Problems we solve

Services

Solutions

Why CXC

Resources

Connect

Global Hiring Contact us

Let´s talk

OUTLINE

Hiring in China

Background checks in China

Hiring employees in China

Language used in China

Corporate presence requirements and payroll setup in China

Easily hire employees in China with our EoR solution

Employer of record in China

Hiring employees in China usually means setting up a local entity — a process that can be expensive, slow, and administratively heavy. You’ll need to navigate registrations with different government bodies, payroll and tax systems, social insurance schemes, and local labour regulations. That may not be practical for companies seeking to expand quickly. Hiring through an employer of record (EoR) is a faster, more flexible alternative.

What is an employer of record (EoR)?

An employer of record (EoR) is a professional service provider that legally hires and pays employees on your behalf. The EoR assumes responsibility for contractual compliance, payroll administration, social insurance and tax withholding, and ensures adherence to local labour law.

This solution is particularly useful for companies expanding into new countries — like China — that have complex regulations and formal entity setup requirements. With an EoR, there’s no need to establish your own corporate structure. The EoR acts as the official employer while you retain operational control of your staff.

Using an employer of record in China

When you engage an employer of record in China, they initiate employment under Chinese law using their qualified local entity. They draft compliant Mandarin or bilingual contracts, administer payroll, deduct personal income tax, and manage social insurance contributions on your behalf. You handle the worker’s functional direction, while the EoR manages statutory employer obligations. This enables you to onboard staff in days, not months — without the hassle of setting up an entity or the risk of misclassification.

Hiring in China with or without an EoR

Engaging an employer of record in China lets you begin hiring quickly and compliantly without establishing your own Chinese legal entity. This works well for short‑term needs, market testing, or small teams — allowing you to scale up with minimal initial investment and legal risk. If you plan a larger, long‑term operation and want full employer control, setting up your own entity is an appropriate path — but it comes with significant time, cost, and regulatory commitment. In this section, we’ll share everything you need to know to compliantly hire in China, whether or not you opt for an EoR solution.

Hiring in China

China is the largest country in the world, with a population of more than 1.4 billion people. With its highly educated and skilled workforce, thriving economy and increasing international business presence, China is a popular destination for workforce expansion. However, businesses hiring in China need a strong understanding of the company’s hiring and firing regulations, customs. and labour laws. Read on to learn what you need to know.

Employment law in China

Companies hiring in China should have a thorough understanding of the labour laws that apply there — which may be very different from those in your country. The primary pieces of employment legislation in China include:

Chinese Constitution.
Labour Law of the People’s Republic of China.
Labour Contract Law of the People’s Republic of China.
Law of the People’s Republic of China on Labour Dispute Mediation and Arbitration.
Labour Union Law of the People’s Republic of China.
Law of the People’s Republic of China on Work Safety.
Social Insurance Law of the People’s Republic of China.

These are supplemented by other national laws, administrative regulations, judicial interpretations released by the Supreme People’s Court and the Supreme People’s Procuratorate, and local regulations and decrees.

Labour unions in China

Unlike in many other countries, employees in China are not free to join or form unions. The single recognised union within the country is the All-China Federation of Trade Unions (ACFTU), which is a government-sanctioned organisation. Local, industry, or enterprise-level unions can only operate under the authority of the ACFTU, making them fairly ineffective at protecting and negotiating for employee rights.

Employment contracts in China

All employees in China must be provided with a written employment contract within 30 days of employment. If the employer fails to comply with this rule, they must pay the employee double the monthly wage for every month when they don’t have a written contract, up to a maximum of 11 months. If an employee still does not have a written contract after a year, it automatically becomes an open-ended contract. The labour authority may also impose fines on the employer for non-compliance.

Chinese labour law also mandates specific information that must be included in the employment contract, including contact information for both parties and the employee’s duties, work location, and working hours. Employment contracts may be fixed-term, open-ended, or project-based.

Taxes and social security contributions in China

Both employers and employees in China must pay social security contributions, which cover things like pensions, medical insurance, and unemployment insurance. Employers hiring in China are also required to participate in the occupational injury insurance scheme and make contributions on behalf of their employees.

Chinese employees must also pay income tax, which is calculated on a progressive scale with tax rates increasing as income rises. Employees are responsible for filing individual tax returns with the Chinese tax authorities. Employers also have various tax returns to file each year, including corporate income tax returns and annual income tax returns for employees.

Background checks in China

Employers in China may conduct background checks on people they are considering employing to verify information and confirm suitability for a role. However, there are certain limitations on the types of background checks that can be performed and the circumstances under which they are allowed. Read on to learn what you need to know about background checks in China.

Required background checks in China

Employees from any third country other than Taiwan, Hong Kong, and Macao must have a valid work permit to work in China — and employers are responsible for checking this information when taking on a new employee. For some roles, employers may be required to check that a candidate does not have a criminal history by requesting a Certificate of No Criminal Conviction (CNCC).

Other permissible background checks in China

Here are some other types of background checks that may be permissible in China based on your circumstances and the nature of the position:

Education and qualification checks: Employers in China can confirm the validity of educational qualifications by verifying diplomas or certificates. They can also check the legitimacy of a candidate’s qualifications through a website designed by the PRC Ministry of Education (CHESICC).
Employment history and reference checks: Employers may also request references from past employers and ask them for information about the candidate’s performance and work ethic. It is a good idea to ask for the candidate’s informed consent before performing a reference check.
Criminal records checks: Employers in China can ask candidates to provide a Certificate of No Criminal Conviction (CNCC) and refuse to engage them if they have a criminal history. However, this is only possible for certain roles and must comply with anti-discrimination and data protection standards.
Credit checks: Background checks that involve looking into an employee’s financial history are heavily limited in China. In general, they are only permitted for roles that involve significant financial responsibility.
Social media checks: Some employers in China may check candidates’ social media profiles before offering them a position. While this can help determine how well a candidate will fit into the company culture, employers should be careful that these checks don’t violate the candidate’s right to privacy.

Limitations on background checks in China

Background checks in China must not infringe on an employee’s privacy or equal employment rights. Employers must obtain consent from candidates before performing a background check, and ensure any information gathered as part of the process is legitimate, just, necessary and not excessive.

Hiring employees in China

Before hiring employees in China, employers should take the time to consider whether this is the best option for their business needs. Depending on your circumstances, it may be a better idea to engage an independent contractor or source labour through a dispatch company (temporary work agency). Read on to learn what you need to know about the different hiring options in China.

Main hiring options in China

Here are the main options available if you want to hire workers in China:

Employee: In China, an employee is an individual who has entered into an employment relationship with an employer. This requires a written contract. Chinese employment contracts can be full-time, part-time, indefinite, or fixed-term. After two consecutive fixed-term contracts, the employee may be entitled to an indefinite contract.
Independent contractor: Unlike in many other countries, there is no specific concept of an independent contractor under Chinese labour laws. While an individual may technically enter into a contract of service with a business under Chinese civil laws, this arrangement may be considered de facto employment.
Agency worker: Employment through a labour dispatch company is when an employee is engaged by one company but performs services for another. In China, there are limits on the number of workers that can be hired through a labour dispatch company in a single workplace. Labour dispatch arrangements are also becoming increasingly regulated to protect employee rights.

Employee misclassification in China

To determine whether a worker is classified as an employee or an independent contractor in China, labour arbitration courts mainly refer to the Circular of the Ministry of Labour and Social Security on the Establishment of Employment Relationships. This document lays out three basic conditions of employment:

Both the employer and the employee are qualified to enter into an employment relationship.
The employee is subject to the employer’s labour management and expected to abide by their rules and regulations.
The employee’s work is part of the employer’s business.

If these three conditions are met, the worker is considered to be an employee of the employer and not an independent contractor. Employers who misclassify workers to avoid employment liabilities may be subject to investigation by labour arbitration courts.

Language used in China

The main language used in China is Standard Chinese, or Putonghua. This is a form of Mandarin based on the local dialect in Beijing. However, there are hundreds of related Chinese languages which are collectively referred to as Hanyu and spoken by over 90% of the population.

Several autonomous regions of China have other official languages, including Mongolian (Inner Mongolia) and Tibetan (Tibet Autonomous Region). Other common languages include Portuguese, English, Mongolian, Korean, Tibetan, Uyghur, Zhuang, Kazakh, and Yi.

Language requirements for employment documents in China

Employment contracts in China should be written in Standard Chinese. While it is possible to produce a bilingual (e.g. English) version for reference, only the Chinese version is legally binding in Chinese courts or arbitration.

English language in China

Many people in China speak English, especially in major cities like Beijing, Shanghai, and Hangzhou. However, English may be limited outside of these urban areas. According to EF’s English Proficiency Index, China is ranked #91 out of 116 countries in the world and #15 out of 23 countries in Asia for English proficiency.

Some multinational companies operating in China may use English as a business language, often alongside Chinese. This is especially common in international trade, finance, tech, and consulting firms, particularly in locations like Shanghai, Beijing, Shenzhen, and other global business centres.

Corporate presence requirements and payroll setup in China

To engage employees in China, a foreign entity must first set up a representative office or subsidiary. Once they have established a corporate presence, there are various steps to follow to set up payroll.

Steps to set up payroll in China

Here are the three basic steps that foreign companies must follow before they can begin hiring and paying workers in China:

Establish a Chinese business entity: This could be a joint venture, a Wholly Foreign‑Owned Enterprise (WOFE), or a representative office. If a representative office is chosen, it cannot directly hire employees but must use a local HR service or labour dispatch agency.
Complete necessary registrations: To hire in China, employers must have a business licence and an organisation code. They must also be registered with the tax and social security authorities.
Obtain licences and permits: Depending on the region and business activity, employers may need a specific licence or permit to operate in China.

Do you need a local bank account to pay workers in China?

There is no formal legal requirement to have a Chinese bank account in order to pay employees in China. However, opening one is standard practice and may make it easier to pay wages to employees. Moreover, payroll taxes and social insurance contributions must be reported and paid by HR systems that are linked to bank accounts. Without a local bank account, it is difficult to establish formal wage receipts, making it hard to prove compliance with labour and tax obligations.

Easily hire employees in China with our EoR solution

Hiring employees in China usually means setting up a legal entity, which can be costly and time-consuming. Employers can avoid this hassle by working with an Employer of Record (EoR), like CXC.

Through our EoR solution, you can confidently hire employees in China, without worrying about compliance issues. We’ll handle everything from payroll to benefits to employment contracts on your behalf — so all you have to think about is finding the right person for the job.

Read about EoR services

Compliantly hire workers anywhere with CXC

With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.

Learn more

DISCLAIMER: The information contained on this website is provided for general informational purposes only and should not be construed as legal, tax, or other professional advice on any subject matter. While we endeavor to ensure that the content is accurate and up to date, we make no warranties or representations of any kind regarding the completeness, accuracy, reliability, suitability, or availability of the information contained herein. The content on this site is not intended to be a substitute for professional advice. Users should not act or refrain from acting based on any information on this website without seeking the appropriate legal, tax, or other professional advice tailored to their specific circumstances from qualified professionals. We expressly disclaim all liability in respect to actions taken or not taken based on any or all of the contents of this website. Use of the information on this site does not create an attorney-client, tax advisor-client, or any other professional-client relationship between the user and the website or its authors.

BLOG

Helping businesess to compliantly engage talent since 1992