An Employer of Record (EOR) acts as the legal employer for workers, handling HR responsibilities like payroll, taxes, and compliance, while the company directs the employees’ day-to-day tasks. This setup allows businesses to hire globally without establishing a local entity.
Hiring workers from China offers benefits due to their high level of education, technical skills, and vast talent pool. China’s workforce is approximately 740.4 million people, providing access to a wide range of skills and expertise. The country is recognized for its strong talent in manufacturing, technology, and engineering fields.
Employment in China has shown positive trends in recent years. As the world’s second-largest economy, China presents significant opportunities for businesses looking to expand into the Asian market or tap into its skilled workforce. However, navigating the country’s complex labor laws and administrative processes can be challenging for foreign companies.
To use an EOR in China, there are 6 basic steps to follow to ensure proper setup:
- Find talent to hire in China
- Compare using an EOR to setting up a legal entity in China
- Get the information needed from your talent
- Choose an EOR provider with expertise in China
- Communicate your hiring needs to the EOR
- Have the EOR set up the contracts and hiring procedure
An EOR manages payroll, taxes, and benefits administration, ensuring compliance with local laws and regulations, thus simplifying the employment process for companies.
Different labor laws in China, such as those governing work hours, termination processes, and mandatory employee benefits, must be considered when hiring remotely. The hiring process in China involves identifying talent, ensuring compliance with local employment laws, and executing contracts, typically facilitated by an EOR for companies without a local presence.
1. Find talent to hire in China
To find talent to hire in China, businesses should explore a variety of channels, emphasizing both local and global platforms. Some popular job boards and recruitment channels in China include:
- 51job
- Zhaopin
- Liepin
- Boss Zhipin
- LinkedIn China
Specialized recruitment agencies can also provide tailored solutions for industries requiring specific expertise. Partnering with career centers at top Chinese universities for entry-level positions or internships can be beneficial.
When searching for talent, consider China’s strong sectors, such as technology, manufacturing, and e-commerce. Many Chinese professionals are highly skilled and adaptable, which can benefit international businesses.
2. Compare using an EOR to setting up a legal entity in China
When considering hiring employees in China, you need to weigh the options of using an Employer of Record against setting up your own legal entity. An Employer of Record offers a quicker, less complex route to hiring local staff, bypassing the need for a formal company presence. This approach suits companies looking to test the Chinese market or expand quickly without significant upfront investment.
An EOR manages all local employment laws, tax, and compliance issues, assuming responsibility for hired employees. This setup allows companies to start operations in weeks, compared to the months required to establish a legal entity.
Setting up a legal entity in China, on the other hand, is a complex and time-consuming process. It can take up to six months and requires significant upfront costs and registration fees. This process involves navigating intricate local labor laws and regulations, which can be challenging for foreign companies.
In comparison, using an EOR is generally less expensive. It involves less risk, making it a suitable option for small to medium-sized businesses or those in the initial stages of market exploration. It eliminates the need for a local expert or dedicated legal and tax teams, as the EOR handles these aspects.
Comparison of Employer of Record (EOR) vs. Setting Up a Legal Entity in China
| Factor | Employer of Record (EOR) | Setting Up Legal Entity in China |
|---|---|---|
| Setup Time | Weeks | Up to six months |
| Initial Cost | Low | High (significant upfront costs and registration fees) |
| Ongoing Cost | Moderate (EOR fees + employee costs) | Variable (operational costs, compliance, etc.) |
| Complexity | Low (EOR handles most administrative tasks) | High (complex local labor laws and regulations) |
| Control over Operations | Limited (company directs daily work, EOR handles employment) | Full (complete control over all aspects of business) |
| Compliance Management | Handled by EOR (payroll, taxes, social security) | Company Responsibility (requires local expertise) |
| Language Barrier | Managed by EOR | Company must handle (documents in Standard Chinese) |
| Scalability | Highly Flexible (easy to add or remove employees) | Less Flexible (changes may require legal procedures) |
| Local Expertise Required | Minimal (EOR provides guidance) | Extensive (need for local legal and tax advisors) |
| Suitable for | Market entry, testing Chinese market, hiring < 10 employees | Long-term presence, hiring > 10 employees, full operations |
| Risk | Lower (EOR assumes employer liabilities) | Higher (company bears all legal and financial risks) |
| Customization of Employment Terms | Limited (must adhere to EOR’s policies) | Extensive (can create company-specific policies) |
| Handling of Labor Law Changes | Managed by EOR | Company must stay updated and compliant |
3. Get the information needed from your talent
You’ll need their personal information, employment contract details, and tax-related information to hire employees in China. Remember, collecting this data before the employee starts working is important.
Typically, you’ll need the following essential information:
- Employee’s full name
- Date of birth
- Address
- National ID number
- Bank account details for salary payments
- Educational qualifications and work history
Additionally, you’ll need to provide a comprehensive job description, including title, duties, and place of work. In China, it’s mandatory to provide written employment contracts within one month of an employee’s start date. These contracts must be in Standard Chinese and include details such as compensation, benefits, responsibilities, and rules around termination.
It’s crucial to note that China has strict Personal Information Protection Laws. Only necessary data will be collected, and encryption and other security measures will be used to collect and store that data.
4. Choose an EOR provider with expertise in China
When choosing an EOR provider to work with in China, selecting one with deep expertise in the Chinese market and a strong understanding of local labor laws is crucial to ensure compliance and smooth business operations. Consider the following factors:
- Experience managing employee onboarding, payroll, and legal compliance in China
- Proven track record of working successfully with companies similar to yours
- Range of services offered, including visa and work permit support, benefits management, and payroll processing
- Technology platform and data security measures
- Pricing structure and transparency
- Commitment to staying up-to-date with Chinese employment laws
Choose an EOR provider demonstrating a strong understanding of Chinese employment practices, including social insurance contributions, housing fund regulations, and termination procedures. Ensure they can provide comprehensive support for all aspects of employment in China.
What are the best EOR providers to use in China?
| EOR Provider | Why It’s a Good Fit for Colombia |
|---|---|
| Deel | – Extensive global coverage including China – Expertise in navigating China’s complex labor laws and regulations – 24/7 customer support with dedicated account managers, helpful for managing time zone differences |
| Remote | – Strong focus on compliance with Chinese employment laws – Offers comprehensive benefits management, crucial for meeting China’s statutory employee benefits requirements – Provides robust data security and IP protection, important in China’s business environment |
| Remofirst | – Cost-effective pricing, starting from $199 per employee/month – Provides efficient payroll and tax compliance services tailored to Chinese regulations – Offers 24/7 customer support to address time zone differences and urgent needs |
| Multiplier | – Covers 150+ countries, including China – Facilitates quick market entry and scalability in China’s dynamic business landscape – Offers comprehensive benefits management, essential for China’s complex employee benefits system |
5. Communicate your hiring needs to the EOR
Communicating your hiring needs to the EOR to ensure the process aligns with company goals and legal requirements is important. Providing a detailed job description, including title, responsibilities, required qualifications, and skills, is key.
Specify the job’s expected start date, location, and whether it’s remote or onsite. Outline the proposed salary, any bonuses or commissions, and other compensation benefits. Clarify the contract type (full-time, part-time, or fixed-term), and detail the working hours, including any flexibility or shift requirements.
Discuss the company culture, growth plans, and how the position fits into future expansion. By accurately representing these aspects, the EOR can find the right talent and ensure legal and administrative compliance.
6. Have the EOR set up the contracts and hiring procedure
Once you have chosen which provider to work with and communicated your hiring needs, the EOR will set up the contracts and hiring procedure, ensuring compliance with local labor laws and employment practices.
The EOR drafts employment contracts that comply with Chinese labor laws, including specific terms regarding job details, working hours, and termination procedures. They’ll also manage the necessary documentation for tax, social security, and payroll setup, adhering to mandatory withholdings and reporting requirements.
Employers must provide written employment contracts in Standard Chinese within one month of an employee’s start date in China. The EOR will ensure this requirement is met, including all necessary details such as compensation, benefits, responsibilities, and termination rules.
The EOR will also register employment with relevant Chinese authorities, assist in obtaining necessary work visas for foreign employees, and manage the onboarding process in accordance with Chinese employment laws.
What help does an EOR provide in Chinese payroll, taxes, and benefits administration?
An EOR in China provides comprehensive support in managing payroll, taxes, and benefits administration, ensuring compliance with complex local laws. This includes:
- Calculating and processing employee salaries
- Withholding and paying individual income tax (progressive system with rates up to 45%)
- Managing social insurance contributions (including pension, medical, unemployment, work-related injury, and maternity insurance)
- Handling housing fund contributions
- Administering statutory benefits such as paid annual leave, public holidays, and overtime pay
- Ensuring compliance with regional variations in minimum wage and social insurance contribution rates
- Providing pay slips and annual payment summaries
The EOR will manage the monthly payroll cycle, ensuring timely and accurate payments. They will also handle any additional benefits you offer, which can be important in China for attracting and retaining top talent.
What labor laws do you need to consider when hiring in China?
| Law / Regulation | Key Points |
|---|---|
| Employment Contracts | Written contracts mandatory within one month of start date. Must be in Standard Chinese. Include job responsibilities, working hours, compensation, and termination conditions. |
| Working Hours | Standard work week is 40 hours over five days. Overtime should not exceed 3 hours per day or 36 hours per month. Overtime pay rates: 150% on regular days, 200% on rest days, 300% on statutory holidays. |
| Minimum Wage | Varies by region and set by local governments. Typically adjusted annually. |
| Paid Time Off | Annual leave based on work experience: 5 days for 1-10 years, 10 days for 10-20 years, 15 days for over 20 years. 11 paid public holidays per year. |
| Social Insurance and Housing Fund | Employers must contribute to pension, medical, unemployment, work-related injury, maternity insurance, and housing fund. |
| Maternity Leave | 98 days of maternity leave, can be extended in certain circumstances. Some regions offer additional leave. |
| Termination | Strict regulations. Valid reasons required. 30 days’ notice or one month’s salary in lieu. Severance pay often required. |
| Probation Period | Up to 1 month for contracts less than 1 year, up to 2 months for 1-3 years, up to 6 months for over 3 years or open-ended contracts. |
| Data Privacy | Strict Personal Information Protection Laws. Only necessary data collected, with security measures for collection and storage. |
When hiring in China, several key labor laws must be considered:
Employment Contracts
In China, written employment contracts are mandatory and must be provided within one month of an employee’s start date. These contracts must be in Standard Chinese and include job responsibilities, working hours, compensation, and termination conditions.
Working Hours
The standard work week in China is 40 hours, typically spread over five days. There are strict regulations regarding overtime:
- Overtime should not exceed 3 hours per day or 36 hours per month
- Overtime pay rates are 150% of normal wages on regular days, 200% on rest days, and 300% on statutory holidays
Minimum Wage
The minimum wage in China varies by region and is set by local governments. It’s typically adjusted annually.
Paid Time Off
Employees are entitled to paid annual leave based on their years of work experience:
- 5 days for 1-10 years of work experience
- 10 days for 10-20 years
- 15 days for over 20 years
There are also 11 paid public holidays per year.
Social Insurance and Housing Fund
Employers must contribute to various social insurance programs, including pension, medical, unemployment, work-related injury, and maternity insurance, and to the housing fund.
Maternity Leave
Female employees are entitled to 98 days of maternity leave, which can be extended in certain circumstances. Some regions offer additional maternity leave.
Termination
China has strict regulations around termination. Employers must have valid reasons for termination and provide 30 days’ notice or one month’s salary in lieu of notice. Severance pay is required in many cases.
Probation Period
The length of the probation period depends on the duration of the employment contract:
- Up to 1 month for contracts less than 1 year
- Up to 2 months for contracts between 1-3 years
- Up to 6 months for contracts over 3 years or open-ended contracts
Understanding and complying with these laws is crucial for any company hiring in China. The complexity of these regulations can make compliance challenging for foreign companies. This is where an Employer of Record (EOR) can provide significant value, offering expertise in navigating these laws and ensuring full compliance with Chinese employment regulations.
How does the hiring process work in China?
The hiring process in China typically involves the following steps:
- Job Posting and Recruitment: Companies advertise positions through various channels, including online job boards, social media, and recruitment agencies.
- Application Review: HR teams or recruiters review applications and resumes to shortlist candidates.
- Initial Screening: Often involves a phone or video interview to assess basic qualifications and cultural fit.
- In-depth Interviews: Qualified candidates are invited for more comprehensive interviews, which may include multiple rounds with different team members.
- Skills Assessment: Candidates might be asked to complete tests or practical assignments depending on the role.
- Reference Checks: Employers often contact previous employers or provided references.
- Job Offer: A formal job offer is extended, usually in writing.
- Contract Negotiation: The terms of employment are discussed and finalized.
- Contract Signing: Both parties sign the employment contract.
- Registration and Onboarding: The new employee is registered with relevant authorities and begins onboarding.
When hiring through an EOR in China, many of these steps are managed or facilitated by the EOR provider, ensuring compliance with local regulations throughout the process.
Is China a relatively easy country to hire employees remotely through an EOR?
China is considered a moderately complex country for hiring employees remotely through an Employer of Record. While it’s not the most challenging market, several factors contribute to its complexity:
Pros
Cons
While not the easiest country for remote hiring, with the right EOR partner, companies can successfully navigate the complexities of employing workers in China. The key is working with an EOR with deep local expertise and a strong track record of compliance with Chinese labor laws.
In conclusion, using an Employer of Record service in China can significantly simplify hiring and managing employees in this dynamic market. By handling complex compliance issues, payroll, and benefits administration, an EOR allows you to focus on growing your business while minimizing risks associated with international expansion. With the right partner and a clear understanding of the local landscape, companies can effectively tap into China’s talented workforce and expand their global footprint.
