ming Festival: 1 day
Labor Day: 1 day
Dragon Boat Festival: 1 day
Mid-Autumn Festival: 1 day
China National Holiday: 3 days
Employers shall pay overtime payment if they require employees to working during the public holidays.

7. China Hiring Practices: China Probation period for employees

Employer can set the probation period when hiring employees in China. The probation period shall be set based on the employment contract term.
If the employment contract is signed for 1 year, the probation period can be one month.

If the employment contract is 2 years, the probation period can be 2 months.

Employment contract term is 3 years or more, the probation can be a maximum of 6 months.

Please kindly note that employees’ salary during probation period cannot be lower than 80% of the salary after the probation period.

If you would like to understand your hiring cost in China, please read the below article: Hiring Cost in China 2024.