One of the largest and fastest developing economies worldwide, China, has been a favorite for businesses for their expansion. With constant support from the Chinese government and a large consumer market, it is a hub for numerous international companies. The country continues to invite more businesses to set up their global foothold and expansion in Asia.
However, for any business, hiring the right people in a foreign country is the key to its successful development. Since every country implements its laws, the expanding company needs to consider many employment factors before hiring local employees. In this article, we’ll simplify the process of hiring an employee in China through a PEO.
Hiring an Employee in China
As per the Chinese laws, a foreign company cannot hire local employees in China without setting up a local entity. The company needs to obtain the required licenses and tax registrations to hire any local employees legally. However, setting up a business in China can be costly and complicated for a small foreign business. The complex local laws and industry-specific requirements may also make hiring an employee in China a difficult task.
The Employment Contract Law governs all the hirings in China. The law governs all the recruitment activities of local Chinese businesses as well as WFOEs in China. It protects the rights of their workforce and ensures cordial relationships between companies and their employees. However, the complex labor laws can make hiring difficult for a company and prevent it from starting its operations immediately. Here, the best option for small businesses is to partner with a PEO to hire an employee in China.
What is a PEO?
A Professional Employer Organization or PEO is a third-party organization that acts as the co-employer of a company. It administers all the employment functions on behalf of a company, allowing it to hire employees in China without a local legal entity.
An international PEO takes care of employee recruitment, benefits management, payroll, and legal compliance requirements. This way, the company does not need to go through the lengthy process of setting up a WFOE in China. It can directly hire its employees through the PEO.
The PEO also takes care of the legal and tax compliance and eliminates non-compliance or erroneous tax filing risks.
A PEO is a cost-effective way for small and medium-sized businesses to expand in a foreign country. Since the PEO can provide a wide range of human resources services to the company, it can focus on its expansion rather than its hiring and compliance needs. A PEO is also an efficient alternative for companies who only wish to test out the Chinese market first without spending its time and resources on a full-fledged expansion.
A PEO is also known as a Foreign Enterprise Service Company and can take care of its market entry, incorporation, and hiring of an employee in China. The co-employment is based on a service agreement between the PEO and the foreign company. All the employee agreements are tripartite and are between the PEO, foreign company, and the employees.
This way, the PEO can legally manage the employees on behalf of the foreign company, and the company only needs to supervise the day-to-day tasks and functions performed by the company.
How to Choose a PEO for Hiring an Employee in China?
If you’re planning to expand into China and wish to hire your employees through a PEO, you must keep the following points in mind:
The Ability of the PEO to Deliver the Right Results
The first thing you need to assess before choosing a PEO is to ensure that it has sufficient tools, solutions, and experience to handle your HR requirements. You must also evaluate the services a PEO offers you and ensure that the package covers your hiring needs. The best way to do this is to assess the strategic solutions, tools, and expansion solutions a PEO provides.
A good PEO provides the right strategic advice relating to employee benefits claims, compensation claims, accident/injury claims, etc. A good PEO also provides the right solutions for your legal compliance and documentation.
A good PEO also provides you with the right HR software, payroll software, and other employee management tools. You must ensure that the PEO you’re partnering with for hiring an employee in China provides you budget-friendly tools for your employee database tracking, payroll management, labor cost calculation, tax filing, search, etc.
Expansion and Market Entry
An experienced PEO also provides you with the right solutions and strategies for your global expansion and market entry. The PEO must be able to guide you throughout your incorporation/ remote hiring processes, local compliance, connecting with local vendors, etc.
The PEO’s Team
For hiring an employee in China through a PEO, you must ensure that the PEO has the right team. The PEO must have sufficient workforce and technology to handle your HR functions efficiently. It must also have adequate experience in providing PEO solutions for international expansion, and the team must be familiar with the requirements of companies of different shapes and sizes.
The Cost of PEO’s Services
Another critical factor to consider before choosing a PEO is the cost of the PEO’s services. You must evaluate the PEO’s pricing structure and plans and the services associated with its prices. Many PEOs offer fixed-priced solutions, benefits, and you may end up paying for services that you may not require. Therefore, you must compare what you’re getting with what you’re paying and check if the PEO offers customized employment solutions.
About New Horizons Global Partners
New Horizons Global Partners is a renowned global PEO that offers a wide range of customized PEO services for all your employment needs. Our PEO services focus on addressing your business’s distinct HR needs, ensuring that you pay only for your chosen services. We offer PEO services relating to employee hiring, payroll processing and management, employee benefits management, and HR compliance.
Our services are more than just HR solutions – we also provide complete assistance for your global expansion requirements. We can help you expand to an international market and guide you on local incorporation, immigration permits, local hiring, and expansion without setting up a legal entity.
Our PEO services include:
- Business incorporation and licensing solutions.
- Market analysis and entry strategy.
- Employee recruitment
- Legal drafting and compliance.
- Tax registration and filing.
- Payroll and employee benefits management.
For hassle-free expansion and hiring an employee in China, contact New Horizons today!