After deciding to set up a company in China, among the first factors to consider is recruiting local people. Most businesses are hesitating to employ foreigners who have not yet been in China, such as a visa and hiring an applicant, due to extra measures to be followed. Global economic growth is great and now easier than ever for your company. Each state in which you wish to take part can be costly, challenging and needs deep understanding of national legislation to establish your own company.

Let GlobalPEO be responsible for it. They deliver outstanding service to global PEO & EOR at a fair rate, enabling businesses to recruit without an entity, an international payroll and external jobs. They provide record benefits to clients who are providing wage facilities first through the development, recruitment, jobs and operation of their own subsidiary in China. The benefits of a China PEO: Their PEO & EOR in China employ the applicant according to regional labor and traditional practices. The newly-employed people will work for the company explicitly and execute all tasks as if they really were the actual employees. You work as your Human resources department in your state, strictly in accordance with the rules of China and conduct the whole cycle of boarding, payments and compensation.There are several reasons that a business should recruit locally, so these are the three main ones:

  • The new market climate should be more conscious for the local employees.
  • Chinese should be fluent, an significant factor when partnering with different clients.
  • You will be acquainted and encouraged to minimize traditional errors with local customs and corporate culture.

For these and many other purposes, it is best to recruit local workers whenever necessary. In the history, lower standards of a salary package recruited more local workers. While this was the case, the globe and particularly China, where salaries are also increasing, have improved their living costs. When approaching the massive Chinese market , it is important to surrender those aspirations. Even though recruiting a Chinese employee is far easier than recruiting a foreigners, you must recognize several considerations if you want to follow this path. The paper addresses some primary factors when choosing to appoint an employee in China , for example:

  • What does the pay plan include?
  • The social security program provides benefits and incentives.

Terms of Payroll

Below are certain concepts that are critical to the recruitment process. In order to optimize it, these words and their meanings in Chinese law would be beneficial to understand. Personal income tax is determined based on the individual employee monthly taxable income. Personal revenue tax is also known as personal income tax in China.

The Social Security System in China

At the regional level the Chinese social security program is determined. The effectiveness of social security paid by the company and the employee is determined by every jurisdiction. The employee shall be exempted from his gross wage from the social security payment. The employer’s exclusion is independently measured and added to the gross salary of an employee and calculates the net job expense. Contrary to individual income tax, the social security allowance is regarded an indirect workplace benefit.

Types of Social Insurance in China

The social security scheme of China consists of a mandatory residential fund and five forms of social benefits. These levels are adjusted and rental funds are adjusted at various intervals in July of every year, and in April the prices of social security are checked. If making the decision to recruit a local employee in China, companies will take these obligatory funds and benefits into consideration. These are the social security types: work insurance, health insurance, motherhood insurance, disability insurance, accident and housing insurance. A detailed overview of each of them is given here:

Unemployment Insurance

The unemployment benefits will benefit employees terminated from their jobs. Employees who want to leave their work for themselves can not profit from this program. The unemployment scheme has to give the unemployed a set number. The assistance can be provided for up to 2 years to these individuals. The sum given to citizens does not depend, as compared to social security schemes, on past donations to the fund.

Medical Insurance

Chinese employees have the right to government health insurance. Chinese employees earn a small sum of money for a insurance card which can be used in medical purposes, including rehabilitation or the purchasing of pharmaceutical products. Policy agencies are responsible for assessing the application of the policies. The medical fund will be funded by businessmen.

Maternity Insurance

Maternity insurance is one of the incentives for several investors and can be a new idea. In particular it relies on when a maternal employee is first registered in a social security office when maternal insurance will be initiated.  Typically, first the pay scale is determined for all members of the organization. The sum payable during this time is then set and charged monthly.

Pension Insurance

Pension insurance covers elderly citizens who, for over 15 straight years after retirement, have committed to the program. The employer is required to contribute much of the 10 to 22 percent contribution to this program, while the workers pay approximately 8 percent. The pension age depends on jobs and sex. Men will retire at the age of 60, eligible employees at the age of 55, and employees at the age of 50.

Housing Funds

Organizations which would like to hire local workers in China would also contribute to the residential program. The housing fund is structured to help Chinese people save money in order to purchase a house or earn a mortgage. For certain towns, local employees can also rent their homes or renewed the mortgage with money from that kind of fund. The residential funds are managed by the Local Housing Fund Office, unlike with the social insurance listed above. Funds for workers are not shared. Housing fund deposits are directly transferred in the individual employee’s account. Four additional criteria could be included in the local pay plan to workers for the decision to recruit a regional employee in China. The clauses are as follows:

  • Public liability insurance
  • Employer liability insurance
  • Commercial / Supplemental Health Coverage
  • Professional liability insurance


When a business wants to recruit a local worker, there are several benefits, it is essential to still pay the requisite income taxes to remember. Entrepreneurs need to take into account four key factors: the personal income tax, the worker’s net pay, and the requisite Chinese social security funds allocations. The Chinese Social Security Fund guarantees that the fundamental rights of local workers are protected. The established social system also means that corporations will not have to establish a framework for internal support for those in need. You also become less likely to discuss your salary on hire, because all of your needs become covered by this method.


  • Mike Souheil

    Author / Writer

    I am a professional blogger/writer and have been writing as a freelance writer for various websites. Now I have joined one of the most recognized platforms in the world.