Hiring employees in China can be complex and costly—especially for foreign companies without a local legal entity. A China Employer of Record (China EOR) offers a compliant and cost-effective alternative, but one of the most common questions employers ask is:

How much does a China Employer of Record cost?

This guide breaks down China EOR pricing structures, key cost components, and how China EOR compares to setting up a legal entity in China, helping you determine whether China EOR is the right solution for your 2026 business expansion or hiring strategy in China.

Contents

• What Is Included in China EOR Costs?
• Example: China EOR Monthly Hiring Cost
• China EOR Cost vs Setting Up a Legal Entity (China WFOE)

✅ What Is Included in China EOR Costs?

China EOR hiring costs consist of the following elements:

• Employee’s Monthly Gross Salary
• Employer’s Statutory Social Insurance Contributions in China
• Trade Union Fee
• Employer Liability Insurance
• China EOR Service Fee
• Value Added Tax (China VAT)

1. Employee’s Monthly Gross Salary

Employee’s monthly gross salary in China is the amount agreed between the employee and the employer and stated in the China employment contract signed with the China Employer of Record (China EOR).

Company should note that the China monthly gross salary is not the employee’s take-home pay. The China EOR agency will withhold the employee’s portion of China social security contributions and individual income tax in accordance with Chinese regulations, and the employee will receive a net salary after these statutory deductions.

2. Employer’s Statutory Social Insurance Contributions in China

Under China labor law, employers must contribute to mandatory social insurance schemes for all full-time employees in China on the monthly basis, which typically include:

• Pension
• Medical insurance
• Unemployment insurance
• Work-related injury insurance
• Maternity insurance
• Disability fund
• Housing fund

Contribution rates and calculation bases vary by city in China, making location a key factor in overall EOR cost. For more details regarding China mandatory social security contributions, please read the article here.

3. Trade Union Fee

China Trade union fees apply when a company’s total employee headcount exceeds the statutory threshold. For established and reputable China Employer of Record (China EOR) agencies, the total number of EOR-employed staff in China typically exceeds this threshold, which requires the China EOR to establish or participate in a trade union.

As a result, all employees hired under the China EOR arrangement are covered by the trade union, and the China EOR is responsible for paying the applicable union fee in accordance with local regulations. EOR employees are also entitled to the corresponding trade union benefits and protections provided under Chinese law.

4. Employer Liability Insurance

Employer liability insurance is not legally mandatory in China, but it is widely adopted by professional China Employer of Record (China EOR) providers. As the China EOR acts as the legal employer, this insurance helps manage potential employment-related risks and provides additional protection for foreign clients, reducing exposure to unforeseen liabilities.

5. China EOR Service Fee

China EOR service fee covers the administrative and compliance services provided by the China Employer of Record, including:

• New employee onboarding and registration
• Employment contract preparation and management
• Monthly payroll calculation and salary disbursement
• Monthly pay-slip preparation and distribution
• Individual income tax (IIT) calculation and monthly filing
• Social insurance and housing fund administration
• Ongoing HR support and labor law compliance management
• Employee offboarding and exit procedures

China Employer of Record Service Fee Models

China EOR providers generally use one of the following service fee models:

1. Fixed Monthly Service Fee per Employee

This is the most common model.

• Charged per employee, per month

• Covers standard EOR services in China

• Predictable and easy to budget

Typical range:

👉 USD 300 – 800 per employee per month

(depending on city, headcount, and service scope)

2. Percentage of Gross Salary

This service fee model is not commonly used in China EOR services, but some China EOR providers may apply it for special or complex hiring scenarios, such as senior management roles, foreign employee hiring, or freelancer engagements.

• The service fee is calculated as a percentage of the employee’s monthly gross salary

• The percentage varies depending on role complexity and compliance requirements. Often ranges between 5% – 15%

This model may result in higher overall costs, particularly for senior or high-salary positions.

3. Customized or Tiered Pricing

Used for:

• Larger teams
• Multi-city hiring
• Roles requiring enhanced HR or compliance support

Pricing is tailored based on complexity and scale.

Hidden Costs to Watch Out For

When comparing China EOR providers, be aware of:

• Setup or onboarding service fees

• Contract amendment service fees

• Termination handling costs/offboarding service fees

• City-specific compliance surcharges

A transparent China EOR provider should clearly outline what is included and what is not from the beginning.

6. China Local Tax: Value-Added Tax (China VAT)

Value-Added Tax (VAT) treatment for China EOR services depends on the client’s legal presence in China.

If the client does not have a legal entity in China, VAT is generally applied to the total EOR invoice amount, including employment costs and the EOR service fee.

If the client has a registered legal entity in China, such as a China WFOE or China Representative Office, VAT is typically applied only to the EOR service fee, in accordance with applicable tax regulations.

The effective VAT rate applied to China EOR services is usually around 6.78%, subject to local tax treatment and invoicing arrangements.

✅ Example: China EOR Monthly Hiring Cost

Let’s assume you hire two employees, one based in Shanghai and the other in Beijing, each with a gross salary of RMB 20,000 per month, and the client does not have a legal entity in China. The estimated monthly cost under a typical China EOR arrangement would be as follows:

For foreign companies hiring employee in China, the official 2026 China national holiday schedule (China public holiday) has been released. Employers should take note of these statutory holidays in China to plan operations, staffing, and payroll smoothly throughout the year in China.

China’s public holidays include New Year’s Day, Spring Festival, Tomb-Sweeping Day, Labor Day, Dragon Boat Festival, Mid-Autumn Festival, and National Day. During these periods, employees in China are entitled to time off according to national regulations. The government also designates certain weekends as adjusted working days to balance long holiday breaks—these adjusted workdays are compulsory normal working days.

Please refer to the below picture for the exact dates of each holiday and the corresponding adjusted working days in 2026.

With China’s strong manufacturing capabilities, hiring a sourcing manager in China is crucial for foreign companies to manage cost, quality, and delivery for their products in the factory in China. But how can you hire in China without a local entity? This guide explains how to legally hire sourcing manager in China using solutions like a China Employer of Record (China EOR), China key factory regions, and hiring costs in China etc.

Contents

• Top Manufacturing Cities in China
• Role and Responsibilities of a Sourcing Manager in China
• Salary Benchmark for Sourcing Managers in China (2025)
• How to Find and Hire a Sourcing Manager in China?
• How to Hire a Sourcing Manager in China Without a Legal Entity (China EOR Solution)?
• What is an EOR in China?
• Total Monthly Hiring Cost of a Sourcing Manager in China (via China EOR)
• JSC Value-Added Support Services for Foreign Companies when Sourcing in China

✅ Why Source Products in China?

China remains the world’s factory, thanks to its:

• Mature supply chain networks
• Economies of scale
• Strong production capability across various industries
• Skilled labor with good English communication including sourcing managers, QC inspectors, and factory supervisors in China.

Whether you are sourcing electronics, apparel, furniture, or machinery, hiring local sourcing manager in China helps you:

• Source and manage reliable suppliers/factories in China
• Ensure your products quality control in China
• Manage deliveries and logistics
• Act as the communication bridge between the foreign company and Chinese factories or suppliers.

✅ Top Manufacturing Cities in China

Choosing the right sourcing manager in China often depends on the location of the suppliers. Here’s a breakdown of major industrial hubs in China:

• Shenzhen, Guangzhou: Electronics, home appliances, fashion
• Dongguan, Zhongshan: Furniture, LED lighting, hardware
• Ningbo, Yiwu (Zhejiang): Auto parts, fasteners, small commodities
• Suzhou, Wuxi (Jiangsu): Industrial machinery, textiles
• Chongqing, Chengdu: Consumer electronics, motorcycles
• Qingdao, Yantai (Shandong): Rubber, seafood, mechanical components

✅ Role and Responsibilities of a Sourcing Manager in China

A sourcing manager in China (also known as a China buyer or China purchasing agent) plays a crucial role in your China supply chain operations. Their key responsibilities include:

• China supplier or China factory sourcing and evaluation
• Negotiation of pricing and terms with China suppliers
• Sample ordering and product development follow-up
• Production tracking and vendor coordination
• Scheduling quality control and inspection
• Handling logistics and shipping preparation
• Managing compliance and factory audits
• Reporting to international management teams

Fluent English and experience in export-oriented manufacturing are major advantages for this role.

✅ Salary Benchmark for Sourcing Managers in China (2025)

Salaries vary based on city, experience, and language skills. High-end sourcing managers with international exposure may demand a higher package. Additionally, roles involving technical sourcing—such as machinery, electronics, or specialized components—typically require candidates with deeper expertise and therefore command higher salaries.

Here’s an overview:

Due to the current global economic slowdown, setting up a legal entity in China has become increasingly time-consuming, costly, and resource-intensive for foreign companies looking to enter the market. As a flexible and cost-effective alternative, the China Employer of Record (China EOR) solution enables foreign businesses to quickly and compliantly hire remote employees in China without establishing a local entity. This approach offers a low-risk way to test the China market, providing an easy entry and exit strategy with streamlined operations and reasonable pricing.

✅ What is a China Employer of Record (China EOR)?

A China EOR (China Employer of Record) is a licensed local service provider that legally employs staff in China on behalf of a foreign company. It allows companies to hire remote employees in China without establishing a legal presence such as a China WFOE (Wholly Foreign-Owned Enterprise) or China Representative Office (China Ro). The China EOR handles all China employment, HR, payroll, tax, and statutory compliance responsibilities—ensuring a seamless employment experience for both employer and employee even while the employee is working remotely for foreign company in China.

✅ Common Scenarios Where China EOR Supports Foreign Companies Hiring Remotely in China

Situation I: For companies that have closed or are closing their China entity

For foreign companies that have shut down their China entity—or are in the process of closing or re-registering a WFOE or Representative Office—the China EOR solution provides a legal and compliant way to retain key employees in China. The China EOR agency acts as the official employer of record, handling employment contracts, payroll, statutory benefits, and tax filings on behalf of the foreign company. Additionally, the EOR agency can issue invoices in major foreign currencies such as USD, GBP, EUR, HKD, and SGD, ensuring smooth financial transactions.

Situation II: For companies in the process of setting up in China

If a foreign company is in the process of establishing a legal entity in China, a China EOR can serve as a practical interim solution. It enables the company to hire and onboard remote employees immediately, maintaining business continuity and productivity while the company registration is underway. Once the China entity is officially established, the China EOR agency can assist with smoothly transferring the employment relationship to the new China entity and may continue to provide ongoing support with China payroll, benefits administration, and tax compliance as needed.

Situation III: For companies with no plans to set up a China entity

For foreign companies that do not intend to establish a legal entity in China, the China EOR solution provides a flexible and long-term option to hire remote employees in China. It allows businesses to operate in the China market compliantly without navigating the complexities of company registration. Moreover, if the business does not perform as expected, there is no need to go through a time-consuming and costly company de-registration process. The employment relationship can be legally and efficiently ended with just one month’s notice, making it a low-risk and agile solution for international companies testing or scaling in China.

✅ Main Advantages of Hiring Remote Employees in China through a China EOR

1. No China company required – Hire and manage remote employees in China without the need to set up a China WFOE or China Representative Office.

2. Fast onboarding– Hire employees in as little as 1 week.

3. Flexible exit strategy– Close your China business and end employee relationships within 1 month.

4. Compliance assurance – Stay compliant with China employment laws and China payroll regulations, including China mandatory benefits like social insurance and housing fund contributions.

5. Direct invoicing in foreign currencies– Pay for services in USD, EUR, GBP, HKD, SGD, etc., simplifying your financial operations.

6. Cost efficiency– Avoid the high startup and maintenance costs of establishing and running a legal entity in China.

✅ Steps to Engage a China Employer of Record

1. Select a licensed China EOR agency with relevant government approvals (e.g., talent dispatch license).

2. Source candidates directly or allow the China EOR agency to handle recruitment and interviews in China.

3. Conduct background checks – China EOR coordinates employee background checks and reference verifications as part of pre-employment procedures if required by foreign companies.

4. Sign employment contracts – The EOR agency signs on behalf of your company with your selected employees.

5. Procure working tools – China EOR can assist with purchasing and providing necessary work equipment such as laptops and other tools required.

6. Register social insurance and housing fund – EOR ensures all mandatory employee benefits are properly registered with Chinese authorities.

7. Process payroll and invoicing – EOR handles salary calculations, tax declarations, and issues service invoices.

8. Client payment – The foreign company pays the invoice to the EOR agency.

9. Salary distribution – The EOR disburses the net salary to the employee and submits individual income tax declarations.

✅ Why Choose JSC as Your China EOR?

At JSC, we are a trusted partner for global companies seeking to hire remote employees in China without complications. Here’s why clients choose us:

• ✅ Fully licensed with China EOR and talent dispatch certifications

• 🌐 Bilingual international team for seamless communication

• ⏱️ 24/7 client support and responsive service

• 📋 Full compliance with Chinese labor and tax regulations

• 🏢 Local presence in China for real-time HR and payroll support

• 💵 Affordable pricing – Only USD 100–200 per employee per month for part-time contractors or full-time employees

• 🌍 Global payments accepted – Flexible billing and international payment options available

Understand more about Top Tips For Hiring Remote Employees in China.

🚀 Contact JSC

Interested in hiring remote employees in China or need help maintaining your workforce after closing your China entity?

Contact JSC today to explore a tailored China EOR solution that fits your business needs.

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/China EOR.

Info@jscgroups.com

As foreign companies expand into China’s dynamic market, managing business operations efficiently becomes increasingly complex. Hiring local talent, ensuring compliance with Chinese labor laws, and handling administrative processes can be resource-intensive. This is where JSC’s China Business Process Outsourcing (China BPO) solution comes in—helping you scale your operations without the burden of direct employment contracts, payroll management, or compliance risks.

By outsourcing entire teams to JSC, you can streamline your China operations while reducing overhead costs and focusing on your core business activities in China.

✅ What is JSC China BPO Solution?

JSC offers end-to-end China BPO services tailored for foreign companies. Our solution allows you to outsource temporary or project-based roles without the need to source candidates, sign China employment contracts, or manage China payroll. Instead, JSC takes full responsibility for the outsourced team, ensuring full compliance with Chinese labor regulations.

✅ Key Benefits of JSC China BPO Solution

No China Employment Relationship Needed:

With JSC China BPO Solution, you can outsource your China workforce without establishing direct China employment contracts. We handle all legal, HR, and administrative responsibilities for your China hiring and employment.

Full Compliance with Chinese Labor Laws:

JSC ensures that your China BPO operations adhere to all China local employment regulations, mitigating compliance risks.

Cost-Effective and Flexible:

JSC China BPO services offer flexible, scalable solutions for temporary and long-term needs, helping you reduce operational costs.

Access to Skilled Talents in China:

JSC assign qualified professionals based on your project requirements, ensuring the right expertise for your business operation in China.

Efficient and Timely Delivery:

JSC guarantees on-time delivery of services, maintaining quality and consistency throughout the project lifecycle.

✅ Comprehensive China BPO Service Offerings

JSC provides a wide range of China Business Process Outsourcing services designed to meet the diverse needs of foreign companies, including:

China Human Resources (HR) Outsourcing:

• China Employee Outsourcing/China Employer of Record (China EOR)
• Employee records management
• HR administration and compliance
• Talent acquisition and recruitment support
• China HR BPO services for smooth workforce management

China Customer Support and Call Center Services:

• Multilingual customer service (Mandarin, English, and other regional languages)
• Inbound and outbound call handling
• Technical support and help desk services
• Customer satisfaction management

IT and Software Development in China:

• Custom software and app development
• IT support and maintenance
• Quality assurance and testing
• BPO-driven tech support solutions

China Supply Chain and Logistics Management:

• Procurement and Sourcing
• Vendor coordination and management
• Inventory tracking and reporting
• Freight and shipment management
• BPO-driven logistics optimization

Translation and Localization Services:

• Document translation (technical, legal, business)
• Website and software localization
• Multilingual content adaptation
• BPO-powered translation solutions

China Marketing and Content Services:

• Digital marketing campaigns
• Content creation and localization
• SEO and social media management
• BPO-driven marketing operations

China Finance and Accounting Services

• Bookkeeping and financial reporting
• Tax filing and compliance
• Accounts payable/receivable management
• BPO for accounting processes

China Legal Process Outsourcing (LPO):

• Contract review and management
• Compliance documentation
• Legal research and support
• China LPO services for corporate legal needs

China Data Analytics and Business Intelligence:

• Data processing and reporting
• Market and customer analysis
• Predictive analytics and insights
• Data-focused China BPO services

Research and Development (R&D) Services in China:

• Market research and feasibility studies
• Product testing and development support
• Data collection and analysis
• China R&D BPO services

✅ How JSC China BPO Solution Works

Needs Assessment:

We assess your project requirements, timelines, and deliverables.

Team Assignment:

JSC assigns skilled professionals tailored to your BPO project needs.

Operational Management:

We oversee the team’s performance, ensuring compliance with China’s BPO standards.

Result Delivery:

Our team delivers timely, high-quality results, helping you achieve operational efficiency in China.

🚀 Streamline Your China Operations with JSC China BPO Solution

Whether you need customer support, IT development, accounting, or logistics services in China. JSC’s China BPO solution provides a seamless, cost-effective, and compliant way to scale your business. With no employment relationship required and full compliance with local regulations, you can focus on expanding your market presence while we handle the day-to-day operations.

👉 Contact JSC today to discover how our China Business Process Outsourcing services can simplify and optimize your operations 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/China EOR.

Info@jscgroups.com

Hiring and managing talent in China requires a deep understanding of local laws, recruitment practices, and the cultural nuances of the job market. This comprehensive guide provides an overview of the China recruitment, Hiring Practices in China, and on-boarding processes for businesses looking to hire in China, along with essential insights into statutory benefits, employee rights, and termination practices.

Contents:

1. Steps in the Onboarding Process for Hiring in China
2. How to source candidates in China?
3. Is It Necessary to Conduct a Background Check in China?
4. How Common Is Remote Work in China?
5. How to Hire Employees in China Without a Local Entity: Using an Employer of Record (China EOR)
6. Hiring Foreign Employees in China: Expats and Work Visas
7. Difference Between Full-Time Employee and Independent Contractor in China
8. Can I Set a Probation Period in China?
9. Essential Tips for Signing a China Employment Contract
10. What Statutory Benefits Are Employers Required to Provide in China?
11. What Is the Salary Payment Schedule in China?
12. Additional Benefits to Help Retain Staff in China
13. Cost and Process of Terminating an Employee in China

Hiring Practices in China 1.Steps in the Onboarding Process for Hiring in China

• Sourcing Candidates: Use China job portals, agencies, or referrals to find candidates.
• Interviews & Offer: Conduct interviews and finalize the job offer.
• Background & Medical Check: Perform background and medical checks.
• Sign Employment Contract: Have the employee sign the contract with job terms.
• Social Security Enrollment: Register the employee in China’s social security system.
• Payroll & Tax: Release salary and handle tax declarations.

Hiring Practices in China 2. How to source candidates in China?

China Job Portals (via a Local Entity or Partner). China Job Portals are one of the most effective ways to source candidates in China local market, with several platforms dominating the China recruitment space. Popular Chinese job portals include 51Job, Zhaopin, Liepin and BOSS which cater to diverse industries and roles, ranging from entry-level to executive positions. These platforms offer robust features such as resume databases, targeted job postings, and employer branding tools, making them indispensable for local recruitment efforts. However, companies without a legal entity in China face a significant limitation: they are unable to directly post job openings on these Chinese job portals due to regulatory restrictions. In such cases, businesses may need to collaborate with local entities or China recruitment agencies to navigate this challenge and access to the talents in these Chinese job portals.

China Recruitment Firms/Headhunting Firms are a reliable option for sourcing talent in China, particularly for specialized or senior-level roles or the foreign company who has no legal entity established in China yet. China recruitment firms have a deep understanding of the China local market, access to extensive Chinese candidate networks, and expertise in matching talent to specific job requirements in China. However, it is crucial to ensure that the chosen China recruitment firms holds a valid license to operate in China, as this is a regulatory requirement. While these China recruitment firms offer valuable services, the costs can be significant, with service fees typically ranging from 20-30% of the candidate’s annual salary. Despite the expense, China recruitment firms can be an efficient solution for companies seeking high-quality candidates or navigating the complexities of the Chinese job market.

Global Job Portals like LinkedIn and Indeed are often used to source talent internationally. However, their effectiveness in China is limited due to lower adoption rates among Chinese candidates and restrictions imposed by China’s internet regulations. Additionally, LinkedIn has officially closed its local business operations in China, further reducing its utility for sourcing Chinese talent in the region. Consequently, global platforms may not be as comprehensive or reliable as domestic job portals for sourcing Chinese candidates.

Hiring Practices in China 3. Is It Necessary to Conduct a Background Check in China?

Conducting a background check in China is strongly recommended to ensure the accuracy of a candidate’s credentials and work history. This process typically includes verifying educational qualifications, checking for any criminal or dismissal records, and confirming previous work experience. Due to strict local regulations, background checks must be conducted through a licensed agency and can only proceed with the formal approval and authorization from the employee in China.

One key reason to prioritize thorough background checks in China is that terminating an employment relationship in China is not straightforward. China Labor laws heavily favor employee protection, and improper termination can lead to significant legal and financial consequences for the employer in China. Ensuring a candidate’s qualifications and background through a compliant process minimizes risks and helps employers make informed hiring decisions while adhering to Chinese legal requirements.

Hiring Practices in China 4. How Common Is Remote Work in China?

Remote work has become more common in China, especially since the COVID-19 pandemic, which accelerated the adoption of flexible work arrangements. It is particularly prevalent among foreign companies without a legal entity in China, as employees typically work from home or other remote locations. For these companies, remote work is both a practical necessity and an attractive benefit, allowing them to access talent without requiring a physical presence. This flexibility has become a key advantage in attracting Chinese employees.

Hiring Practices in China 5. How to Hire Employees in China Without a Local Entity: Using an Employer of Record (China EOR)

Hiring employees in China without a legal entity is possible through a China Employer of Record (China EOR). The China EOR acts as the legal employer in China, handling all local employment responsibilities such as China payroll, taxes, social security, benefits, and compliance with Chinese labor laws. The foreign company manages the employee’s day-to-day tasks, while China EOR ensures legal compliance. This approach allows businesses to hire and onboard employees quickly without setting up a local entity in China, offering a cost-effective and risk-free solution for accessing China’s talent pool.

For more details, please visit:

Pay Employees in China through China Employer of Record

How to Hire Employees In China Without Legal Entity?

Hiring Practices in China 6. Hiring Foreign Employees in China: Expats and Work Visas

Employers should be aware that hiring foreign employees to work in China requires obtaining a China work permit and a residence permit for the employee. These permits are mandatory, and foreign employees can only legally begin working in China once the required permits have been successfully issued.

Hiring Practices in China 7. Difference Between Full-Time Employee and Independent Contractor in China

Full-Time Employee: A permanent employee working under an employment contract, entitled to company benefits and protections.

Independent Contractor: A freelancer or self-employed individual hired for specific tasks, without the same benefits or protections as full-time employees.

Benefits:

Full-Time Employee: Eligible for China social insurance, paid leave, and other statutory benefits.

Independent Contractor: Not entitled to employee benefits in China such as social insurance or paid leave.

Control Over Work:

Full-Time Employee: The employer has more control over working hours, job duties, and location.

Independent Contractor: Works independently with more flexibility regarding working hours and methods, typically based on deliverables or projects.

Termination:

Full-Time Employee: Requires legal processes, including notice periods and severance pay.

Independent Contractor: Termination is based on the contract terms, usually with less legal formalities.

Complete Guide on Hire Independent Contractor in China 2024

Hiring Practices in China 8. Can I Set a Probation Period in China?

Yes, employers can set a probation period in China, but it must follow specific rules:

• Duration: The probation period cannot exceed six months. For employment contracts of more than one year but less than three years, the probation period is two months. For employment contracts of three years or more, it can be up to six months.
• Salary: During probation, employees must receive at least 80% of the agreed salary in China.
• Notice Period: Both the employer and the employee can terminate the employment with a three-day notice period during the probation period.

Hiring Practices in China 9. Essential Tips for Signing a China Employment Contract

• Eligibility: The employment contract in China must be signed with a legal entity in China, and the employee must be a Chinese national or a foreigner with a valid work permit. For the foreign company who has no registered entity in China, they shall engage a China EOR to sign the employment contract with employees in China.
• Key Information: China employment contract should include job duties, salary, benefits, working hours, leave, social insurance, and termination clauses.
• Contract Term: After three contract renewals, the contract becomes permanent.
• Digital Signatures: Digital signatures are allowed if done through a licensed platform.
• Signing Deadline: The contract must be signed within 30 days of the employee’s first day of work.

Hiring Practices in China 10. What Statutory Benefits Are Employers Required to Provide in China?

Employers in China are required to provide mandatory China social security benefits for all full-time employees. Key points include:

• China Social Security Contributions: Employers and employees must both contribute to China social insurance funds, which typically include pension, medical insurance, unemployment insurance, work injury insurance, and maternity insurance.
• Local Variations: Contribution bases and percentages vary by city, and employers must comply with the regulations specific to the location where the employee is registered.
• Employee Contributions: The employee’s portion is withheld from their salary and submitted by the employer along with the employer’s contributions.
• Monthly Contributions: Contributions are made on a monthly basis, with adjustments to the contribution base occurring annually.

Hiring Practices in China 11. What Is the Salary Payment Schedule in China?

In China, the payroll cycle is typically monthly. The most common payday is the last working day of each month, although some companies choose to pay employees on the 15th of the following month.

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

Hiring Practices in China 12. Additional Benefits to Help Retain Staff in China

• Commercial Insurance (Supplementary Health Insurance): While social insurance is mandatory in China, many employers in China offer commercial insurance as an additional benefit. This may include enhanced health coverage, accident insurance, or life insurance, providing employees in China with better financial security and medical care options beyond what is covered by the standard social insurance system.
• Medical Check-Ups: Providing annual medical check-ups is a popular benefit among employers in China. It demonstrates care for employees’ health and well-being, helping to build loyalty and trust. Many companies partner with private healthcare providers to offer comprehensive health screenings.
• Additional Leave: Beyond the statutory leave (e.g., annual leave, maternity leave, and sick leave), offering extra paid leave or flexible time off can greatly improve employee satisfaction. Examples include personal days, mental health days, or extended holiday periods during Chinese festivals.

Hiring Practices in China 13. Cost and Process of Terminating an Employee in China

• Grounds for Termination: Employers can terminate an employee only under specific conditions, such as serious misconduct, failure to meet performance standards during probation, or mutual agreement. Unilateral termination without a valid reason is not allowed.
• Notice Period: If the termination is lawful, employers must provide a 30-day notice or pay one month’s salary in lieu of notice. During probation period, notice period is 3 days.
• Severance Payment: Severance is required if the employer initiates the termination in China, except in cases of gross misconduct. The amount is calculated as one month’s salary for each full year of service. For any period of employment less than six months, the severance is half a month’s salary.
• Calculation of Salary: Severance is based on the employee’s average monthly salary over the previous 12 months, capped at three times the local average monthly salary. Any salary above this cap is calculated at the capped rte.
• Special Circumstances: Terminating employees in China during protected periods, such as maternity leave, medical treatment leave, or for statutory reasons like discrimination, is prohibited. Companies that fail to comply with these regulations may face penalties and additional compensation to employees.

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/China EOR.

Info@jscgroups.com

China has revised “National Public Holidays and Commemorative Days Holiday Policy” in November 2024, starting from January 1, 2025, all citizens will have an additional 2 days off. This includes 1 additional day for both the Spring Festival (Chinese New Year) and Labor Day.

Accordingly, the holiday and adjustment principles have been further optimized and improved. Except in special circumstances, the Spring Festival holiday will begin on the eve of the lunar New Year and last for 8 days; the National Day holiday will last for 7 days starting from October 1; Labor Day will be 5 days off; the New Year’s Day, Qingming Festival, Dragon Boat Festival, and Mid-Autumn Festival will each have 3 days off (if the holiday falls on a Wednesday, only that day will be a holiday); the National Day holiday will be extended to 8 days if it coincides with the Mid-Autumn Festival.

In accordance with these principles, the specific holiday arrangements for 2025, including New Year’s Day, Spring Festival, Qingming Festival, Labor Day, Dragon Boat Festival, Mid-Autumn Festival, and National Day, are as follows.

 

Expanding into the Chinese market is a promising venture for many international companies, yet navigating the complexities of setting up a legal entity and managing payroll can be daunting. Fortunately, there’s a solution that streamlines this process: China Employer of Record (China EOR) services. This article explores how China Employer of Record services enable foreign companies to hire and pay employees in China efficiently and compliantly, without the need for establishing a legal entity in China.

Contents:

1. Steps to Engaging a China Employer of Record
2. Benefits of Using China Employer of Record Services to pay employees in China
3. Risk of paying employees in China directly through overseas entity
4. Understanding the Costs of paying employees in China through China Employer of Record
5. Frequency of Paying Employees in China
6. Salary Tax in China
7. Frequently Asked Questions of paying employees in China

1. Steps to Engaging a China Employer of Record

Here are the key steps involved in utilizing a China Employer of Record service to pay employees in China:

• Find a Licensed Provider: Seek out a reputable China EOR service provider with a Talent Dispatch license, ensuring compliance with local regulations.
• Signing Employment Contracts: China Employer of Record provider signs employment contracts with hired employees on behalf of the foreign company.
• Enrollment in China Social Security: China Employer of Record provider shall enroll employees in China social security system based on their working city, ensuring compliance with Chinese labor laws.
• Pay employees in China timely: China Employer of Record provider handles China payroll, ensuring employees are paid accurately and on schedule.
• China Income Tax Contributions: China Employer of Record provider manages individual income tax contributions for employees, adhering to local tax regulations in China.

Understand more about China Employer of Record.

2. Benefits of Using China Employer of Record Services to pay employees in China

Engaging a China EOR service provider offers several advantages:

• Speed: Companies can hire and begin paying employees in China within one week, facilitating rapid market entry.
• Ease of China Market Entry and Exit: Avoid the complexities of setting up and closing a legal entity in China. Terminating employees and exiting the market is streamlined through China Employer of Record.
• Cost Savings: Save on costs associated with China company registration, finance outsourcing, and ongoing corporate maintenance in China.
• Compliance Assurance: Navigate China’s intricate payroll policies and local variations with confidence, ensuring payroll accuracy and compliance.
• Mitigated Risks: Delegate labor dispute handling to the China Employer of Record service provider, reducing potential legal and operational risks.

3. Risk of paying employees in China directly through overseas entity

When overseas entities pay employees directly in China, they face critical risks related to permanent establishment (PE) and tax compliance. Establishing a PE can trigger legal obligations and tax liabilities in China, potentially leading to complex regulatory issues and financial penalties.

4. Understanding the Costs of paying employees in China through China Employer of Record

To understand the costs associated with paying employees in China, refer to resources like this guide on calculating employee salaries in China.

5. Frequency of Paying Employees in China

Full time employees in China are paid on a monthly basis, with the specific payment date determined by the employer.

6. Salary Tax in China

There are differet kinds of taxes involved in employee’s payroll in China.

China Individual Income Tax: Individual Income Tax in China is progressive, with rates varying based on income levels and residency status. Employers are responsible for deducting and remitting individual income tax from employees’ salaries each month.

Annual Tax Return in China: All China tax residents, must file their annual tax returns to report income earned. The process involves declaring all sources of income, including salaries, bonuses, investments, and other taxable earnings. Deductions and allowances permitted by Chinese tax laws, such as those for education, medical expenses, and housing loans, can also be claimed to reduce taxable income.

Although it is mandatory for all employees in China to file annual tax returns, employers share the responsibility to ensure that their employees complete this process in a timely manner.

China Mandatory Social Insurance Tax: encompass five types of social insurance (pension, medical insurance, unemployment insurance, work injury insurance, and maternity insurance) and a housing fund. These contributions are mandatory for both employers and employees, calculated as a percentage of employees’ salaries, and must be paid to local authorities monthly.

Social insurance contribution bases and rates vary from city to city across China. Employees’ contributions are typically withheld from their gross monthly salary, with employers also responsible for contributing to various social insurance funds.

Frequently Asked Questions of paying employees in China:

a) How to manage employees in China under China Employer of Record?

China employer of record service provider assumes responsibility for paying employees in China in accordance with local laws, managing payroll intricacies, and ensuring compliance with mandatory social security contributions. Meanwhile, the foreign company retains direct managerial oversight of its employees’ daily activities and performance in China.

b) Can I pay employees in USD or other foreign currency in China?

No, employees in China must be paid in RMB (Renminbi). Salaries must also be calculated and disbursed in RMB, as the tax thresholds and social insurance contribution bases are specified in the local currency.

c) Can I pay contractors or part-time employees through China employer of record?

Yes, using a China Employer of Record (China EOR) allows companies to engage contractors or part-time employees legally in China. The China EOR manages the necessary legal and administrative tasks, including contract signing and payroll processing, ensuring compliance with local regulations for non-permanent staff.

Contractors in China are subject to different individual income tax regulations compared to full-time employees. Unlike full-time employees, there is no mandatory social insurance contribution requirement when hiring contractors in China.

Understand more about Complete Guide on Hire Independent Contractor in China 2024.

d) Is there a specific deadline for paying employees in China?

Yes, in China, there is typically a fixed date each month by which employees are expected to be paid. This date is agreed upon by the employer. In practice, employer normally pay employee on the last working day of each month.

e) How should business trip expenses be paid to employees in China? Are these payments subject to taxation?

For employees hired through a China Employer of Record (China EOR), their business trip expenses are covered by the EOR agency. Employees must provide tax receipts (Fapiao) issued under the corporate name of the China EOR agency. These business trip expenses are not subject to individual income tax.

f) Do I need to pay additional fees to terminate employees hired through a China Employer of Record?

Yes, severance payments are the responsibility of the employer. The severance payment is calculated based on the employee’s years of service, typically equivalent to one month’s salary per year of service. Termination procedures are generally managed by the China EOR service provider as part of their contractual obligations.

g) Do I have to pay any additional fees to employees in case they resign?

No, typically there are no additional fees that employers need to pay to employees when they resign.

For international companies eyeing expansion into China, leveraging a China Employer of Record service is a strategic move. It simplifies the complexities of payroll management, ensures compliance with local regulations, and accelerates market entry and exit processes. By partnering with a trusted EOR service provider, businesses can focus on growth and innovation while navigating the intricacies of the Chinese market with ease.

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/China EOR.

Info@jscgroups.com

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