Things You Need to Know Before Expanding Business into China

Do you know China is the world’s second-largest economy today? As of 2019, China is the fastest-growing economy in the world. Even during the worldwide crisis of the Corona Virus Pandemic, the Chinese economy showed overall growth. The Chinese market is considered the powerhouse of international trade, and that is why many western companies crave to foray into this market. This rapid economic growth and low production cost make China one of the most sought-after destinations for foreign companies’ business expansion.

No matter how rosy it looks on paper, expanding your business in China is not going to be a piece of cake. You will have to do thorough market research and learn about the legal environment in China. You are also required to collaborate with local partners for the smooth operation of your business. You can’t take care of all these sitting in your home country. That is why you should partner with an Employer of record China so that it can handle all the administrative tasks on behalf of your company, letting you focus on the core business. When it comes to employment, the EOR tackles everything from head to toe. Let’s learn about the top 10 roles of China Employer of record.

  • Hiring in China

As you are thinking of hiring Chinese candidates for your business in China, you should abide by all the local rules and regulations. Every foreign employer is bound to follow the Chinese Labor Laws set up in 1994. Not only this but for recruiting in China, you also need to keep in mind a few cultural norms. The Employer of record China generally takes care of all these. They arrange the interview separately for each and every candidate. The EOR team tries its best to maintain a healthy working environment for the hired candidates in China.

  • Working hours

In a country like China, all employers are supposed to follow the Chinese government’s working hours rule. The working limit per week for an employee is 44 hours. In case of extra hours, as an employer, you are liable to pay compensations and extra payment. The Chinese people generally work from 8 am to 6 pm. The Employer of record monitors the working hours of each and every employee working for your business in China.

  • Employment contracts in China

Like many countries, the Chinese government also asks employers to provide the employees with a legal employment contract for a full-time job within the first 30 days after joining. In case you forget to send this contract, you are liable to pay the employee twice their salary. The Employer of record China generally drafts the employment contract on behalf of your company, and they state clearly in that contract about the compensations, benefits, pension, termination policy, company rules, etc. The Chinese employees prefer it if you mention their salary in their national currency instead of standard USD.

  • Bonus

Chinese employees are entitled to the annual bonus, which is commonly known as the “13th-month salary”. This is generally paid during the month of the Chinese New Year or Spring Holiday. You should state the Bonus structure of your company in the employment contract clearly, and the EOR helps you in this process.

  • Other employment benefits

As you are expanding in China, you should know that in this country, every employer is supposed to pay at least 5% of employees’ salaries as housing benefits to the employees. In China, there is a total of five types of social insurance benefits such as medical insurance, pension insurance, occupational injury insurance, and so on. The employer of record in China manages such employment benefits for every employee throughout their service in your company.

  • Tax in China

Every employee in China is liable to pay an income tax at the end of the year, depending on their salary. The Employer of record helps them with the income tax declaration and resolves all kinds of queries regarding income tax. The EOR also takes care of security tax and other forms of corporate tax on behalf of your company.

  • Sick leave

The Employer of record keeps track of the sick leaves taken by the employees and adjusts their salary accordingly. In China, an employee can take up to 2 years of sick leaves with payment, although it is granted depending on the service duration of the employee. In case of accidental injury during working hours, the employee takes a year-long sick leave with full payment.

  • Maternity leave

In China, pregnant female employees are entitled to 98 days of standard maternity leaves. During this time, employers are supposed to pay the female employees full salary. It is against Chinese law to sack any such employee during maternity leave. The EOR monitors the work environment and doesn’t let any illegal activities happen in your office in China.

  • Termination

It is not easy to terminate employment in China. You need to garner solid ground and documented grievance against the employee. Luckily, the EOR takes care of this too. They not only marshal all the proofs against the employee but also help the employees with their due payment and employment benefits. The EOR sends the notice of termination way ahead of the final date of leaving.

Finally, if you are contemplating entering the Chinese market, you shouldn’t waste a single second pondering over this decision. Rather grab your phone and dial the number of China Employer of Record. They will not only guide you with your business expansion but also help you with their huge local contacts.

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