We have discussed in many blogs topics such as who to hire, why to hire, and when to hire in China. This blog will delve into how to hire in China. It aims to illuminate the various hiring options available, dissecting the pros and cons of each approach. So, let’s explore the various options for hiring your colleagues in China.
1. Setting up your own Foreign Invested Enterprise (FIE) and hiring personnel
Setting up your own entity is the most standard and official way to employ personnel in China.
Benefits: Gain unparalleled control, transparency, and the ability to customize compliance—ideal for those targeting the Chinese market with a locally engaged team.
Disadvantages: Prepare for extensive paperwork, significant investments, and operational costs that may strain your budget. Closing shop is also challenging. Hiring across different regions in China requires establishing multiple branch entities.
2. Setting up a Representative Office + Local HR Firm
Benefits: Test the waters with a simpler setup, an official ‘presence,’ and a relatively smoother exit strategy.
Disadvantages: You can’t directly employ or sell in China, and a 10% tax is levied on your total office costs — could this be the worst of both worlds?
3. Contracting with Personnel
Benefits: Navigate with lower risk, offering flexibility in engaging talent part-time or across different locations.
Disadvantages: This method is not likely to attract top-tier talent. Consider the complexities of social insurance, non-exclusive arrangements, and potential currency exchange challenges.
4. Global HR Outsourcing Firm
This option involves engaging an Employer of Record (EOR) to employ personnel on behalf of your company. There are both global and regional Employer of Record companies.
Benefits: Enjoy a hands-off payroll experience without the need for a physical presence. Let the experts handle the local intricacies.
Disadvantages: Anticipate limited transparency, potential compliance issues, and a lack of direct employee engagement. It’s like HR on autopilot—standard procedures are managed, but the day-to-day details of managing a team on the ground are not included. Additional documentation, such as a separate confidentiality agreement with the employees, may also be required.
Hiring in China: How do all the options stack up?
| Aspect | 1. Setting up a FIE | 2. Rep Office + HR firm | 3. Contracting with Personnel | 4. Global HR Outsourcing Firm |
|---|---|---|---|---|
| Control | Total | Limited | Limited | Limited |
| Transparency | High | Moderate | Moderate | Low |
| Compliance | Tailored | Some limitations | Low | Moderate |
| Setup Difficulty | High | Moderate | Low | Low |
| Operational Costs | High | Moderate | Moderate | High |
| Direct Selling Capability | Yes | No | No | No |
| Flexibility in Engagement | Limited | Limited | High | Limited |
| Talent Pool | Broad | Limited | Limited | Broad |
| Social Insurance Responsibility | Company | Company | Employees | Outsourcing Firm |
| Presence Requirement | Yes | No | No | No |
Where does The China Desk by Kinyu fit in?
The China Desk aims to provide a blend of the aforementioned options, specifically tailored for products, supply chain, and manufacturing sectors. Kinyu has China and supply chain expertise in its DNA. We act as an Employer of Record, hiring in China on behalf of your company, while adding layers of strategic supply chain support and localized China management.
Kinyu not only understands the challenges your team members face but also know the skills and attributes needed for certain roles. We take action to maintain employee engagement, track performance, and process various employee requests. Additionally, we offer a flexible, part-time model called Streamline!
The China Desk is an ecosystem of supply chain resources and talent, made possible only by our industrial and geographical focus.
Benefits of The China Desk
| Aspect | The China Desk by Kinyu | China and Supply Chain Benefits |
|---|---|---|
| Control | High level of control | China and Supply Chain Benefits |
| Transparency | Highest possible level of transparency – taking into account China personal data regulations | |
| Compliance | Tailored and supply chain focused. | Focus on Chinese labour laws and aspects particularly concerning supply chain |
| Setup Difficulty | Low | Launch Phase 0 to 1 in less than a month |
| Operational Costs | Low | Cheaper than Global HR companies |
| Direct Selling Capability | No | Not required for focused industries |
| Flexibility in Engagement | Higher | Full time and part time options |
| Talent Pool | Broad | Multi-channel recruitment |
| Social Insurance Responsibility | Kinyu | Kinyu |
| Presence Requirement | No | No |
We understand the challenges that your team members face and know the skills and attributes required for certain roles, offering a hands-on approach to strengthen your China supply chain operations.
In conclusion, the choice of hiring in China is akin to selecting from a buffet: each dish has its unique flavor. Your decision should hinge on your appetite for control, risk tolerance, and business objectives. So, let’s embark on this journey of hiring in China together, blending professionalism with a touch of informality.
If you want to learn more about how The China Desk can meet your needs, you can download our case study or get in touch!
