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China Employer of Record
  • By Milly Barker, PhD
  • Updated August 11, 2024
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Milly Barker, PhD
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Milly is an international lawyer and tech entrepreneur who has advised companies on expanding globally for over 5 years. She is an advocate of remote hiring and regularly consults on future of work matters. Milly founded RemotePad to help employers learn more about building and growing international teams.
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China Employer of Record (EOR)

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Key Takeaways

  • A China EOR (China Employer of Record) enables international companies to hire in China quickly and more cost-effectively than setting up a local entity. 
  • On average, hiring through a China EOR takes two weeks vs 3 to 6 months to establish a local entity.
  • China EORs benefit most companies expanding into China, as they save money and time and ensure full compliance with Chinese laws. 

What is a China Employer of Record?

A China EOR is a professional HR company that helps foreign businesses hire professionals in China by acting as the legal employer for their China-based team. This eliminates the costly and time-consuming step of registering a company in China. 

This is ideal for foreign companies that want to explore the Chinese market without making long-term commitments or investing heavily in local infrastructure. It allows businesses to quickly set up and scale their operations in China, as the EOR takes care of the legal and administrative complexities involved in hiring and paying employees in China. 

How Does a China EOR Work?

A China Employer of Record (EOR), similar to a China Professional Employer Organization (PEO), provides services to assist foreign companies in hiring and managing employees in China.

Traditionally, for a global company to hire employees in China, it would need to set up a local legal entity in China, such as a Wholly Foreign Owned Enterprise (WFOE). However, this can be expensive and time-consuming, and there is always the risk that companies will inadvertently fail to comply with complex Chinese labor laws. 

So, what exactly does a China EOR do?

  1. Hiring
    When a company utilizes a China Employer of Record (EOR), the EOR takes over the key administrative responsibilities of the employer. This includes preparing employment contracts, processing work permits, and managing visa applications. With these administrative burdens gobe, the company can focus on the core aspects of its operations.
  2. Payroll and Benefits
    The EOR also manages payroll processing and employee benefits administration. This means paying salaries and ensuring employee social insurance contributions are accurately and promptly paid on behalf of the employees: The EOR takes care of all statutory benefits, such as health insurance, common pension fund contributions, and unemployment insurance, following local regulations. 
  3. Payroll Taxes
    The EOR also manages employer payroll tax obligations. This includes withholding and remitting taxes from employee salaries, filing tax returns, and adhering to other statutory requirements related to employment in China. 
  4. Compliance
    The EOR ensures that all employment is in full compliance with China’s labor laws. This includes ensuring all employees are hired under a legally valid written employment contract. The China EOR will also handle all ongoing correspondence with central and local governments. 

It’s important to note that the specific services a China EOR offers may vary among providers. Therefore, it’s crucial to clarify the scope of services and responsibilities with the chosen EOR to ensure they align with the needs of the foreign company. 

What Are the Benefits of a China EOR?

Whichever provide you choose, what are the general benefits of a China EOR solution? Advantages of using an EOR for your China hiring include:

  1. Local expertise and compliance
    China has complex employment regulations that can be challenging for foreign companies to navigate. A China EOR brings extensive knowledge of labor law in China. This includes, knowing, for example, how the Hukou system and China Social Security System relate to employment. 
  2. Quick market entry
    Engaging a China EOR allows foreign companies to enter the Chinese market rapidly without the need to register a company in China or navigate the lengthy process of setting up a local entity. This saves time and resources, enabling businesses to start operations and hire employees swiftly.
  3. Flexibility and scalability
    With an EOR in China, companies can scale their operations up or down quickly based on business needs. Whether hiring a small team or expanding the workforce rapidly, the EOR can handle the administrative and legal aspects of employee management, providing flexibility in managing headcount.
  4. Risk mitigation
    By relying on a China EOR, companies can mitigate various risks associated with employment and legal compliance. The EOR assumes the legal responsibility as the employer of record, reducing the risk of non-compliance with labor laws, tax penalties, or other legal issues. A China EOR will also be able to help companies reduce risk in other areas — such as any risk related to the corporate social credit score in China. 
  5. Cost-effectiveness
    Engaging a China EOR can be cost-effective compared to setting up and maintaining a legal entity in the country. Companies can avoid the costs associated with establishing a local infrastructure, such as office space, legal fees, compliance expenses, and staffing an HR team.
  6. Business continuity
    The EOR ensures smooth operations during transitions, such as mergers, acquisitions, or restructuring. They can help manage employee transfers or terminations while ensuring compliance with labor laws and handling the necessary administrative procedures.
  7. Focus on core business
    By outsourcing the employer-related responsibilities to the EOR, foreign companies can focus on their core business activities, strategic planning, and market expansion efforts, knowing that employee management and compliance are in capable hands.

What Are the Risks or Downsides of a China EOR?

Are there any downsides to using a China EOR arrangement? Consider:

  1. Data security concerns
    When engaging a China EOR, the EOR will have sensitive employee data on file in China. This means there is an inherent risk of that data being released in an unauthorized manner. 
  2. Limited control over employment matters
    When you engage an EOR, they become the legal employer of your team in China. This means you have less direct control over employment decisions, such as hiring, termination, promotions, and disciplinary actions. The EOR will have its own policies and procedures based on Chinese law, that might not align perfectly with your company’s preferences.
  3. Potential cultural and communication challenges
    Working with an EOR in China may introduce cultural and language barriers. Communication and understanding between the foreign company and the EOR, as well as between the EOR and the employees, can be affected, leading to misunderstandings or inefficiencies.
  4. Dependence on a third-party
    By relying on a China EOR, you become dependent on their services and performance. If the EOR experiences operational issues or fails to meet expectations, it can impact your business operations and employee management in China. There is also an element of legal risk in that company intellectual property will be under the control of a third-party company in China. 
  5. Limited flexibility in HR policies
    The EOR typically follows standardized HR policies and practices that may not align perfectly with your company’s specific HR requirements or company culture. This can limit your ability to implement customized HR policies or practices tailored to your organization’s needs. 

Note that when considering these risks or EOR downsides, a reputable China EOR such as any of those on our Best China EOR list will have measures in place to mitigate against these risks.

How a China EOR Ensures Compliance with Local Labor Law

Perhaps the most essential part of the China EOR’s job is ensuring labor law compliance. This ensures your company is not subject to costly fines or penalties for its China hiring. 

Some of the critical areas where a China EOR will ensure compliance include: 

1. Minimum Wage Laws

A China EOR will ensure that China’s minimum wage laws are complied with at all times (note that the monthly minimum wage in China changes regularly and differs by region and city). 

2. Compliant Labor Contracts

The China EOR will ensure that all employees in China are hired on a compliant written labor contract. This will set out the employee’s fundamental entitlements, including any probationary period, severance pay,  maternity leave, and annual leave. 

3. Social Security

The China EOR makes deductions for employee social insurance contributions and remits those amounts to the authorities. Social security contributions in China cover the so-called Five Insurances and Housing Fund contributions. These five insurances are Pension, Medical, Unemployment, Work-related injury, and Maternity. 

The Steps for Engaging a China EOR

Engaging a China EOR involves a few key steps. Here’s a general guide on how to engage a China EOR:

1. Identify your needsDetermine your requirements and goals for expanding or establishing a presence in China. Consider factors such as the number of employees you plan to hire, the duration of your engagement, and the level of support you expect from the EOR. Depending on your needs, Labor Dispatch or a WFOE could be the best option. 
2. Research EOR ProvidersConduct thorough research to identify reputable EOR providers in China. Check out our China EOR Leader Board to see our assessment of the best China EORs. 
3. Assess EOR ServicesEvaluate the range of services offered by different EOR providers. Consider whether their services align with your specific needs, such as payroll administration, compliance management, HR support, and other relevant aspects of employment in China.
4. Request QuotesContact the selected EOR providers and request proposals outlining their services and pricing structure. Request a ‘total cost of hiring’ proposal, including the EOR service fee.
5. Conduct Due DiligenceBefore finalizing your choice, perform due diligence on the EOR provider you are considering. Verify their credentials, reputation, and client testimonials. You may also want to seek references or speak with existing clients to gather feedback on their experience with the provider.
6. Contract NegotiationOnce you have selected an EOR provider, engage in contract negotiations. Ensure that the terms and conditions align with your expectations and clearly outline the responsibilities of both parties. Pay close attention to service-level agreements, pricing, termination clauses, data protection, and confidentiality provisions.
7. Engage the EOROnce you have selected an EOR provider, engage in contract negotiations. Ensure that the terms and conditions align with your expectations and clearly outline the responsibilities of both parties. Pay close attention to service-level agreements, pricing, termination clauses, data protection, and confidentiality provisions.

China EOR Companies

1. Horizons

With Horizons, client companies can leverage their local China expertise to hire, onboard, and pay employees anywhere in China. With extensive experience in hiring in China and its regional headquarters in Shanghai, Horizons is a popular pick for hiring in China. 

💡 Pricing starts at $299+ per employee per month.

2. Bradford Jacobs

With its broad range of expansion solutions — EOR, entity setup, payroll and marketing support, we judge Bradford Jacobs a smart choice for a full China business expansion. 

💡 Pricing available by custom quote.

3. Infotree Global

With a full range of temporary and permanent hiring solutions in China, we rate Infotree Global as an ideal partner for your China workforce.

💡 Pricing available by custom quote. 

4. ChaadHR

With its user-friendly SaaS and multiple integrations, ChaadHR’s China EOR is a good solution for companies seeking a comprehensive HR platform.

💡 Pricing starts at $299 per employee, per month.

5. JSC Groups

JSC Groups offers Employer of Record solutions, alongside recruitment and company registration in China. 

💡 Pricing available by custom quote.

Pro Tip: Remember that engaging a China EOR involves a legal and contractual relationship, so it’s advisable to consult with legal and business advisors familiar with China’s laws and regulations to ensure compliance and protect your interests throughout the process

Engaging a China EOR — Our Take

Engaging a China Employer of Record can provide foreign companies with a streamlined and efficient way to expand and establish a presence in China. By outsourcing employer-related responsibilities, such as compliance with labor laws, payroll processing, and HR administration, companies can save time, resources, and mitigate legal risk.

The EOR’s local expertise and support enable businesses to navigate the complexities of the Chinese market, while maintaining flexibility and scalability. While there are potential downsides or risks to any global expansion solution, the top China EORs have measures in place to protect you against any risk. 

China Business Guides

Frequently Asked Questions

No, China Employers of Record can be beneficial for companies of various sizes. While larger companies may have the resources to establish their own legal entity in China, engaging an EOR can still provide cost savings, speed, and expertise.

Small and medium-sized enterprises (SMEs) often find EOR services particularly advantageous as they may not have the resources or local knowledge to navigate Chinese labor laws and administrative processes on their own.

Yes. As China expansion experts a China EOR will be able to guide you on the rules around corporate social credit scores. These are a China-specific mechanism for determining whether a company or individual is trustworthy. 

Yes, it is possible to transition from using a China Employer of Record to register your own China company in the future. The EOR can help facilitate the transition process by providing guidance and support. Keep in mind that establishing a legal entity involves additional time, costs, and administrative requirements. It's advisable to consult with legal and business advisors to determine the most suitable timing and approach for transitioning to a legal entity based on your business objectives and long-term plans in China.

No, it is not required. If you do not possess a company registered in China such as a WFOE, you have the option to engage employees using a Professional Employer Organization (PEO) service offered by a Chinese employment agency or an EOR service such as described on this page.

1.  Employ individuals with a China EOR

If you lack a legal entity in China, this is the sole compliant method for having employees work for you in China. An EOR in China allows you to hire in less than 48 hours employees in China without the need to set up your own entity.

2. Onboard employees through a WFOE

If you have already established a WFOE in China, you can directly enter into labor contracts with your employees. You have the option to manage their payroll and benefits in-house or outsource these functions.

3. Engage employees through a representative office (RO)

A representative office in China is not permitted to directly hire employees. The only compliant approach is to employ workers through a labor dispatch agency under the PEO service.

Digital Yuan is a new state-backed digital currency in China. Currently it is only being trialed with salaries for some public employees and is not generally available for salary payment yet. 

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