China, with a GDP exceeding $19 trillion, stands as an economic titan and a global manufacturing hub. From electric vehicles to custom software development, China’s ecosystem of innovation and production is unparalleled. For businesses looking to expand internationally, especially into China, leveraging an Employer of Record (EOR) can simplify the complexities of hiring and compliance.

What is an Employer of Record (EOR)?

An Employer of Record (EOR) is a third-party organization that manages the legal responsibilities of employing staff on behalf of a company. This includes handling HR processes such as onboarding, payroll, benefits, taxes, and compliance with local labor laws. Using an EOR allows businesses to hire employees in China without setting up a local entity, saving time and reducing administrative burdens.

Benefits of Using an Employer of Record in China

1. Quick Market Entry: EORs facilitate faster entry into the Chinese market by managing the legal and administrative aspects of employment.
2. Cost Savings: Avoid the costs associated with establishing a local entity and managing HR processes.
3. Compliance Assurance: Stay up-to-date with China’s complex and evolving labor laws, minimizing the risk of non-compliance.
4. Focus on Core Business: Free up resources to focus on strategic business activities rather than administrative tasks.

How to Choose the Right EOR in China

Choosing the right EOR is crucial for a smooth and compliant expansion into China. Follow these steps to find the ideal partner:

Step 1: Evaluate EOR Capabilities

List the essential services you need from an EOR, such as:

• Local entity setup
• Payroll management
• Legal support with labor regulations
• Employee onboarding
• Competitive pricing
• Tax compliance
• Intellectual property protection

Step 2: Prioritize Owned-Entity EORs

Opt for EORs with their own subsidiaries in China rather than those relying on third-party entities. This reduces potential legal and financial risks associated with third-party providers.

Step 3: Check Reviews and Testimonials

Read online reviews, client testimonials, and third-party review sites to gauge the quality of service and reliability of the EORs you are considering.

Step 4: Ensure a Positive Employee Experience

Ensure the EOR provides a seamless and engaging employee experience, including efficient onboarding, timely payroll, and responsive support.

Step 5: Offer Competitive Compensation

Work with your EOR to offer competitive salaries and benefits packages that align with local standards and attract top talent.

Step 6: Secure Intellectual Property

Ensure your EOR has robust data security measures and contractual agreements to protect your intellectual property.

Cost of Using an EOR in China

The cost of an EOR can vary based on the services provided and the number of employees. Traditional EOR providers may charge up to $2,000 per employee per month, or a percentage of payroll expenses. However, modern EORs like Stipenda offer comprehensive services at more competitive rates.

Key Considerations for Hiring in China

Employment Contracts

Chinese law requires written employment contracts within 30 days of hiring. These contracts must include:

• Employer and employee details
• Contract duration
• Job description and workplace
• Working hours, rest, and leave
• Remuneration
• Social insurance
• Labor protection

Payroll and Taxes

Employee income taxes in China are capped at 45%, while employer payroll contributions can be as high as 41%, depending on the region.

Employee Benefits

• Maternity Leave: 98 days paid leave, extendable to 113 days for complicated births.
• Public Holidays: 11 paid public holidays per year.
• Annual Leave: 5 days after the first year, increasing with tenure.
• Sick Leave: 3 to 24 months of paid leave based on tenure and region.

Employee Misclassification

Misclassifying employees as contractors can lead to severe penalties. An EOR helps ensure correct classification and compliance with local laws.

Ready to Expand Your Business in China?

Using an EOR in China can streamline your expansion process, allowing you to focus on growing your business while ensuring compliance with local laws. Partner with Stipenda to enjoy a smooth and efficient hiring process in China.

Contact us to learn more about our EOR services and how we can help you expand your team in China:

• Email: sales@stipenda.com
• Europe: +44 (0) 330 380 0161
• US: +1 800 910 7847

Discover how Stipenda can be the key to your successful market expansion in China.

An Employer of Record in China can simplify the complexities of international hiring, ensuring compliance and efficiency. By choosing the right EOR, you can enter the Chinese market quickly, save costs, and focus on your core business objectives. Expand your team in China with confidence and ease by partnering with Stipenda today.