Velocity Global’s China PEO (Professional Employer Organization) solution simplifies your expansion into China. This solution creates a quick and compliant supported employee onboarding process—all without setting up a legal entity.
By partnering with Velocity Global, we act as your Employer of Record. We hire, onboard, and manage your supported employees, ensuring full compliance while you maintain control of day-to-day employee oversight. From managing payroll and benefits to mitigating risk, we take care of every small detail so you can focus on moving your business forward.
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China Fast Facts
Currency: Yuan, or renminbi (CNY, ¥)
Population: 1.4 billion
Economy: US$14.4 trillion
Top Sectors: Services, manufacturing, mining, energy, and agriculture
The following are public holidays, as well as additional, special non-working days:
- New Year’s Day
- Spring Festival
- Qingming Festival
- Labor Day
- Dragon Boat Festival
- National Day & Mid-Autumn Festival
Hiring Considerations in China
Benefits of hiring in China:
- China is the world’s second-largest economy and is home to the world’s largest population, making it a massive market for finding new customers. Companies within virtually all sectors will find growth opportunities in this market, though this is especially true for manufacturing, IT, and software companies.
- The country’s college graduation numbers grow year after year, with about 7.6 million new graduates in 2019 (most recent data). More than 640,000 master’s and doctoral students graduated from China’s colleges and universities in 2019, offering international companies an ever-deepening talent pool from which to hire.
- China climbed 15 places on the World Bank’s Ease of Doing Business Report between 2019 and 2020, ranking 31st overall. Eight business reforms made expanding into China easier than in any previous year. The country joined the world’s top ten most-improved markets for doing business.
Challenges when expanding into China:
- Tensions between the United States and China continue to pose threats not only to businesses but international security. Western companies—and especially American companies—must remain abreast of how these relations will impact their operations. Changes came quickly in recent years, and further complications are likely.
- While educational attainment grows in China, gaps still exist in management and talent retention. Significant differences in cultural approaches to business mean that Western companies must walk a tightrope regarding communication, operations, and understanding territorial sovereignty.
- All companies must understand the risk of intellectual property theft in China. This risk is especially dire for American companies and even more urgent for tech companies. The FBI estimates that Chinese theft of U.S. trade secrets costs $300-600 billion annually.
Cultural nuances and must-knows for doing business in China:
- Remember the concept of Guanxi, which means “networks” or “connections.” In China, relationships remain central to the success of any pending deals. Show respect and express appreciation for your colleagues’ time and effort.
- Be mindful of how your words come across to others. The concept of “face” is important in China. How and what you say may negatively impact another person’s reputation, which may cause deals to fall apart.
- Shake hands when meeting. Maintain a firm but not overbearing grip, as an excessively vigorous or forceful shake may be seen as challenging.
- Bring business cards to your initial meeting. Make sure to translate the business card into Mandarin as well as English.
- Be punctual. The Chinese business world sees lateness as a significant offense. Give yourself plenty of time to travel from the airport to your meeting, as Chinese airports are well-known for their delays.
- Avoid sensitive conversations. Topics controversial to the Chinese include Taiwan, Tibet, U.S.-Chinese relations, and working conditions in China.
Employment Contracts in China
Minimum wages and salaries:
- China’s minimum wage varies across provinces and regions.
- Probation periods are common in China and typically last between three to twelve months.
- Employers pay bonuses most often at the end of the year, either as a fixed amount, equal to one month’s salary or as 13th- or 14th-month salary.
- Floating bonuses, or performance bonuses, are increasingly common.
Termination and Severance Considerations:
- Chinese law states that only employees may terminate their employment contracts with 30 days’ written notice. Employers may not terminate contracts without cause.
- Cause typically includes but is not limited to:
- The employee does not meet basic job requirements.
- The employee violates employment policies.
- The employee takes action that causes the employer to suffer business losses.
- The employee is working for multiple employers at once and thus unable to fulfill job requirements.
- The employee falsifies information on his or her job application.
- The employee becomes the subject of criminal charges.
- Employers must give 30 days of notice before terminating the employee.
Paid Time Off & Benefits
- Mothers receive 98 days of maternity leave and 15 days of parental leave. Mothers may receive an additional 15 days of leave in the event of a difficult birth. Each ensuing birth results in another 15 days of leave.
- Fathers may receive paternity leave depending on local laws.
Vacation and annual leave:
- Employees in China accrue time off depending on how long they have worked for their employer:
|Between 1-10 years||5 days|
|Between 10-20 years||10 days|
|Over 20 years||15 days|
- Employees who suffer a non-work injury or illness receive three to 24 months of medical leave, dependent upon their total working years.
Average workweek hours:
- China’s standard system outlines no more than eight hours per day within a 40-hour week. However, this applies only to certain positions and is subject to labor authorities’ approval.
- China’s labor laws include overtime standards, though they remain fluid. Employees may receive 1.5 times their standard rate for work exceeding an eight-hour workday. Saturday and Sunday work earns employees two times their standard rate. However, employers cannot ask employees to work more than three hours’ overtime on a weekday and no more than 36 hours per month.
Contribution requirements differ according to the province in China.
|Work-Related Injury||0.16% – 1.52%|
|Total||27.16% – 28.68%|
|Work-Related Injury||0.2% – 1.9%|
|Total||27.8% – 29.7%|
|Medical||6.5% + CNY 21.37|
|Unemployment||0.48% – 0.8%|
|Work-Related Injury||0.14% – 0.98%|
|Total||21.97% – 23.13% + CNY 21.37|
Choose Velocity Global
Expanding into China presents your business with significant opportunities and challenges. Partnering with a global expert like Velocity Global helps you maximize the speed, efficiency, and value of your expansion. By allowing us to handle all the small details necessary for compliance and risk mitigation–from hiring and onboarding to managing benefits and payroll–you focus entirely on ensuring your business thrives in a new market.
International PEO avoids the financial and time commitments associated with entity establishment, saving you up to 60% on costs and 90% on time. Whether you’re looking to set up a small team for a short-term project or are testing out a market for long-term viability, we have the knowledge and expertise to help you meet every goal.
Ready to find out how to streamline your expansion using International PEO? Contact us today.
Additional Countries We Serve
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