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For anyone looking to rapidly onboard skilled overseas professionals at competitive rates, hiring via an employer of record in China will make a potentially tricky process relatively painless.
Because an employer of record in China can have staff in place quickly and will also take care of many of the complicated matters related to onboarding and administering them, including managaging their payroll.
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When you choose an employer of record in China, you will need to select one with an established recruitment network and a good understanding of the local job market. Depending on the roles you are trying to fill, such a provider will be able to find and hire top local talent in weeks, if not days.
Legal issues are often a concern when doing business overseas, but many compliance issues will be taken care of if you have an employer of record in China drawing up the contracts and overseeing the adminstration and payroll of the professionals they hire on your behalf.
Note that an employer of record (EOR) can also be referred to as an international professional employer organization (international PEO), and while many providers distinguish between EOR and PEO as services, international PEO is often used to describe the services an employer of record provides.
If you are interested in hiring professionals via an EOR in China, contact us now.
Or read on to understand more about what makes China an attractive destination for expansion, and how an employer of record can help you.
Why invest in China?
China is an attractive place for investment with a strategic location in East Asia and a burgeoning middle class, driving a large and growing consumer market.
The country is home to around 200 million highly skilled workers, among an economically active population of over 790 million, meaning that an abundance of talent is available, whether you are seeking the likes of IT or business professionals, or are seeking to staff up a manufacturing facility.
While, like in many countries, the COVID-19 pandemic caused a slowdown in growth, China remains the world’s second largest economy and is still expanding.
Many businesses in the country had faced difficulties due to a strict approach to controlling the pandemic, however the easing of restrictions at the end of 2022 brough relief to many companies.
That has contributed to an expected growth rate of 5.2% in 2023 — a considerable increase on the 3% growth seen in 2022.
Doing business in China is made all the more attractive by its increasing international clout, with the country making significant investments in the likes of Africa and Latin America.
Its leading role in the Shanghai Cooperation Organisation (SCO), also offers local companies preferential access to many neighbouring and nearby nations, including economic powerhouses India and Russia.
The SCO is the world’s largest regional organization, both geographically and by population, representing 60% of Eurasia and accounting for 40% of the global population and more than 30% of worldwide GDP.
What to expect when using an employer of record in China
An employer of record in China offers its clients the opportunity to hire workers in the country without needing to set up their own local entity, taking care of payroll and other administrative matters, while those professionals report directly to the client.
Although working with an EOR in China will obviously come at a cost – usually charged on a monthly per employee basis — that will generally be cheaper than setting up a local entity and employing people directly, on top of the speed benefits.
It also comes with a compliance guarantee, because an employer of record in China will ensure that all local laws are upheld, so there will be no risk of unexpected financial penalties or legal inconveniences. This is a particularly important reason for using EOR in China, as state control is stricter than in many other countries.
Not only is there a lot of pressure from the government, but China is a cultural behemoth. More than most countries, it works by its own rules and norms. An employer of record in China can help you navigate the culture shock of doing business in the Middle Kingdom and avoid any faux pas.
Employment regulations for your employer of record in China
Your employer of record in China will make sure a range of employment regulations are properly implemented, including:
Hours: Under Chinese law the maximum working week is generally 44 hours long, based on eight-hour days. A China EOR will also guarantee that the daily maximum of three hours overtime is not exceeded.
Salary: While it is unlikely that professionals you employ through a EOR in China will be earning the minimum wage, other types of employees, such as manufacturing or agricultural workers, may do. It is worth noting that minimum salaries differ by region, with the highest monthly minimum wage of RMB 2,590 (approximately US $380 at time of publication) found in Shanghai, while the lowest monthly minimum of RMB 1,340 (approximately US $200) found in Anhui.
Taxes: The individual income tax rates range from 3% to 45%, with many benefits in kind (BIKs) available to foreign workers. China has recently introduced new Foreign Direct Investment laws that offer some benefits to overseas businesses. An employer of record in China can help you take advantage of these.
Bonuses: While there is no statutory obligation to offer bonuses in China, you may find that you will need to offer incentives to attract top talent. This is something your employer of record in China will be able to advise you on, as well as implement once such an agreement is established.
Leave: Your EOR in China will record and manage paid leave among employees they hire on your behalf, which will total five days of leave per year for anyone who has provided at least one year of continuous service. That allowance increases to 10 days of leave per year once an employee has served for 10 years, and 15 days of leave per year once they have served for 20 years. In case of maternity leave is 158 days.
Sickness: Employees can be entitled to between three months and two years of paid sick leave, depending how many years they have provided of continuous service to their employer. Sick pay rates range from 60% to 100% of the employee’s regular salary.
Understanding how much paid sick leave employees are eligible for is something an employer of record in China will be able to provide guidance on.
Alternatives to using an employer of record in China
The main alternative to using an EOR in China is to set up a legal entity and employ staff directly. This is usually time-intensive and costly in the setup phase. However, it can work for businesses who are committed to a long-term presence in the market and comfortable dealing with local regulations.
Even in these cases, companies planning on making such a commitment will often still hire via a EOR in China to start with, because it allows them to get started in the market while going through the company formation process. Another option, is to hire local contractors, which an employer of record in China can also help you with.
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Being able to start operations immediately gives the client the benefits of market insight and understanding ahead of deciding on whether to establish a legal entity. In China, setting up a company legally can take four to six months.
In many cases, an employer of record in China will also offer recruitment as a standalone service. This means that it is still possible to tap into their expert understanding of the job market and the recruitment network they will have developed over years of operating there.
Serviap can be your employer of record in China
At Serviap Global, we have more than 12 years of experience providing international PEO / EOR services to help our clients quickly expand overseas. Our extensive and growing network of destinations means we are able to assist clients in over 100 countries worldwide.
We also offer global talent acquisition services to assist clients with the recruitment of direct hires overseas.
We are a family-run business that started life in Mexico before expanding throughout the world. While our vision is global, we are committed to the sort of service excellence and individualised treatment that comes with working with a local provider.
If you are looking to hire via an employer of record in China, contact us today.
If you liked this article about EOR in China, check out the rest of our coverage of our service worldwide. Or read more about us.
