China is a popular destination for foreign entrepreneurs. Doing business in China is appealing and profitable to the majority of foreign investors. Hiring employees is usually the most pressing concern when starting a business in China. Given the complexities of Chinese employment law, it is critical for foreign employers to fully understand the various options for legally hiring employees in China.
This article will introduce four different viable options for different companies hiring staff in China, as well as the pros and cons of each option.
1. If you do not have a legal entity in China, hire in China PEO/EOR agency
2. If you already have a China WFOE, hire employee through your China WFOE
3. If you have a China Representative office, hire staff through China PEO agency
4. Hiring in China through your local supplier or partner
Only registered companies in China are legally permitted to hire employees. If you do not yet have a legal entity established in China or your WFOE is not yet registered, the only compliant way for you to hiring in Chinais through a local China PEO/EOR agency or China employment agency. What is China PEO & China EOR? How does it work in China?
China PEO and EOR agency is a registered Chinese human resource company. They will act as the employer, signing the local labor contract with the worker you selected and handling the following issues that the Chinese government requires of employers:
For more information on PEOs, click here. Understand more about What is China PEO, and steps to engage a PEO in China.
Smart and quickest option to enter China market: Hiring in China through a China PEO agency is a highly clever way for foreign investors to enter the Chinese market, as it allows them to bypass the time-consuming and expensive process of forming their own legal corporation. This option allows international investors to access the Chinese market rapidly and begin doing business within one week.
Overall, foreign investors who have no company registered in China, hiring in China through a China PEO agency is still the smartest option. If you would like to learn more about How to Hire Employees In China Without Legal Entity?
For foreign investors who already has a registered company in China, you are eligible to hiring in China directly. Before officially onboard staff, below are the extreme important work you shall do first before hiring in China:
Only when you get the above four key things done, you are able to onboard employee in China and complete all the mandatory on boarding procedures required by the Chinese government.
Most foreign companies that already have a China WFOE or Partnership Company, a general partnership comapny may be formed by general partners who bear unlimited joint and several liability for the debts of the partnership will hire employees directly through their WFOE in China. Your China WFOE will be the employer in this scenario, and will be responsible for all employer responsibilities. Because of the complexities of China’s employment and payroll requirements, they usually hire a local China HR service provider to handle their employees’ monthly payroll, taxes, and social security to guarantee that their hiring in China complies with all applicable laws.
Here are some important tips for foreign investors to hiring in China through China WFOE:
More tips for you to learn about hiring employees in China.
In China, one sort of legal entity that is popular among international investors is a China representative office. Many foreign entrepreneurs prefer to start their firm in China by establishing a representative office rather than a China WFOE.
There is, however, a significant distinction between China WFOE and China Representative Office. To summarize, China WFOE is a registered company in China, whereas China representative office is a registered office, but it is not a Chinese firm. As a result, there are numerous restrictions on representative offices conducting business in China.
One major restriction is that the China representative office is not permitted to hiring in China directly. The only legal option to hire local Chinese workers is through a licensed China talent dispatch agency. The China talent dispatch agency will sign the worker’s employment contract, handle payroll, taxes, and benefits, and send the worker to the China representative office. The only way to hire foreign employees in compliance is to hire through a foreign parent business and dispatch the expats to a China representative office as representatives.
Overall, it is very important for you to know that if you have a China representative office, you can only hiring in China through a licensed HR agency. The representative office itself is not eligible for signing any employment contract in China.
If you can identify a local supplier or a partner who already has a legal entity in China and is willing to hire all of these employees on behalf of your foreign firm in China, this may be an option. In actuality, it is difficult to discover; the major reason is that employers in China are required to assume a large number of obligations, such as work-related injury, severance compensation, sick leave, maternity responsibility, and so on. Because all of these employees work for an overseas company and are managed directly by the foreign corporation, your Chinese supplier or partner is unwilling to take on such a high level of risk.
If you are able to find the supplier or partner that is willing to hire your staff in China. You shall also take care that if they hire your employee legally? Did they pay salary to your employee on time? Did they contribute the social security on time and fully? These are all the very important questions for you to know before hiring in China through your partner.
To summarize, there are different options for hiring employee in China. It is critical that you select the most suited option based on your company’s unique circumstances when hiring in China.
For more information regarding start a business in China, read our article of 8 Steps to Starting a Business in China.
China is a popular destination for foreign entrepreneurs. Doing business in China is appealing and profitable to the majority of foreign investors. Hiring employees is usually the most pressing concer…
What employers need to know when hiring in China? This article explains the most critical information that employers should have when hiring in China.
Comprehensive guide to help you understand all practices about hiring employees in China to ensure your hiring in Chinese are fully compliance under China Employment Law.