How to Hire in China: Comparing 4 Key Methods

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!