China, as one of the world’s fastest-growing economies, is luring more international entrepreneurs to invest and start businesses in the country. Hiring local employees would be the first step in expanding into a new world. The following contents will assist you in understanding how to hire an employee in China without forming a business, as well as provide you with valuable information for hiring and managing Chinese employees.


4 Options of hiring in China.

Before you hire your employees, you must first learn about the various hiring options available in China in order to ensure that your hiring and employment practices are legal.

1. Hire employees without legal entity in China through PEO.

Using a PEO to hire employees in China is the quickest and most convenient way for foreign investors to start their company and build a team in China. Employee outsourcing, talent/labor dispatch are other terms used in China for PEO service, which means that a China employment agency (a PEO company) can serve as the employer of employees who are selected and worked for foreign companies.
The employment agency (PEO) like JSC will sign the local employment contract with your employees, and handle the monthly payroll, mandatory benefits, social benefits, expenses claim. The PEO agency will manage all of the necessary and mandatory operations that an employer must perform in China.
Due to the complexities of Chinese local laws, an experienced employment and PEO agency will assist you in declaring all local taxes and benefits in accordance with the most recent policies in the cities where your employees are located.

Advantages of hiring employee in China through PEO

Easy entry and exit into the China market

PEO is the perfect solution for foreign investors who want to test the China market but aren’t sure whether they want to make a long-term investment in China. You can easily hire employee in China through the employment agency via PEO withing 1 month. If you are unhappy with the employee’s results or do not want to continue doing business in China, you may fire him or her through the PEO and employment agency.

Focus on business

By hiring employees through a PEO in China, you avoid having to learn the intricacies of each city’s hiring and benefits policies, which are complicated, constantly evolving, and all in Chinese. You can outsource all of these administrative HR issues to an experienced PEO & employment provider, who can assist you in completing all of these necessary and mandatory operations effectively and efficiently, allowing you to concentrate on your own business.


Doing business in China in a compliance way is one of the most important things for foreign companies. However, different cities in China has different polices regarding payroll, tax, benefits, and due to the language barriers, it is very difficult for foreign investors to know all these polices clearly and completely. Furthermore, since all of these policies are constantly evolving, it is important to stay up to date.

Save time & Save money

Start doing business in China through PEO can enable you to start the business within 1 month without setting a company. Setting up a company (WFOE) to start a business normally takes at least two months to complete, including the establishment of a bank account. You’ll also have to pay monthly tax accounting fees to keep the business running after it’s been founded.

Avoid language and culture barriers

One of the most important obstacles foreign businesses would encounter when doing business in China is language and cultural differences. Selecting a qualified HR service provider will assist you in avoiding such stumbling blocks.

Steps to start hiring in China with no registered company.

1. Below are the different ways for you to find the right candidates.

Find through your own connections.

Post jobs in different job portals, e.g. Linkedin,,

Leave the recruitment part to the recruitment or headhunting firm.

2. Sign local labor contract with employees

The HR agency you selected will sign an official labor contract with the candidates you selected.

3. Prepare the Payroll Report

Your HR agency will calculate the monthly employment cost based on the employee’s personal information, salary specifics, and social benefits contribution policies in each region, and submit a payroll report to your company for payment.

4. Onboard Employee

The HR agency will register the employee’s information into the government system, which will enable them to complete all of the on-boarding procedures mandated by local regulations.

5.Pay Salary to Employee

The HR agency will release the salary, allowances, expenses to employees on the monthly basis after receiving the payment from foreign companies.

2. Hiring Chinese employees after forming a company – WFOE

For hiring staff in China, you need a local company to be the employer. If you have a long-term investment plan in China, or you are very confident of your China business, or you already have the signed client in China, setting a WFOE is the best option for you before hiring employees.

Before recruiting staffs in China, you must first create your own WFOE, which takes about 2-6 months to complete. Since different business practices in China necessitate different licenses, the entire process may take much longer. It is very important to find an experienced agency for you to set up a company.

After your WFOE is completely operational, you must first set up your company’s social security and housing fund accounts, after which you will begin recruiting employees and managing their monthly payroll and mandatory benefits.

3. Hiring your Employees under a Representative office- Ro

Many foreign investors prefer to setting up a representative office in China first. It is essential to understand that Chinese representative offices are not permitted to hire employees directly. Hiring them through a licensed labor dispatch/PEO and employment agency is the only way to ensure compliance.

4. Hiring staff in China through your local supplier or partner

This can also be an opportunity if you can locate a local supplier or partner who is willing to recruit your employees. However, you must ensure that your local supplier or partner is properly managing your employees’ payroll and employment; if they are not, your employees’ experiences and feelings will be extremely negative, prompting them to leave the job.

Things you need to know before hiring in China.

1. Employment contract term in China

In practice, employer will sign a fixed term contract with their employee. However, when it goes to the third time renewal of the contract, then the contract becomes to a permanent contact.
Sign a two years or three years contract is more common in China.

2. Mandatory benefits in China

For hiring employees in China, you need to know the 5 social insurance and 1 housing fund is mandatory benefits.
5 Social Insurances,
 Pension
 Medical Insurance
 Unemployment Insurance
 Work-Related Injury Insurance
 Maternity Insurance
1 Housing Fund

3. Normal salary structure/offer package in China

Gross salary: fixed base salary
Flexible salary: performance bonus, commission, allowances
13 Month salary/ Annual bonus: common in China
Mandatory benefits: 5 social insurances and 1 housing fund
Supplementary health insurance: not mandatory, but very common among foreign employers
Annual leaves Paid sick leaves

4. Payroll Cost of Hiring Employees in China

Your monthly employment cost consist of:
+Employee monthly net salary
+Employer contribution of mandatory benefits
+Employee contribution of mandatory benefits
+Individual income tax
+Other benefits offered.

5. China Annual leave policies

Company cannot give the days lower than the below policy:
Employee working years>=20, annual leave >=15

6. Public holidays employees can take in China

Below are the public holidays in China and is paid holidays. The exact date will be announced by the government at the end of December last year.
New Year’s day: 1 day
Spring Festival/Chinese New Year: 3 days
Qing Ming Festival: 1 day
Labor Day: 1 day
Dragon Boat Festival: 1 day
Mid-Autumn Festival: 1 day
China National Holiday: 3 days
Employers shall pay overtime payment if they require employees to working during the public holidays.

7. China Probation period for employees

The probation period shall be set based on the employment contract term.
3 months 1 yearEmployment contract term is 3 years or more, the probation can be a maximum of 6 months.

Please kindly note that employees’ salary during probation period cannot be lower than 80% of the salary after the probation period.

Frequently asked questions for payroll and hiring employees in China.

No, you do not need.

If you don’t have a company in China, you can hire employees through PEO service through the employment agency in China.

a) Hire employee through the PEO/employment service.

If you don’t have a legal entity in China, this is the only compliance way to have employee working for you in China.

b) Hire employee under WFOE.

If you already set up a WFOE in China, you can sign the labor contract with employees directly. You can either choose to handle their payroll land benefits yourself, or you can choose to outsource.

c) Hire employee under representative office (Ro)

Representative office in China is not allowed to hire employees directly. The only compliance way is hire employees through labor dispatch agency under PEO service

PEO refers to a professional employment organization, in China it’s also called employee outsourcing, labor dispatch. Foreign companies can hire staff in China through a PEO agency without setting up a legal entity in China.

Severance payment in China is based on the number of years employee has worked for the company.

Each full year employee worked for your company, one month salary shall be paid as severance payment.

For the working periods that are less than 6 months, half month salary shall be paid.

If employee’s monthly salary is higher than 3 times local average monthly salary, each year of the severance payment compensated shall be 3 times local average monthly salary.

If employees are in the probationary period, both employee and employer shall give 3 days as notice period for termination.

After probationary period, both employee and employer shall give 3o days as notice period for termination.

If employer need immediate termination, employer shall compensate one month salary.

No, You shall have a company registered in China to sign a written labor contract with each of your employee.

In practice, employer will sign a fixed term contract with their employee. However, when it goes to the third time renewal of the contract, then the contract becomes to a permanent contact.

Sign a two years or three years contract is more common in China.

Labor contract in China shall be at least in Chinese, and including but not limited to:

 Company details including full name, address and legal representative or person in charge.

 Employee details including full name, ID number, address.

 Term of the employment contract; (E.g., 2 years, 3 years…).

 Position (job title), location(city), working hours, holidays, leaves.

 Package: gross salary, bonus, commission, social insurance, other benefits.

 Occupational safety, and occupational hazard prevention.

 Other terms which laws and regulations required.

You need to set up a company in China and then set up a separate Social Insurance and Housing Fund Account. After the company has been set up, you can contribute the benefits to the employees who have signed a contract with you.

The most popular job portals in China is:,, However, these three job portals only accept a registered company in China.

If you don’t have a company in China, you can search candidates through or engage a headhunting or recruitment firm to help you search the candidates.

In China, employees’ individual income tax (personal tax) shall be declared monthly by the employer, and yearly by employee themselves.

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