Hire in China,
compliantly,
without the complexity.

China is the world's second-largest economy by nominal GDP and the largest by purchasing power parity (PPP). Beyond its historic role as the "World's Factory," China has evolved into a global epicenter for consumer technology, digital commerce, fintech, advanced robotics, electric mobility (EVs), battery storage, and artificial intelligence.

Strategic Advantages & Talent Concentration

• World-Class STEM Talent Pool: Millions of engineering, software, and data science graduates annually, offering deep expertise in AI/ML, full-stack development, hardware prototyping, and automated supply chains.
• Unmatched Supply Chain Ecosystem: End-to-end component sourcing, rapid rapid prototyping, and specialized industrial clusters across the Pearl River Delta and Yangtze River Delta.
• Massive Consumer Market: 1.4 billion consumers with world-leading digital commerce penetration, social commerce platforms, and instant mobile payment infrastructure (WeChat Pay, Alipay).

Major Metropolitan Hubs

• Shanghai: Commercial, financial, and multinational regional headquarters capital; luxury retail and international trade.
• Beijing: National political capital, state-owned enterprise headquarters, deep tech R&D, and AI clusters.
• Shenzhen: "China's Silicon Valley," global hardware capital, telecommunications, and consumer electronics hub.
• Guangzhou: Southern international trade, logistics, and advanced manufacturing center.
• Hangzhou: Global e-commerce, cloud computing, and fintech center (Alibaba ecosystem).
• Chengdu & Chongqing: Western China's high-tech manufacturing, software outsourcing, and logistics powerhouses.

Employment relations are strictly governed by the PRC Labor Law and the PRC Labor Contract Law (amended 2013), alongside municipal implementing regulations.

Mandatory Written Contract & Double-Wage Penalties

• 1-Month Statutory Window: Employers must execute a written labor contract within 1 month of the employee's start date.
• Double-Wage Penalty: Failure to sign a contract between month 2 and month 11 obligates the employer to pay double monthly wages for every uncontracted month.
• Deemed Open-Ended Contract: If no written contract is signed within 1 full year, an open-ended (permanent) contract is legally established by operation of law.
• Language Requirements: Contracts must be executed in Simplified Chinese to be legally binding and enforceable before Chinese labor arbitration committees and courts. Bilingual versions are standard for international hires, with Chinese prevailing in disputes.

Contract Classifications

• Fixed-Term Contract: Contract with a specified duration. Standard for new hires.
• Open-Ended (Permanent) Contract: Mandatory upon employee request after the completion of two consecutive fixed-term contracts, or after 10 years of continuous service with the employer.
• Project-Based Contract: Concludes automatically upon the verified completion of a specific project.
• Part-Time Contract: Limited to max 4 hours/day and 24 hours/week; can be terminated without notice or severance.

Statutory Probation Limits

Note: An employer may only impose a single probationary period per employee.

Standard Working Hours & "996" Enforcement

• Statutory Standard: 8 hours per day and 40 hours per week (Monday through Friday).
• Overtime Cap: Overtime is legally capped at 36 hours per month. Regulators and the Supreme People's Court have intensified enforcement against unlawful excessive overtime cultures (such as historical "996" tech schedules).

Mandatory Overtime Pay Multipliers

• Weekday Overtime (Beyond 8 Hours): 150% of base hourly wage (1.5×).
• Weekend Overtime (Rest Days): 200% of base hourly wage (2.0×), or compensatory paid rest time.
• Statutory Public Holidays: 300% of base hourly wage (3.0×) — Mandatory cash payment; cannot be substituted with time off.

Special Working Hour Systems (Government Approved)

• Comprehensive Working Hour System: Averages hours across a weekly, monthly, or quarterly cycle (common in manufacturing, logistics, and retail).
• Flexible / Non-Fixed Working Hour System: Exempts senior management, field sales, and specialized R&D staff from standard daily timekeeping and overtime rules (requires formal labor bureau pre-approval).

Annual Paid Vacation (Based on Cumulative Career History)

Statutory annual leave is determined by an employee's total cumulative career work experience across all employers (verified via social security contribution records), not just tenure with the current company:

• 1 to 10 Years Total Work History: 5 working days.
• 10 to 20 Years Total Work History: 10 working days.
• 20+ Years Total Work History: 15 working days.
• Market Standard: Multinationals and tech employers typically provide 10 to 20 days as an enhanced benefit.

Official Public Holidays (11 Days with Make-Up Workdays)

China observes 11 statutory public holidays, frequently combined with adjacent weekends via government-mandated "make-up workdays" (*Tiao Xiu*):

• New Year's Day (1 January)
• Spring Festival / Chinese New Year: 3 official days (extended to 7–8 days "Golden Week")
• Qingming / Tomb-Sweeping Festival (April)
• International Labour Day (1 May – 5-day holiday block)
• Dragon Boat Festival (June)
• Mid-Autumn Festival (September/October)
• National Day (1 October): 3 official days (extended to 7-day "Golden Week")

Sick Leave & Medical Treatment Periods

Employees are entitled to a statutory Medical Treatment Period (*Yi Liao Qi*) ranging from 3 to 24 months depending on cumulative work history and company tenure, during which they cannot be dismissed. Sick pay is calculated as 60%–100% of salary (minimum 80% of local minimum wage).

Maternity & Paternity Leave

• Maternity Leave: National statutory baseline of 98 days (15 days prenatal + 83 days postnatal), extended provincially to 128 to 158+ days (e.g. 158 days in Shanghai and Beijing). Funded via the Maternity Insurance branch of social security.
• Paternity Leave: Provincially mandated, ranging from 7 to 30 days (typically 10–15 days in Beijing/Shanghai).
• Marriage & Bereavement Leave: 3 to 10 days depending on local provincial regulations.

Mandatory Social Security: "Five Insurances and One Fund" (*Wu Xian Yi Jin*)

China's comprehensive social welfare framework requires joint employer-employee monthly contributions administered by municipal Human Resources and Social Security Bureaus (HRSSB) and Housing Provident Fund Centers:

City-Specific Contribution Caps

Social insurance contributions are not calculated on unbounded gross salary. Monthly contribution bases are capped at 300% of the previous year's municipal average monthly wage (and floored at 60%), updated annually in July by each city's HRSSB (Shanghai, Beijing, Shenzhen, and Guangzhou each maintain unique statutory caps).

Market Standard Benefits & 13th-Month Pay

• 13th-Month / Year-End Bonus: Disbursed before Chinese New Year (Spring Festival); standard commercial expectation in tech and corporate sectors.
• Supplemental Commercial Health Insurance: Covers high-end private clinics (United Family, Parkway) and direct billing.
• Meal & Transport Allowances: Monthly stipends provided via non-taxable fapiao reimbursement structures.

Monthly Payroll & Strict Foreign Exchange Compliance

• Currency: Chinese Yuan (RMB/CNY). Under PRC foreign exchange regulations (SAFE), domestic staff must be paid in RMB to local bank accounts.
• Payroll Frequency: Monthly payroll cycle, disbursed between the 5th and 15th of the following month (or month-end).
• Electronic Fapiao & Payslips: Mandatory itemized payslips issued detailing gross wage, Five Insurances deductions, Housing Fund, IIT withholding, and net salary.

Individual Income Tax (IIT – Comprehensive Income Table)

Withheld monthly on a cumulative progressive basis, with annual reconciliation between March 1 and June 30:

Standard deduction: RMB 5,000/month (RMB 60,000/year) + Special Additional Deductions (children's education, mortgage interest, housing rent, elderly care, continuing education).

Strict Prohibition of At-Will Termination

Under PRC law, at-will termination is unlawful. Employers must have an explicit statutory ground under Articles 36, 39, 40, or 41 of the Labor Contract Law and follow strict evidentiary due process.

Statutory Severance Formulas: "N", "N+1" and "2N"

• Lawful Severance ("N"): Paid upon mutual separation, contract expiry (without renewal offer at equal terms), or economic redundancy. Calculated as 1 month's average salary per completed year of service (6–12 months = 1 month; < 6 months = 0.5 month). For salaries exceeding 3x the local average wage, the base is capped at 3x average wage and tenure is capped at 12 years.
• Notice in Lieu ("N+1"): If the employer terminates for objective incompetence (after training/reassignment) or major operational changes without giving 30 days' advance written notice, they must pay N + 1 month's salary.
• Unlawful Dismissal Damages ("2N"): If a termination is found unlawful by a labor arbitration committee and the employee does not seek reinstatement, the employer must pay double the statutory severance (2N).

Protected Employee Classes

Employees cannot be terminated for redundancy or non-fault grounds during medical treatment periods, pregnancy/maternity leave (*fuero*), or if they have completed 15 years of service with under 5 years until retirement.

Points-Based Foreigner's Work Permit System

Foreign nationals working in China are classified into three tiers based on a points grid evaluating salary, education, Chinese language proficiency, age, and work experience:

• Category A (High-End Talent): Score ≥ 85 points, executive management, top scientists, or high earners (> 6x local average wage). Expedited processing and green-channel benefits.
• Category B (Professional Talent): Score 60–84 points, bachelor's degree + 2 years relevant experience. Standard professional category.
• Category C (Temporary / Non-Technical Staff): Score < 60 points; subject to strict government quotas.

Application Workflow

1. Notification Letter of Work Permit: Sponsoring local entity applies via the Foreigner's Work Management System.
2. Z Visa Issuance: Candidate secures a Z visa at a Chinese embassy/consulate abroad.
3. Work Permit Card & Residence Permit: Issued post-arrival and converted into a 1-to-2 year Work-Type Residence Permit with the Public Security Bureau (PSB).

Processing Timeline: Typically 4 to 8+ weeks.

Wholly Foreign-Owned Enterprise (WFOE) Incorporation

Foreign enterprises setting up a direct subsidiary in China incorporate a Wholly Foreign-Owned Enterprise (WFOE):

• Registration Formalities: Business scope pre-approval, State Administration for Market Regulation (SAMR) licensing, State Administration of Foreign Exchange (SAFE) capital accounts, Tax Bureau activation, Social Insurance / Housing Fund accounts, and Company Chop (*Gongzhang*) carving.
• Company Chops / Legal Seals: In China, physical company chops carry absolute legal authority to bind the company to contracts and bank withdrawals.
• Corporate Income Tax (CIT): Standard 25% CIT (15% for High-Tech Enterprise accreditation).
• Setup Timeline & Overhead: 2 to 4+ months ($10,000–$30,000+ setup costs plus mandatory monthly Chinese GAAP bookkeeping, annual statutory audits, and corporate maintenance).

Key Advantages of an EOR in China

• Rapid Market Entry (Days vs. Months): Hire software engineers, supply chain managers, and sales leads in days without a 2–4 month WFOE incorporation delay.
• Eliminate City-by-City Social Insurance Complexity: Seamless compliance with localized contribution bases, caps, and Housing Fund rules across Beijing, Shanghai, Shenzhen, and Tier 2/3 cities.
• Foreign Work Permit Sponsorship: EOR's established Chinese entities sponsor Z visas, Category A/B Foreigner's Work Permits, and Residence Permits.
• Mitigate Double-Wage & 2N Severance Liabilities: Strict adherence to 1-month contract execution rules, Simplified Chinese drafting, and legally sound mutual separation agreements.
• PIPL & Cross-Border Data Compliance: Compliant localized management of employee HR and payroll data under China's Personal Information Protection Law (PIPL).

EOR vs. Direct China WFOE Entity Setup