Employer of Record in China
Hiring in China at a glance
An Employer of Record in China legally employs workers on behalf of a foreign company, managing contracts, payroll, and statutory compliance.
China's labor dispatch regulatory ambiguity and PIPL data compliance requirements are the two primary hiring obstacles foreign companies face when building local teams.
- Hiring speed: EOR engagement takes 2 to 4 weeks versus 3 to 6 months for entity setup.
- Employer social security cost: Approximately 27 to 34 percent of gross salary, varying by city.
- Standard notice period: 30 days for employees who have completed their probation period.
- Missing written contract penalty: Double salary is owed for each month a written contract is absent, up to 11 months.
This page covers China's EOR model, hiring options, step-by-step process, employment law, payroll, and termination rules, organized by topic for quick reference.
Gloroots is an Employer of Record provider. This guide presents the full range of hiring options in China so readers can identify the path that fits their situation.
What Is an Employer of Record in China?
An EOR in China is the legal employer on record. It signs the employment contract, runs payroll, and manages statutory filings, while the client company directs the employee's day-to-day work.
Foreign companies without a WFOE, businesses testing the China market, and teams scaling to fewer than five employees are the primary EOR users.
In practice, the client selects the candidate. The EOR then issues a Mandarin-bilingual contract, runs monthly RMB payroll, remits social insurance and housing fund contributions, and manages ongoing HR compliance while the client retains operational direction. For a deeper explanation of the model, see how does EOR work.
Chinese authorities may treat EOR arrangements as labor dispatch (劳务派遣) under Labor Contract Law Article 66. A compliant EOR holds or partners with a licensed labor dispatch entity to mitigate this classification risk.
Your Hiring Options in China: EOR vs. Entity vs. PEO vs. Contractor
Foreign companies hiring in China have four main paths: establishing a WFOE entity, engaging an EOR, using a PEO or labor dispatch arrangement, or contracting an independent worker. Each path carries different compliance obligations and cost structures. Choosing the right option depends on headcount, timeline, and operational intent. Reviewing a guide to the best employer of record providers can help narrow the EOR selection.
Entity setup suits large-scale, permanent, revenue-generating operations where the company plans a long-term China presence and can absorb a 3 to 6 month registration timeline.
EOR is appropriate for market testing, small teams, or situations where speed to hire is a priority and entity overhead is not justified.
| Path | Setup Time | Compliance Ownership | Cost Structure | Best For |
|---|---|---|---|---|
| WFOE Entity | 3 to 6 months | Company | High upfront capital plus ongoing operational costs | Large-scale, permanent operations |
| EOR | 2 to 4 weeks | EOR provider | Per-employee monthly fee | Market testing, small teams, fast hiring |
| PEO / Labor Dispatch | 2 to 4 weeks | Shared | Per-employee fee plus dispatch markup | Short-term or project-based staffing |
| Independent Contractor | Immediate | Company bears risk | Contract fee, no statutory benefits | Short engagements with low integration |
Contractor arrangements carry high misclassification risk in China. Labor law defaults toward employment status, and courts regularly reclassify contractor relationships as employment, triggering back-pay and penalty obligations.
How to Hire in China Through an EOR: Step by Step
The following six steps cover the practical hiring sequence for engaging an employee in China through an EOR, from initial strategy through to active employment.
Step 1: Decide Whether an EOR or Entity Fits Your China Strategy
Assess headcount, timeline, and operational permanence before committing. EOR suits fewer than five employees or market-testing scenarios. A WFOE suits long-term, revenue-generating operations where the company plans to remain in China indefinitely.
Step 2: Vet and Select a Licensed EOR Provider
Verify that the EOR holds or partners with a licensed labor dispatch entity, owns its own China entity with a verifiable Unified Social Credit Code, and has city-level payroll expertise for the locations where you plan to hire.
Step 3: Draft and Sign a Compliant Employment Contract
Contracts must be written in Mandarin (bilingual is acceptable), signed within one month of the start date, and specify contract type, salary in RMB, working hours, probation terms, and termination conditions.
Include an IP assignment clause. Under Chinese patent law, service inventions default to the employer, but explicit assignment language provides stronger protection. Also include an employee handbook acknowledgment, which is legally binding and admissible in labor disputes.
Step 4: Register Statutory Benefits and Onboard the Employee
The EOR registers the employee with the local social insurance bureau and housing fund management center in the city where they work.
Required onboarding data includes: national ID (居民身份证) for Chinese nationals, passport and visa for foreign hires, and bank account details matching the payee name exactly for RMB payroll. Hukou details are collected where applicable.
Data collection must comply with China's Personal Information Protection Law (PIPL): collect only necessary data, encrypt it in transit and at rest, and obtain employee consent before any cross-border data transfer.
Step 5: Run Compliant Monthly Payroll in RMB
Payroll must be processed in RMB through a Chinese bank account and paid by the 15th of the following month.
The EOR withholds Individual Income Tax (IIT) on progressive brackets and remits both employer and employee social insurance and housing fund contributions to city-specific bureaus each month.
Year-end IIT reconciliation is required. Employees receive annual income statements confirming total earnings and tax withheld for the calendar year.
Step 6: Manage Offboarding and Exit Compliantly
The EOR issues statutory 30-day notice or payment in lieu, calculates severance at one month per year of service, settles unused annual leave, deregisters social insurance and housing fund accounts, and issues the mandatory Certificate of Employment.
Unused annual leave carries specific compensation rules. Employers must pay 200% of the daily wage if leave is not carried over, and 300% if the employer prevented the employee from taking leave.
How to Choose the Right EOR in China
Selecting the right EOR services provider in China requires evaluating several operational and legal criteria before signing any agreement.
Local Legal Knowledge and Licensing
Verify that the EOR understands city-specific social insurance rates, labor dispatch licensing requirements, and PIPL obligations. Ask for their Unified Social Credit Code as confirmation of legal registration in China.
Own Entity vs. Partner Network
Ask whether the EOR operates through its own wholly-owned China entity or subcontracts to third-party partners. Own-entity providers carry direct liability and reduce subcontractor risk for your workforce.
Support Model and Language Capability
Confirm the EOR offers Mandarin-language HR support, in-country contacts, and defined response-time SLAs. China's time zone and language requirements make local, human-led support a practical necessity, not a bonus.
Pricing Transparency
EOR fees in China typically range from USD 199 to 2,000 per employee per month, charged as a flat fee or a percentage of payroll. For teams of fewer than three to five employees, an EOR is generally more cost-effective than entity setup. Review employer of record cost structures before committing to a provider.
Data Security and PIPL Compliance
Verify the EOR stores Chinese employee data onshore, has completed a Personal Information Protection Impact Assessment (PIPIA), and uses Standard Contract Clauses for any cross-border data transfers. PIPL compliance is a legal requirement, not optional.
HRIS Integration and Automation
Evaluate whether the EOR platform integrates with your existing HRIS and supports automated payroll runs. China's multi-bureau filing environment spans tax, social insurance, and housing fund authorities. Manual processes across these bureaus increase error risk and compliance exposure significantly.
Workforce and Talent Pool in China
China has approximately 780 million workers, the largest workforce in the world. The median age is around 39 years, and roughly 35% of the population is under 35, providing a broad base of working-age talent.
Key hiring hubs include Shanghai for finance and R&D, Beijing for policy and technology, Shenzhen for hardware and innovation, Guangzhou for trade and manufacturing, and Chengdu for IT outsourcing.
Work culture in China is shaped by hierarchical structures and a strong emphasis on seniority. Younger professionals in Tier 1 cities are digitally fluent and seek career progression alongside stability. Salary expectations differ significantly between Tier 1 cities such as Shanghai and Beijing and Tier 2 or Tier 3 cities, where compensation is materially lower. English proficiency is stronger in Shanghai and Beijing, particularly within multinational companies. Employers hiring across regions should account for these differences in both cost planning and communication strategy. For a comparison with a nearby market, see employer of record Hong Kong.
| Category | Key Facts |
|---|---|
| Workforce Size | Approx. 780 million workers |
| Median Age | ~39 years |
| English Proficiency | Moderate overall; stronger in Shanghai and Beijing |
| Top Talent Hubs | Shanghai, Beijing, Shenzhen, Guangzhou, Chengdu |
| Key Industries | Technology, manufacturing, finance, e-commerce, renewable energy, biotech |
Employment Law Essentials in China
China's Labor Contract Law sets strict requirements for written contracts, working hours, and minimum wages. Employers who miss these requirements face financial penalties and legal exposure. The rules below apply nationally but are enforced at the city and provincial level.
Three areas carry the highest compliance risk for foreign employers: contract documentation, overtime arrangements, and city-specific wage floors. Each is governed by specific statutory rules, not general guidance.
Employment Contracts
Employers who fail to issue a written contract within one month of hiring must pay the employee double salary for each month without a contract, up to 12 months. After one full year without a written agreement, the law treats the relationship as an open-ended contract automatically. Employee handbooks carry legal standing and must be signed by each employee to be enforceable.
Working Hours and Overtime
Standard working hours are eight hours per day and 40 hours per week. Overtime is capped at 36 hours per month. Flexible or comprehensive hour arrangements require prior approval from the local labor bureau before implementation.
Minimum Wage
Minimum wages vary materially by city and are updated annually. Current figures: Shanghai RMB 2,690 per month (RMB 25 per hour); Beijing RMB 2,420 per month (RMB 24 per hour); Shenzhen RMB 2,360 per month; Guangdong Province RMB 1,620 to RMB 2,100 per month depending on the tier. Employers must verify the applicable local rate before setting compensation.
Leave and Statutory Benefits in China
China mandates specific leave entitlements and pay rates for each type of absence. Employers must track these correctly because underpayment or failure to grant leave triggers statutory compensation obligations.
Public holidays increased to 13 days in 2025 with the addition of Lunar New Year's Eve and May 2 as statutory holidays. Work on a statutory holiday attracts 300% of the employee's regular wage.
The 13th-month payment is not legally required, but it is a strong market norm. It is typically paid before Chinese New Year, is fully taxable, and must be included in payroll calculations.
| Leave type | Entitlement | Pay rate | Key conditions |
|---|---|---|---|
| Annual leave | 5 to 15 days (by tenure) | 100% base salary; 200% daily wage if unused at year-end; 300% if employer prevented leave | Accrues after one year of service |
| Sick leave | Varies by tenure and city | 60% to 100% of salary depending on local rules | Medical certificate required |
| Maternity leave | 98 days national; 128 to 188 days total with provincial extensions | Paid via maternity insurance fund | Provincial top-up varies by region |
| Paternity leave | 7 to 30 days by province | Paid via social insurance | Must be taken within a set period after birth |
| Parental leave (post-birth) | 5 to 15 days per year per parent until child turns 3 | Paid per local regulation | Both parents eligible |
| Public holidays | 13 days (from 2025) | 300% for work on statutory holidays | Includes Lunar New Year's Eve and May 2 |
Annual Leave
Employees accrue five to 15 days of annual leave based on years of service. If an employer does not carry over unused leave at year-end, it must pay the employee 200% of their daily wage for each unused day. If the employer actively prevented the employee from taking leave, the compensation rate rises to 300% of the daily wage.
Sick Leave
China's medical treatment period (病假期) ranges from 3 months for employees with under 10 years of service to 24 months for those with over 20 years of service.
Maternity and Paternity Leave
National maternity leave is 98 days. Provincial extensions bring the total to 128-188 days depending on location. Paternity leave ranges from 7 to 30 days by province. After birth, each parent receives 5-15 days of parental leave per year until the child turns 3.
Public Holidays
China observes 13 public holidays in 2025, up from 11. The two new additions are Lunar New Year's Eve and May 2 (Labour Day). Employees required to work on statutory holidays receive 300% of their regular pay.
Payroll, Tax and Statutory Contributions in China
Employers in China run monthly payroll cycles and are responsible for withholding Individual Income Tax (IIT) and remitting statutory social contributions on time.
China's Personal Information Protection Law (PIPL) classifies payroll data as sensitive personal information. Employers processing employee salary data must meet strict consent, storage, and cross-border transfer requirements, making PIPL a high-risk compliance area for any payroll operation.
Contribution rates vary materially between cities. The table below reflects Shanghai 2026 rates, with a wage base ceiling of RMB 36,549 per month for social security contribution caps.
| Contribution Type | Employer Rate (Shanghai 2026) | Employee Rate |
|---|---|---|
| Pension | 16% | 8% |
| Medical + Maternity | 10% | 2% |
| Unemployment | 0.5% | 0.5% |
| Work Injury | ~0.2% | 0% |
| Housing Fund | 7% | 7% |
| Total | ~33.7% | ~17.5% |
Cities such as Chengdu carry different rates. Always verify local rates before running payroll in a new city.
Total Cost of Employment example (Shanghai):
- Gross salary: RMB 20,000
- Employer social security contributions: ~RMB 5,400
- Housing fund (employer share): ~RMB 1,400
- EOR service fee: ~RMB 3,500
- Estimated total monthly cost: ~RMB 30,300
IIT is calculated on a progressive basis. The brackets below apply to annual taxable income after deductions.
| Annual Taxable Income (RMB) | IIT Rate | Quick Deduction (RMB) |
|---|---|---|
| 0 - 36,000 | 3% | 0 |
| 36,001 - 144,000 | 10% | 2,520 |
| 144,001 - 300,000 | 20% | 16,920 |
| 300,001 - 420,000 | 25% | 31,920 |
| 420,001 - 660,000 | 30% | 52,920 |
| 660,001 - 960,000 | 35% | 85,920 |
| Over 960,000 | 45% | 181,920 |
Work Visas and Permits in China
Foreign nationals working in China require a Z Visa for entry and a Residence Permit for ongoing in-country authorization. Both are tied to a valid Foreigner Work Permit issued by the Ministry of Human Resources and Social Security (MOHRSS).
An EOR acts as the legal employer in China and can sponsor both the Foreigner Work Permit and the Residence Permit on behalf of the foreign employee. This removes the need for the client company to hold a local entity to support work authorization.
Foreigner Work Permit process steps:
- Submit application to MOHRSS with required employment and qualification documents.
- Complete a mandatory medical examination at an approved facility.
- Enter China on a Z Visa.
- Register place of residence with local police within 24 hours of arrival.
- Apply for Residence Permit at the local Exit-Entry Administration Bureau within 30 days.
| Visa Type | Purpose | Validity |
|---|---|---|
| Z Visa | Entry visa for foreign employees | Single or multiple entry; typically 30-90 days |
| Foreigner Work Permit | Authorization to work in China | Up to 5 years, tied to employment contract |
| Residence Permit | In-country permit replacing Z Visa | 1-5 years, renewable |
Equity and ESOP Consulting in China
Equity compensation, including stock options and RSUs, is common in China's technology sector, particularly among companies based in Shenzhen, Beijing, and Shanghai.
Equity income is taxed as employment income under IIT at progressive rates up to 45%. Cross-border equity plans also require registration with the State Administration of Foreign Exchange (SAFE), and employers must manage withholding obligations carefully to avoid penalties.
Employees hired through an EOR who receive equity from a foreign parent company require careful structuring. SAFE registration must be completed before equity vests or is exercised, and the EOR must fulfill IIT withholding obligations on any equity income paid to the employee.
Misclassification Risk in China
Chinese law strongly favors employee status. Courts default to employment for any ongoing, exclusive working relationship, regardless of how the contract is labeled.
Regulators assess the following criteria when determining employment status:
- Fixed working hours set by the company, not the worker
- Use of company-owned equipment and systems for daily tasks
- Exclusive service to one company with no independent client base
- Regular reporting lines to a designated manager or supervisor
- Payment calculated by time worked, not by project deliverable
Misclassification exposes companies to significant financial and legal penalties:
- Back payment of all unpaid social insurance and housing fund contributions, plus late fees
- Double severance for unlawful termination of a misclassified worker
- Late payment fines imposed by the local social insurance bureau
- Labor arbitration proceedings, which are employee-favorable under Chinese law
An EOR eliminates misclassification risk by issuing compliant employment contracts and making all statutory contributions from day one.
Labor dispatch note: If an EOR arrangement is treated as unlicensed labor dispatch, joint liability applies to both the EOR and the client company. Reputable EOR providers structure engagements to avoid dispatch classification and hold the required licenses where applicable.
Hiring, Onboarding, Termination and Offboarding in China
China's Labor Contract Law governs every stage of the employment lifecycle, from the first day of work through final settlement. Employers must follow prescribed procedures at each phase or face statutory penalties.
The sections below cover onboarding, termination, and offboarding in sequence. Each phase carries specific legal obligations that apply regardless of company size or industry.
Failing to issue a written contract within one month of the start date triggers a double-salary penalty for every month the contract is missing. This rule applies from the second month of employment onward and is actively enforced by labor bureaus across all provinces.
Termination requires statutory grounds or mutual agreement. Unlawful termination without grounds exposes the employer to reinstatement orders or double severance equal to two times the standard amount.
Offboarding must include unused annual leave compensation, a statutory Certificate of Employment, and deregistration from social insurance and housing fund systems. Skipping any of these steps creates ongoing compliance exposure after the employee has left.
Onboarding
Before Day One
- Collect national ID or passport and bank account details; the account name must match the payee name exactly for payroll processing
- Obtain PIPL-compliant data consent before collecting or storing any personal information
- Sign a Mandarin-bilingual employment contract; the contract must be executed within one month of the start date to avoid the double-salary penalty
Day One
- Register the employee with the local social insurance bureau and housing fund management center
- Issue the employee handbook and obtain a signed acknowledgment, which is legally binding under Chinese law
- Confirm probation period terms in writing, including duration and performance expectations
First Week
- Enroll the employee in the payroll system and verify individual income tax (IIT) withholding setup
- Communicate workplace safety policies and grievance procedures in writing
Beyond
- Document probation performance reviews with dated records
- Maintain monthly payroll and contribution filing records for each pay cycle
- Track annual leave accruals from the first month of employment
Termination
Termination requires statutory grounds such as misconduct, incompetence after training, or redundancy, or it must occur by mutual agreement. Unilateral termination without valid grounds triggers a reinstatement order or double severance equal to two times the standard statutory amount.
Offboarding
Settlement
- Calculate final wages for all days worked in the last pay cycle
- Pay unused annual leave at 200% of the employee's daily wage rate
- Calculate severance at one month of salary per year of service and process within the final payroll cycle
Documents
- Issue a Certificate of Employment stating the employment duration, role held, and reason for departure; this document is a statutory requirement
- Update payroll records and individual income tax (IIT) filings with the local tax bureau
Exit
- Deregister the employee from the social insurance bureau and housing fund management center
- Collect all company property and confirm return in writing
- Complete exit clearance sign-off with the employee before closing the employment record
What's New: Recent Regulatory Changes in China
Two changes have the broadest impact on employers operating in China today. The Personal Information Protection Law (PIPL), effective November 1, 2021, reshaped how companies collect and transfer employee data. The 2025 public holiday expansion added two additional national holidays, bringing the total from 11 to 13 days.
- PIPL requires data localization for certain categories of personal information and mandates separate approval for cross-border data transfers to foreign entities
- The 2025 public holiday calendar increased statutory holidays from 11 to 13 days, raising payroll costs for all employers with fixed monthly salaries
- Shanghai updated its social insurance wage base ceiling to RMB 36,549 per month for 2026, affecting contribution calculations for higher-earning employees
- Social insurance contribution rates continue to vary by city and are adjusted periodically; employers must verify local rates rather than applying a national default
- Labor dispatch license enforcement has tightened, with regulators scrutinizing EOR and staffing arrangements more closely for unlicensed dispatch activity
Employers must audit data flows for PIPL compliance, update payroll systems to reflect the new public holiday count, and verify city-level contribution rates on a quarterly basis.
Quarterly review owner: HR or payroll compliance lead. Rates and holiday counts should be confirmed each quarter against official bureau announcements.
Costs and Financial Planning for Hiring in China
Beyond base salary, employers in China must budget for statutory social security contributions, housing fund payments, severance liability, and an EOR service fee.
Several costs catch foreign employers off guard. A 13th-month payment is a strong market norm and is fully taxable. Unused annual leave must be compensated at 200–300% of the employee's daily wage if not taken. Permanent Establishment (PE) risk is also significant: if Chinese employees sign local contracts or capture revenue without a registered local entity, the foreign headquarters faces a 25% Corporate Income Tax on China-sourced income. A compliant EOR mitigates PE risk through its legal-employer status and Fapiao invoicing, keeping the foreign company outside China's tax net. For a broader APAC cost comparison, see employer of record Singapore.
Worked example: Total Cost of Employment (monthly)
- Gross salary: 20,000 RMB
- Employer social security (~27%): ~5,400 RMB
- Housing fund (7%): ~1,400 RMB
- EOR fee: ~3,500 RMB
- Total monthly cost: ~30,300 RMB
| Cost Element | Direct Entity | Gloroots EOR |
|---|---|---|
| Setup cost | High registered capital + legal fees | No setup cost |
| Payroll compliance | Managed internally | Managed by Gloroots |
| Social security filing | Company handles city-level filings | Gloroots files on your behalf |
| PE risk exposure | High without careful structuring | Mitigated via Gloroots legal-employer status |
| Monthly EOR fee | Not applicable | USD 199–2,000 per employee |
EOR pricing typically ranges from USD 199 to USD 2,000 per employee per month. This model is cost-effective for companies employing fewer than three to five people in China before committing to entity setup.
Common Challenges and How Gloroots Solves Them in China
Hiring in China involves regulatory ambiguity around labor dispatch licensing, strict Personal Information Protection Law (PIPL) data obligations, PE risk exposure, and contribution rates that vary by city.
| Challenge | How Gloroots Addresses It |
|---|---|
| PIPL compliance | Gloroots processes employee data under PIPL-compliant protocols, including lawful basis documentation and cross-border transfer controls. |
| PE risk | Gloroots acts as the legal employer of record, issuing Fapiao invoices and keeping the foreign company outside China's corporate income tax scope. |
| Labor dispatch licensing | Gloroots holds a valid labor dispatch license, structuring contracts to meet Labor Contract Law Article 66 requirements. |
| Double-salary contract penalty | Gloroots issues written contracts within the statutory one-month window, avoiding the mandatory double-salary penalty under Article 82. |
| Unused leave liability | Gloroots tracks accrued leave and flags compensation obligations at 200–300% of daily wage before they become liabilities. |
| 13th-month payroll inclusion | Gloroots incorporates 13th-month payments into payroll runs with correct tax withholding applied. |
Why Gloroots Is a Strong EOR Partner in China
Gloroots is best suited for companies hiring one to ten employees in China, testing the market before entity setup, or needing compliant payroll and contracts without forming a Wholly Foreign-Owned Enterprise (WFOE).
Gloroots operates through its own China entity, handles employee data under PIPL-compliant protocols, and manages city-level payroll across Shanghai, Beijing, Shenzhen, and Chengdu. Mandarin-language HR support is available for day-to-day employee queries.
Companies that need compliant employment in China without entity overhead can run payroll and contracts through Gloroots from week one.
The model fits best for market-entry teams, project-based hires, and companies assessing China before committing to a WFOE or Joint Venture.
Buyers should verify that any EOR holds a valid labor dispatch license in China, confirm city-specific contribution rates before signing, and request a detailed cost breakdown covering social security, housing fund, and service fees.
Conclusion
China's 2025 expansion to 13 public holidays and ongoing PIPL compliance obligations make local HR expertise a practical requirement, not an optional add-on.
Before committing to entity setup or an EOR contract, assess your headcount needs for the next 12 months, verify that any EOR holds a valid labor dispatch license, and request a city-specific cost breakdown covering social security, housing fund, and service fees. For companies considering broader regional expansion, employer of record Vietnam is a related market worth reviewing.
Frequently Asked Questions About Employer of Record in China
Is it legal to use an Employer of Record in China?
China does not formally recognize the EOR model in law. Authorities may treat EOR arrangements as labor dispatch (劳务派遣) under Labor Contract Law Article 66, which caps dispatch workers at 10% of the workforce and limits use to temporary, auxiliary, or substitute roles. A compliant EOR holds a valid labor dispatch license and structures contracts correctly, reducing legal exposure for the foreign client company.
How much does an Employer of Record in China cost?
EOR pricing in China typically ranges from USD 199 to USD 2,000 per employee per month, depending on the provider and service scope. See pricing details for Gloroots.
Employers should also budget for employer social security contributions of roughly 27 to 34 percent of gross salary, varying by city, plus housing fund contributions of 5 to 12 percent. For teams of fewer than three to five employees, an EOR is generally more cost-effective than entity setup.
How long does it take to hire an employee in China through an EOR?
Hiring through an EOR in China typically takes 2 to 4 weeks from candidate selection to first payroll. This compares to 3 to 6 months for WFOE entity setup.
The EOR manages contract drafting, social insurance registration, and payroll enrollment in parallel, compressing the timeline significantly. Note that a written employment contract must be signed within one month of the employee's start date.
What benefits do employees receive when hired through an EOR in China?
Employees hired through an EOR in China receive all statutory entitlements. These include the five social insurances: pension, medical, unemployment, work injury, and maternity coverage, plus housing fund contributions.
- Paid annual leave: 5 to 15 days, based on tenure
- Maternity leave: 128 to 188 days, including provincial extensions
- Paternity leave: 7 to 30 days, varying by province
- 13 public holidays from 2025
Many EOR providers also facilitate supplemental health insurance and 13th-month pay, both of which are standard market practice in China.
What is the difference between an EOR and a WFOE in China?
A WFOE (Wholly Foreign-Owned Enterprise) is a legal entity you own and operate in China. It gives full operational control but requires 3 to 6 months to establish, registered capital of USD 150,000 to 500,000, and ongoing compliance obligations.
An EOR acts as the legal employer on your behalf. You can hire in 2 to 4 weeks with no registered capital requirement. A WFOE suits large-scale permanent operations; an EOR suits market testing or small teams.
Can an EOR sponsor work visas for foreign employees in China?
Yes. As the legal employer of record, an EOR can sponsor Foreigner Work Permits and Residence Permits for foreign employees in China.
The process involves applying through the Ministry of Human Resources and Social Security (MOHRSS), completing a mandatory medical examination, and registering with the local exit-entry bureau. Foreign employees must also register their residence with local police within 24 hours of arrival.
Does China's Personal Information Protection Law (PIPL) affect EOR arrangements?
Yes. PIPL, effective November 1, 2021, imposes strict obligations on how employee personal data is collected, stored, and transferred across borders.
Employers and EOR providers must collect only necessary data, obtain employee consent for cross-border transfers, and conduct security assessments for large-scale international data flows. Non-compliance carries penalties of up to RMB 50 million or 5 percent of annual revenue. A PIPL-compliant EOR stores Chinese employee data onshore and uses Standard Contract Clauses for any cross-border transfers.
What is Permanent Establishment (PE) risk in China, and how does an EOR help?
PE risk arises when a foreign company's Chinese employees sign local contracts, maintain a fixed place of business, or habitually conclude contracts on behalf of the foreign headquarters. Under State Taxation Administration rules, this can trigger China's 25% Corporate Income Tax on China-sourced income.
An EOR acts as the legal employer, issues Fapiao (official tax invoices), and ensures the foreign company holds no direct employment relationship with Chinese workers. This removes the conditions that create PE exposure.
