Hiring an Employee Without a Company in China

In this article, we provide the clear insight on how to hire a Chinese employee without a company in China:

  • What are the rules when hiring a local in China?

  • Are there any workarounds to these laws?

  • What is HROne?

Outsourcing services from employees around the globe has its ups and downs. For certain companies, there are some tasks that can be completed and accomplished only if they would outsource workers and employees from other countries who specializes in specific set of skills they need. With the advancement of technology and the internet over the past years it is indeed much easier to find the kind of employees and workers you need for your company all over the world with a few taps and clicks on your computer. However, despite all these advancements in technology there are rules and regulations that still applies whenever a company would outsource workers and employees from across the globe. In this aspect,it can get a little tricky.

Due to the limitations and possible complications that laws of every country has it can become challenging to hire someone from overseas to do the job for a company. This is especially true if you’re looking to employ someone located in China.

What are the rules when hiring a local in China?

In general, the Chinese government has strict rules when it comes to foreign companies employing workers based in China. For a little bit of background information here’s how it works. If you’re a foreign company who wants to hire people in China say for certain projects or even as a regular employee for your company it is illegal to directly hire the employee. As per Chinese law, only companies based in China are allowed to employ locals or are based in China. In the eyes of the Chinese law, when a person provides professional services for you or your company and performs employment-like services that would mean that person is your employee thus you must comply with everything that they require to go along with that employment relationship.

 

I Want to Hire an Employee Without a Legal Entity in China

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Are there any workarounds to these laws?

There are a few options available to be able to work around the legalities but they all come with their pros and cons as well. Here are some of the options:

  • The best option is to hire your employee from a China-based staffing agency. There are companies based in China that can provide employee leasing services to foreign companies in need of employees for specific types of projects, tasks and jobs. One example for these companies is HROne. We are a company that provides employee leasing services such as HR and accounting related services to clients with no legal entities in China. Companies like ours are licensed to provide employment services or employee leasing service in China, Hong Kong and Taiwan. As of today, imploring the assistance of companies such as HROne is the best option in hiring a Chinese employee without a China company whether it be in terms of legality, convenience and financial aspect.

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  • If you already have an employee in China but your employee relationship is not legally recognized by the government one option is to have the employee hired by a Chinese company. Your company can pay the Chinese company that is equivalent to the Chinese employee’s wages, taxes and administrative fees.Cons: There can still be a problem in the legality of this method because if the employee isn’t actually doing any work for the Chinese employer that can still come into question in the Chinese government. Many of those who have used this method have failed in the long run and it is deemed to be too risky in the side of the Chinese employer as this can put their own company’s reputation and legalities in question as well.
  • One common practice that many do from a few years ago is that they hire someone who is already tied to a local company in China. However, this practice is becoming less popular these days as it still has its loopholes.Cons: One problem of this method is that when the foreign employer makes its payments to the local Chinese employer the government might question why the Chinese employer is receiving monthly deposits in foreign currency in their bank account and why no taxes are being paid in relation to this.
  • This third option is also recommended from a legal standpoint. Have your potential employee or employees form their own domestic Chinese company. Once created, you can just simply contract the company they created for the services that you need.Cons: This option requires a lot of work on the employee’s side. This is why despite it being a very good option in terms of legality it is not a very popular method either. Also, another downside to this is that after everything there is an independent Chinese company out there who can directly offer business to your business’s client instead of going through you.

What is HROne?

HROne is a non-state owned foreign enterprises service firm located in Shanghai, China. HROne enables foreign companies to take their business into further heights in China through employment solutions. We are the one-stop shop for Human Resources for companies and businesses looking to establish and operate business activities in China. Throughout the years, we have not limited our services to China alone but have expanded our reach and services with branches in Hong Kong, Taiwan and Macau.

2018-08-31T05:39:27+00:00July 13th, 2017|Employment Insight|