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.