Have questions? Ask us!

Employing in China

At a glance

Employment in China

Foreign companies that employ workers in China face several challenges and must adhere to the legal and regulatory framework that is in place. Most notably there are restrictions depending on the type local entity they have incorporated. In some cases, using an outsourced employer will make the process smoother, and it is recommended to use professional legal services as well. Our guide explains Chinese policies on leave, termination and payment of benefits…

Read more

Payroll & Tax in China

Complying with local payroll and tax requirements is essential for a company doing business in China. Issues such as tax rates and withholding and social security are all essential in ensuring a seamless human resources operation. Many companies will consider outsourcing these administrative tasks to a GEO (Global Employment Organization)…

Read more

Immigration / Work Permits in China

Foreign workers are required to have the proper visas and work permits in China, as established by immigration laws.
This often requires incorporation and licensing prior to sponsoring work permits for employees, which can be a problem if your company is trying to enter the country quickly. The most common work permit is called a Z visa…

Read more

Incorporation

There are several business structures available for incorporation in China, and each has advantages and disadvantages. In some cases it will depend upon the type of industry that you are in, and the scope of planned business activity. Our guide has a a comparison of the time and cost for incorporating standard company structures including Rep Office, WFOE and JV.

Read more

GEO Solutions or DIY Employment in China?

Companies entering China must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or China Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Chinese entity established that can run payroll.

A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

Shield GEO

Shield GEO provides a fully outsourced employment service in China. Companies expanding into China can contract with Shield GEO to employ and payroll their staff on their behalf in China. Shield GEO then assumes the legal responsibility for these employees, becoming the Employer of Record, sponsoring them on work permits, complying with local employment law and running their monthly payroll.

Using Shield GEO Employer of Record Services in China

Payroll China
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis. Income tax and social security (where applicable) are deducted at source and paid to the China tax authorities. Expats are able to offset their taxable income with relevant business expenses.

China has 20% employers social security contribution and 8% employees contribution which covers pension, health insurance, maternity insurance, workrelated injury insurance and unemployment insurance. This varies by region and generally has a limit to the employer contribution where the maximum social security contribution cannot exceed three times the average monthly wage.

e.g. in Shanghai in 2012 the maximum social insurance contribution was RMB 11689 per month because the average monthly wage was RMB 3896. Since 2011 expats are theoretically subject to employer and employee social security however many states are still yet to enforce this requirement. The World Bank estimates it takes employers in China 192 man days to ensure compliance with payroll and labour taxes each year.

 
Grossed income Tax Rate (%)
0 – 1,500 3
1,501 –4,500 10
4,501 – 9,000 20
9,001 – 35,000 25
35,001 – 55,000 30
55,001 – 80,000 35
Over 80,000 45

Expats are able to offset their taxable income with relevant business expenses

Tax Returns Supplied

Yes

Corporate Tax Requirements

5% business tax on invoices

Employers Social Security and statutory contributions

China has 20% employers social security contribution which covers pension, health insurance, maternity insurance, work related injury insurance and unemployment insurance. This varies by region and generally has a limit to the employer contribution where the maximum social security contribution cannot exceed three times the average monthly wage.

e.g. in Shanghai in 2012 the maximum
social insurance contribution was RMB 11689 per month because the average monthly wage was RMB 3896. Since 2011 expats are theoretically subject to employer and employee social security however many states are still yet to enforce this requirement

Employees Social Security and statutory contributions

China has 8% employees contribution which covers pension, health insurance, maternity insurance, work related injury insurance and unemployment insurance. This varies by region.

Since 2011 expats are theoretically subject to employer and employee social security however many states are still yet to enforce this requirement

Insurance requirements

Foreign nationals require private health insurance

Corporate Income Tax Rate

25%

Payroll Tax

N/A

Sales Tax

17%

Withholding Tax

10% for non-resident companies

Work Permits
Can Sponsor Work

Shield GEO is able to sponsor foreign workers on Z visas / Work Permits which allow them to work in China. As the employer of record, Shield GEO handles all of the formalities and employment requirements in China. The client maintains responsibility for day to day employee management.

Work Permit cost

USD 800

Work Permit processing time

4-6 weeks

Work Permit process

Shield GEO applies through the Chinese immigration authorities in China, once the Employment License is issued the employee applies for the Employment/Work Visa (Z Visa) at the Chinese Consulate in their country of residence. On entry in China the employee and Shield GEO submit an application at the local Labor & Social Security Bureau which then takes a further 15 days. Once approved the employee will need to apply for the Residence Permit (done from within China).

Documentation required : passport, CV, employment contract, education certificates.

Can Work Permit be processed in country

No. Consultant can be in country whilst processed, but must return to home country to pick up the Z visa

Switch Business Visa to Work Permit?

Yes but not in country

Can Spouse work on dependent visa?

No

Business Visas
Can do Business Visa

Yes

Business Visa Cost

USD 300

Business Visa processing time

5–7 days

Others
Can supply private health care

Yes

Can assist opening bank accounts

Yes

Array ( [0] => 8 [1] => 24 [2] => 47 [3] => 33 [4] => 34 [5] => 27 [6] => 101 [7] => 61 )
Expanding into Asia – A Simple Solution to International Employment
Array ( [0] => 22 [1] => 8 [2] => 47 [3] => 33 [4] => 87 [5] => 36 )
Cross Border Restrictive Covenants: A Country Specific Case Study
+1 877 457 7691
Chat Now
  • Twitter
  • Linkedin

Subscribe

to our monthly Global Mobility newsletter