As one of the fastest-growing economies worldwide, China provides many opportunities for local and global companies. It is one of the top importers and exporters globally with a huge domestic market. Furthermore, top cities such as Beijing have business-friendly policies and incentives for foreign investors.
If you are a foreign company planning to establish a presence in the Chinese market, hiring a Chinese employee will be advantageous. Not only can they speak the language, but they also have a better understanding of the culture and can share local insider tips.
Indeed, one of the reasons many businesses prefer to operate in the country is their workforce. The Chinese employees are known for their productivity and work ethic. They’ve led many companies to increased profitability and opened new opportunities for expansion and operational improvement.
Here are the things you need to know about the hiring process in the country.
What to Know When Hiring in China
Before Hiring
The first and foremost thing to know is that only companies legally established in China can directly hire local employees. However, setting up a company in the country is often complex, time-consuming, and expensive.
If you can’t create a legal entity at the moment or if you have no plans of doing so, the more cost-effective alternative is to use a local recruitment agency such as an Employer of Record (EOR) or Professional Employer Organization (PEO). For large, multinational corporations, a wholly foreign-owned enterprise (WFOE) can be an option.
The first and foremost thing to know is that only companies legally established in China can directly hire local employees. However, setting up a company in the country is often complex, time-consuming, and expensive.
If you can’t create a legal entity at the moment or if you have no plans of doing so, the more cost-effective alternative is to use a local recruitment agency such as an Employer of Record (EOR) or Professional Employer Organization (PEO). For large, multinational corporations, a wholly foreign-owned enterprise (WFOE) can be an option.
It is also important to know that each city or region may have specific requirements, taxes, and regulations. There are also local licenses and permits you need to apply for depending on your industry. Getting the help of an EOR or PEO makes this process easier to do.
Moreover, you should look at the average market salary in the industry you are hiring for to see how you can offer more competitive remuneration. This way, you can attract more talent especially if you’re hiring in Beijing and Shanghai, with a more globally-competitive workforce.
Hiring Process
Understanding the labor practices in China is necessary as you begin your hiring process. You must take note of how you should pay your employee, mandatory benefits, the work hours, and more. Here are some of the things you have to know:
Aside from the regular salary compensation, employees in China are entitled to health insurance, unemployment insurance, maternity benefits, and pension plans.
When it comes to work hours, China enforces a strict work-life balance. Employees should not work more than 8 hours a day and 44 hours per week. The standard office schedule is 8 AM to 6 PM with two hours break midday.
There are 7 public holidays wherein employees are entitled to get paid for. When it comes to vacation leaves, Chinese law has lower requirements compared to other countries. Including more vacation leaves in employment packages can be a good opportunity to hire employees.
Meanwhile, if you plan to conduct background checks on candidates, you must know and do the following:
Consent is necessary before organizations can check the educational background of employees; the same goes for employment history.
Submit a request to the government to check if the candidate has no criminal record.
There’s a restriction imposed on employers and HR agencies when doing background checks on female candidates. During interviews, you are prohibited from asking about their marital or pregnancy status.
After Hiring
An employment contract is a sacred document in China. The PRC law states that all companies must sign employment contracts with their employers. Foreign companies without a legal entity in the country must go through a licensed HR service provider to comply with the labor laws.
The contract includes all the details of employment, along with the compensation and benefits that employees can expect. It can be complicated to draft the contract if you’re not familiar with Chinese regulations. You’ll find it easier to prepare this by hiring an employment agency.
We match you with our specialised recruiters based on your hiring needs - so you can reach your goals faster in a competitive market
How Can a Foreign Company Recruit from China?
The two best ways for foreign companies to hire in China are through an Employer of Record (EOR) or Professional Employer Organization (PEO), depending on your needs.
An EOR gives you the freedom to manage local talents. You are solely responsible for the everyday activities of your employees. However, the organization acts as the legal employer in China. The biggest advantage of this setup is that you don’t need to establish a legal entity in China to start hiring people.
EOR companies enable international companies to hire locals within days. This provides a hassle-free method for expanding businesses into the Chinese market. They also help international companies stay updated and compliant with local employment regulations.
Meanwhile, PEOs enable your business to outsource the handling of HR functions, employee benefits and compensation, and employment taxes. PEO services best work for companies that don’t have the resources to sustain in-house HR functions or would prefer to outsource it to focus more on the business.
Tips When Hiring
There are certain times in China when people are open to new job opportunities. This falls around April to May after people receive their annual bonuses. The most challenging time to hire new employees is around December to February. People tend to wait for their bonuses during this period before leaving their jobs.
Some jobs require local talents to interact with foreigners. This means that employees must be able to speak in English or other languages. Chinese people with good English or foreign language skills can expect higher compensation.
In Chinese working culture, the managers and bosses do everything they can to make employees feel that they’re family. It is displayed by regularly hosting dinners, going out for excursions, and giving out gifts on special holidays. You should foster this culture to maintain employee loyalty and satisfaction.
WeChat is the most used social networking platform in China. Job openings are frequently listed there. LinkedIn is also another online platform where foreign companies can look for qualified candidates.
Employment regulations in China can be complicated and confusing. By employing EOR or PEO services, foreign companies can directly hire local talents while staying compliant.
Foreign employers might be surprised that Chinese workers receive more benefits and better job security compared to employees from other countries. Additionally, getting the services of employment intermediaries might be unfamiliar to western employers. But all these are placed to ensure fair labor treatment to all Chinese employees.
Instead of deterring foreign employers, the strict regulations continue to invite international business owners. EOR and PEO agencies make it easier for foreign companies to establish their foothold in the Chinese market.
What Makes Career Pond Different
At Career Pond, we know that each company has unique needs and requirements. As a boutique recruitment agency, we offer customized recruitment and hiring solutions. Our recruitment team has a local and comprehensive understanding of Chinese laws and hiring practices. We also work with a large pool of local talents, each expert in their respective fields. Learn how we can help you expand your business in China. Contact us today to know more!
