China is the world’s second-largest economy and a global hub for manufacturing, technology, and services. The country is home to a vast, highly skilled workforce that spans from software engineers in Shenzhen and Beijing to financial specialists in Shanghai and supply chain experts in Guangzhou. With a population exceeding 1.4 billion, China offers an unparalleled talent pool, making it a strategic destination for companies seeking scale, efficiency, and innovation.

At the same time, China’s employment environment is highly regulated. Labor laws are uniform nationally but enforced rigorously at the provincial and municipal levels, making compliance particularly nuanced. Payroll, taxation, and mandatory benefits such as social insurance and housing fund contributions must be managed with precision. Moreover, establishing a legal entity in China can be costly and time-consuming, often taking months and requiring significant upfront capital.

Many international businesses overcome these barriers by partnering with an Employer of Record (EOR) in China. With Gloroots as your EOR, you can hire employees in China quickly and compliantly—without the burden of entity setup. Gloroots ensures all statutory requirements are met, from labor contracts to payroll and benefits, so you can focus on building strong teams and expanding in one of the world’s most dynamic markets.

What are the key facts about China’s economy and workforce?

China stands as the second-largest economy in the world and continues to drive global growth. Fueled by a combination of manufacturing strength, technological innovation, and expanding services, China has transformed into a powerhouse for both traditional industries and cutting-edge sectors. The country’s 14th Five-Year Plan emphasizes self-reliance in advanced technologies, sustainability, and innovation, signaling long-term opportunities for foreign businesses.

Institutions such as Tsinghua University, Peking University, and Fudan University rank among the world’s leading centers for STEM education, producing millions of engineering, IT, and finance graduates annually. Tech giants like Alibaba, Tencent, Baidu, and Huawei dominate global markets, while cities like Shanghai, Beijing, and Shenzhen are thriving hubs for finance, R&D, and start-ups.

For employers, this means access to a workforce that is not only large and diverse, but also increasingly highly educated, digitally savvy, and globally competitive. At the same time, regional differences in cost of labor, living standards, and English proficiency require thoughtful hiring strategies.

Data Snapshot: China’s Workforce

What is the work culture and talent pool like in China?

China’s work culture is shaped by Confucian values, hierarchical structures, and collectivist principles. Respect for authority and seniority remains strong, particularly in state-owned enterprises, though start-ups and multinational companies are increasingly adopting flatter, collaborative structures. Employees are known for their discipline, strong work ethic, and adaptability.

White-collar professionals in China often emphasize long-term stability, opportunities for advancement, and skill development. Younger talent, especially those in Tier 1 cities such as Beijing, Shanghai, Shenzhen, and Guangzhou, are globally competitive, digitally fluent, and seek employers who offer both career progression and work-life balance.

China’s talent pool is vast and diversified:

• The country produces millions of STEM graduates annually, making it one of the largest sources of engineers, data scientists, and IT specialists.
• Finance, e-commerce, biotech, and renewable energy are booming sectors that attract top-tier professionals.
• Regional talent hubs are highly specialized—for instance, Shenzhen excels in hardware innovation, while Shanghai dominates in finance and R&D.

For global employers, hiring in China means access to deep expertise across industries, but it also requires navigating local business etiquette, bilingual communication gaps, and a fast-paced, competitive job market.

Data Snapshot: China’s Talent Pool

Q. What is the process of setting up an entity in China?

Step-by-Step Process

1. Decide the Business Structure
   • Wholly Foreign-Owned Enterprise (WFOE): The most common choice for foreign companies, giving full control over operations.
   • Joint Venture (JV): Partnership with a local Chinese company, required in some restricted industries.
   • Representative Office (RO): Limited to liaison functions, not allowed to generate revenue or hire directly.
   Most foreign investors choose a WFOE, but it requires significant upfront capital and strict adherence to Chinese business regulations.

2. Define Business Scope
   • China requires companies to define their exact business activities (called “scope of business”) when applying for registration.
   • The approved scope determines what operations the company can legally conduct. Any deviation may require re-approval or trigger penalties.

3. Name Pre-Approval & Registration with SAMR
   • Submit proposed company names to the State Administration for Market Regulation (SAMR) for clearance.
   • Register the entity with SAMR, submitting Articles of Association, shareholder documents, lease agreements, and legal representative details.

4. Registered Capital & Bank Account Setup
   • For a WFOE, the investor must commit a registered capital amount (varies by sector, usually USD 150,000–500,000 equivalent).
   • Open a RMB-denominated bank account in a local Chinese bank for daily operations, and a foreign exchange account to receive foreign investment.

5. Company Seal (Chop) Registration
   • In China, official seals (“chops”) carry legal weight and are used to validate contracts, issue invoices, and authorize company documents.
   • Companies must register and obtain official chops with the Public Security Bureau.

6. Tax Bureau Registration
   • Register with the local tax bureau to obtain a tax identification number.
   • Set up tax filing systems for Corporate Income Tax (CIT), Value-Added Tax (VAT), and local surcharges.
   • Appoint a certified local accountant to handle monthly tax filings.

7. Social Insurance & Housing Fund Registration
   • Mandatory contributions must be registered with the local social insurance bureau and the housing fund management center.
   • Contributions are made monthly by both employer and employee.

8. Hiring Employees & Payroll Setup
   • Employers must draft bilingual labor contracts (Mandarin + English), file contracts with the labor bureau if required, and comply with China’s Labor Contract Law.
   • Payroll involves income tax withholding, social contributions, and housing fund management. Non-compliance can lead to severe penalties.

9. Post-Setup Compliance
   • Annual audits and filings with SAMR and tax authorities.
   • Ongoing labor law compliance, especially for probation terms, overtime, and termination procedures.
   • Strict rules on foreign exchange for profit repatriation, requiring SAFE (State Administration of Foreign Exchange) approval.

Timeline and Costs

• Timeline: 3–6 months (depending on location and business type).
• Costs: High upfront investment in registered capital, professional fees, office lease, and regulatory filings.
• Exit Barriers: Winding up a WFOE can take 12–18 months, with tax clearance and liquidation requirements.

Q. What are the main benefits of using Gloroots as an Employer of Record in China vs. setting up your own entity?

China is a strategic but complex market. For businesses expanding into the country, the choice often comes down to two paths:

1. Setting up a legal entity (e.g., WFOE or Joint Venture).
   This offers direct control but requires months of preparation, significant registered capital, strict local filings, and ongoing audits. It is best suited for organizations making a large, long-term investment in China.
2. Partnering with an Employer of Record (EOR) like Gloroots.
   This enables companies to hire employees in China quickly, without establishing an entity, while ensuring full compliance with labor, tax, and benefits laws. Gloroots manages everything from employment contracts to payroll and social insurance, allowing global companies to focus on business growth instead of navigating bureaucracy.

With Gloroots, companies gain speed, flexibility, and risk reduction—ideal for market testing, scaling fast, or hiring specialized talent without committing to the complexities of entity ownership.

Direct Entity vs Gloroots EOR (China)

Why This Matters

For companies entering China, choosing the right market-entry strategy is critical. A direct entity may make sense for large-scale, permanent operations, but it comes with high costs, rigid compliance, and slow timelines.

By contrast, Gloroots’s EOR solution allows global companies to:

• Hire in weeks, not months.
• Stay compliant with Chinese labor and tax regulations.
• Avoid financial and legal risks tied to misclassification or incorrect filings.
• Scale flexibly, whether hiring one specialist or building a small team.

Gloroots makes global hiring in China simple, compliant, and fast—giving you an agile path to access top talent without the burdens of entity setup.

Q: What are the key employment laws in China that employers should know?

Employment in China is governed by the Labor Contract Law, Employment Promotion Law, and various social insurance regulations. These laws are designed to protect employees and ensure fair treatment across hiring, compensation, and termination. For employers, the framework is strict and requires meticulous compliance.

All employment contracts must be written and bilingual (Mandarin and English), and companies are expected to strictly follow rules on working hours, overtime compensation, leave entitlements, and social insurance contributions. Non-compliance can lead to fines, back payments, and reputational damage.

Partnering with an Employer of Record like Gloroots ensures that employment in China is fully compliant. Gloroots manages contracts, payroll, benefits, and reporting obligations, helping global companies avoid legal pitfalls while ensuring employees receive their entitlements.

Key Employment Law Provisions in China

• Employment Contracts
  Must be in writing and signed within one month of employment start. Contracts may be fixed-term, open-ended, or project-based.
• Working Hours
  Standard workweek is 40 hours, 8 hours per day, 5 days a week. Special arrangements (flexible or comprehensive hours) require labor bureau approval.
• Overtime Pay
  Employees working beyond standard hours must receive:
  • 150% of hourly wage for overtime on workdays
  • 200% for weekends (if not given a compensatory day off)
  • 300% for statutory holidays
• Minimum Wage
  Set by provincial and municipal governments. For example, Shanghai’s minimum wage is higher than second- and third-tier cities.
• Maternity Leave & Paternity Leave
  • Maternity leave: 98 days minimum, extended in some regions (e.g., Beijing grants an additional 30 days).
  • Paternity leave: Varies by province, typically 7–15 days.
• Annual Leave
  Based on length of service:
  • 1–10 years: 5 days
  • 10–20 years: 10 days
  • 20+ years: 15 days
• Sick Leave
  Employees are entitled to paid sick leave, with pay ranging from 60% to 100% of wages depending on tenure and local rules.

Employment Law Compliance: Direct Entity vs Gloroots EOR (China)

Why This Matters

China’s employment laws are detailed and rigorously enforced, and local variations across provinces make compliance more complex. Failure to issue contracts on time, pay overtime correctly, or provide mandated leave can expose employers to labor disputes and reputational risks.

With Gloroots as your EOR in China, you can:

• Ensure every employment contract is legally valid and compliant.
• Avoid payroll errors by letting Gloroots manage overtime, leave, and benefits.
• Reduce compliance risks while maintaining a strong employer brand in a competitive talent market.

Q: What are the risks of misclassification in China?

In China, the distinction between employees and independent contractors is heavily regulated. Misclassifying a worker—treating an employee as a contractor—can expose businesses to legal disputes, financial penalties, and reputational harm. Unlike in some countries where contracting is flexible, Chinese authorities expect most ongoing working relationships to be governed by a formal employment contract with mandatory benefits, payroll deductions, and labor protections.

Companies using contractors to avoid social insurance, housing fund, or tax obligations risk retroactive liabilities and fines. Courts in China typically side with workers in disputes, especially if the contractor relationship resembles that of an employee (regular working hours, company-provided equipment, exclusive service, etc.).

By working with an Employer of Record like Gloroots, businesses avoid these risks. Gloroots ensures that workers are correctly classified, compliant contracts are issued, and all statutory contributions are made—eliminating misclassification exposure.

Criteria That May Lead to Misclassification in China

Authorities may reclassify a contractor as an employee if the relationship includes:

• Fixed working hours dictated by the company
• Use of company-provided equipment and tools
• Regular reporting lines and integration into the company’s hierarchy
• Exclusive work for one employer
• Payment based on time rather than project milestones
• Work conducted at the employer’s premises

Penalties for Misclassification

If a contractor is deemed an employee, employers may face:

• Back payment of wages, benefits, and social contributions (pension, medical insurance, housing fund, etc.)
• Late payment penalties and fines imposed by labor and tax authorities
• Liability for severance pay if the relationship is terminated
• Exposure to labor arbitration or litigation initiated by the worker
• Reputational damage, making future hiring in China more difficult

Misclassification Risk: Direct Entity vs Gloroots EOR (China)

Why This Matters

In China, employee misclassification is a high-risk compliance issue. Unlike other markets where contractor arrangements are common, China strongly favors formal employment contracts with full benefits. Businesses that attempt to bypass these requirements may face heavy financial and legal consequences.

With Gloroots as your EOR, you can:

• Avoid the risks of misclassification entirely.
• Ensure every worker receives correct entitlements.
• Focus on growth, while Gloroots safeguards compliance.

Q: How does an EOR help you run payroll in China?

Payroll in China is heavily regulated and complex, requiring strict compliance with national labor laws and local regulations at the municipal and provincial levels. Employers must withhold individual income tax (IIT), contribute to multiple social insurance schemes, and manage mandatory housing fund contributions. Payroll must be calculated and paid in Renminbi (RMB) through approved local bank accounts, and all filings must be reported to local tax authorities on a monthly basis.

Errors in payroll processing—such as late payments, miscalculated taxes, or incorrect benefits contributions—can lead to fines, employee disputes, and regulatory scrutiny. For companies without an entity in China, running payroll independently is nearly impossible.

An Employer of Record (EOR) like Gloroots eliminates this complexity by managing end-to-end payroll compliance. Gloroots ensures timely salary payments, accurate tax withholding, and mandatory contributions across different cities, while also keeping up with frequent local regulatory updates.

Key Payroll Compliance Requirements in China

• Currency & Bank Requirements
  Payroll must be processed in RMB through a Chinese bank account.
• Payroll Cycle
  Typically monthly; wages must be paid by the 15th of the following month.
• Tax Withholding
  Employers must calculate and withhold Individual Income Tax (IIT) based on progressive tax brackets.
• Mandatory Contributions (employer + employee)
  Contributions vary by city but generally include:
  • Pension Insurance
  • Medical Insurance
  • Unemployment Insurance
  • Work-Related Injury Insurance
  • Maternity Insurance
  • Housing Fund
• Reporting
  Payroll, tax, and contribution reports must be filed monthly with local authorities.
• Year-End Filings
  Employers must reconcile payroll taxes annually and provide employees with income statements.

Payroll Management: Direct Entity vs Gloroots EOR (China)

Why This Matters

Payroll in China is not uniform nationwide—rates and contribution bases vary by city, and rules are updated frequently. For employers, staying compliant across jurisdictions is a challenge even with an established entity.

With Gloroots as your EOR in China, you gain:

• Error-free payroll management across multiple cities.
• Timely compliance with local tax and labor bureaus.
• Peace of mind, knowing employees receive accurate pay and benefits.

Gloroots makes running payroll in China simple, compliant, and risk-free, allowing you to focus on business growth instead of administrative burden.

Q: How does tax compliance work in China?

Tax compliance in China is multi-layered and strictly enforced, covering both individual income taxes for employees and mandatory employer contributions to social insurance and housing funds. Employers must withhold, remit, and report taxes monthly to local authorities, with annual reconciliation at year-end.

For foreign companies, China’s tax system can be daunting because rules vary by city and province, contribution bases change regularly, and penalties for late or incorrect filings are severe. Employers without a legal entity cannot directly remit taxes and contributions, making compliance almost impossible without a local partner.

With Gloroots as your Employer of Record (EOR), companies can navigate China’s tax system confidently. Gloroots manages withholding, reporting, and payment obligations—ensuring compliance while giving employees a transparent and reliable experience.

What are the Individual Income Tax (IIT) in China?

China applies a progressive tax system for resident employees. Non-residents are taxed only on China-sourced income.

Monthly Tax Brackets (Resident Employees):

What are the Employer and Employee Contributions?

Contributions vary by city but typically fall into these ranges:

• Employer Contributions (approx. 30–40% of salary):
  • Pension Insurance: ~16%
  • Medical Insurance: ~10% (including maternity)
  • Unemployment Insurance: ~1%
  • Work Injury Insurance: 0.2–1.9% (industry-specific)
  • Housing Fund: 5–12% (city-dependent)
• Employee Contributions (approx. 15–20% of salary):
  • Pension Insurance: ~8%
  • Medical Insurance: ~2%
  • Unemployment Insurance: ~0.5%
  • Housing Fund: 5–12% (matching employer, varies by city)

Tax Compliance: Direct Entity vs Gloroots EOR (China)

Why This Matters

China’s tax compliance is city-specific, rule-heavy, and constantly evolving. For companies without local expertise, the risk of miscalculation or late filing is high.

With Gloroots as your EOR in China, you gain:

• Seamless withholding and remittance of IIT and social contributions.
• Accurate application of local housing fund and insurance rates.
• Full transparency for employees through compliant payslips.
• Confidence that your operations remain compliant across China.

Q: What benefits and entitlements do employees in China receive?

Employees in China are entitled to a comprehensive package of statutory benefits, mandated under national labor laws and local regulations. These benefits cover social insurance, housing funds, leave entitlements, and statutory allowances. Employers must contribute a significant share of these costs, and compliance is strictly monitored by local authorities.

Beyond statutory entitlements, companies operating in competitive talent markets like Shanghai, Beijing, and Shenzhen often provide additional perks such as supplemental health insurance, meal allowances, wellness programs, and professional development opportunities to attract and retain top talent.

With Gloroots as your EOR, businesses can provide both mandatory and optional benefits, ensuring employees are well-supported while employers remain fully compliant with Chinese labor law.

Statutory Employee Benefits in China

• Social Insurance (Five Insurances)
  • Pension Insurance: Provides retirement income.
  • Medical Insurance: Covers healthcare costs, includes maternity benefits.
  • Unemployment Insurance: Provides income support if unemployed.
  • Work Injury Insurance: Covers medical bills and compensation for job-related injuries.
  • Maternity Insurance: Covers medical costs and income during maternity leave.
• Housing Fund
  Both employer and employee contribute (typically 5–12% each, depending on the city) to support housing-related expenses.
• Paid Leave Entitlements
  • Annual Leave: 5–15 days depending on years of service.
  • Maternity Leave: Minimum 98 days; extended in some provinces.
  • Paternity Leave: Varies by city/province (typically 7–15 days).
  • Sick Leave: Paid, with entitlements based on tenure and local rules.
  • Public Holidays: 11 national holidays annually, plus regional holidays.
• Severance Pay
  Employees terminated under non-disciplinary grounds are entitled to one month of salary per year of service (with some caps).

Benefits & Entitlements: Direct Entity vs Gloroots EOR (China)

Why This Matters

Employee benefits in China are not optional—they are central to labor compliance. Mismanagement of benefits like social insurance or housing funds can result in fines and disputes. Meanwhile, offering supplemental perks is increasingly important to compete for skilled talent in major cities.

With Gloroots as your EOR in China, companies can:

• Guarantee employees receive all mandatory entitlements.
• Offer competitive perks without worrying about local administration.
• Ensure payroll, benefits, and compliance are integrated seamlessly.

Q: What’s involved in hiring and onboarding employees in China?

Hiring in China is highly regulated under the Labor Contract Law and requires careful attention to documentation, contracts, and onboarding procedures. Unlike some markets where informal arrangements are common, China requires written employment contracts in Mandarin within one month of an employee’s start date. Failure to issue a contract on time can expose employers to fines and even double wage liabilities.

The onboarding process also involves registering employees with the local social insurance and housing fund authorities, enrolling them in payroll and tax systems, and ensuring compliance with probationary period rules. Employers must verify employee identities, manage work permits for foreign hires, and provide clear orientation on policies and benefits.

With Gloroots as your EOR, hiring and onboarding in China becomes seamless. Gloroots manages employment contracts, handles government registrations, and ensures employees are onboarded compliantly and efficiently—saving time and reducing risk.

Hiring & Onboarding Steps in China

• Employment Contracts
  Must be written in Mandarin (often bilingual) and signed within one month of starting work. Contracts specify type (fixed-term, open-ended, project-based), working hours, salary, benefits, and termination conditions.
• Probation Periods
  Allowed but capped by contract length:
  • ≤1 year contract: 1 month probation
  • 1–3 year contract: ≤2 months
  3 years or open-ended contract:
  ≤6 months
• Documentation Required
  • Employee’s national ID (Chinese nationals) or passport/visa (foreign hires)
  • Academic certificates, qualifications
  • Household registration (hukou) details (for locals, if applicable)
• Social Insurance & Housing Fund Registration
  Mandatory employer registration for every employee with local authorities.
• Onboarding & Orientation
  Employers are expected to communicate workplace rules, safety policies, benefits, and grievance procedures.
• Foreign Employees
  Require a valid work permit and residence permit, processed through the Ministry of Human Resources and Social Security (MOHRSS) and local exit-entry bureaus.

Hiring & Onboarding: Direct Entity vs Gloroots EOR (China)

Why This Matters

Hiring in China is formal and documentation-heavy. Missing contract deadlines, mismanaging probation, or failing to register employees with local authorities can result in penalties and disputes.

With Gloroots as your EOR, companies can:

• Hire quickly and compliantly without setting up an entity.
• Provide employees with valid contracts, benefits, and transparent onboarding.
• Avoid costly compliance mistakes while maintaining a smooth employee experience.

Q: How do you successfully manage a workforce in China?

Managing a workforce in China requires balancing strict compliance obligations with cultural awareness. Chinese labor laws dictate everything from contracts and payroll to social insurance and termination procedures, and enforcement is rigorous. Employers must stay up to date on city-specific regulations, which often vary between Tier 1 hubs like Beijing and Shanghai and emerging cities.

Equally important is understanding China’s workplace culture. Traditional values emphasize hierarchy, respect for authority, and collective responsibility, though younger professionals increasingly value collaboration, innovation, and work-life balance. Building trust, maintaining clear communication, and offering competitive benefits are key to retaining top talent.

For global companies, the challenge lies in managing compliance and culture simultaneously. With Gloroots as your EOR, workforce management in China becomes seamless—ensuring your team is both legally protected and well-supported, while you focus on business growth.

Best Practices for Managing a Workforce in China

1. Ensure Compliance First
   • Keep employment contracts updated and in line with the Labor Contract Law.
   • Monitor local payroll, tax, and benefit regulations.
   • Avoid misclassification—use formal employment contracts instead of contractor arrangements.
2. Respect Work Culture
   • Recognize hierarchical structures and decision-making norms.
   • Invest in relationship building (guanxi) with employees and stakeholders.
   • Provide clear communication and structured processes to align expectations.
3. Invest in Employee Development
   • Younger professionals value training, upskilling, and career mobility.
   • Competitive employers in China often provide supplemental health insurance, education allowances, and professional growth programs.
4. Prioritize Engagement and Retention
   • Offer a balance of salary, benefits, and perks to compete in talent-heavy hubs.
   • Encourage feedback and recognition to build loyalty.
   • Maintain transparency around performance evaluation and promotions.

Workforce Management: Direct Entity vs Gloroots EOR (China)

Why This Matters

China’s workforce is one of the largest, youngest, and most competitive in the world. Successfully managing employees requires both regulatory precision and cultural adaptability. Employers who ignore compliance risk penalties, while those who neglect culture may face high turnover in a competitive job market.

With Gloroots as your EOR, companies can:

• Stay compliant with ever-changing labor regulations.
• Offer competitive benefits and smooth HR processes.
• Focus on building engaged, high-performing teams instead of navigating bureaucracy.

Q: What are the key steps and requirements in terminating employees in China?

Termination in China is one of the most complex and sensitive areas of employment law. Governed primarily by the Labor Contract Law of the PRC, it requires employers to follow strict rules around notice, severance, and grounds for dismissal. Any misstep may result in labor arbitration, reinstatement orders, or compensation claims.

Chinese law favors employee protection. Termination without “statutory grounds” is generally unlawful. Employers must either reach a mutual termination agreement with the employee or provide valid justification (such as misconduct, incompetence after training, or redundancy due to business restructuring). Documentation and due process are essential to reduce risk.

With Gloroots as your EOR, companies gain access to expert guidance, ensuring terminations are handled legally, fairly, and respectfully, while minimizing exposure to disputes.

Key Termination Rules in China

• Termination Process
  Employers must provide written notice with legal grounds and, in some cases, notify or consult with labor unions.
• Notice Period
  Standard notice is 30 days for unilateral terminations. Payment in lieu of notice is permitted.
• Severance Pay
  Employees terminated without cause or during redundancy are entitled to one month of salary per year of service (capped at 12 years, unless otherwise agreed). Severance is calculated on the average salary of the past 12 months.
• Probationary Period Termination
  Employees may be terminated more easily during probation, but employers must still provide valid grounds and cannot terminate for discriminatory reasons. Notice periods vary (3–7 days).
• Unlawful Termination Risks
  If termination is deemed unlawful, the employee may demand reinstatement or compensation—often double the standard severance.

Termination Rules: Direct Entity vs Gloroots EOR (China)

Why This Matters

Termination in China is not employer-friendly. Missteps can trigger costly disputes, reinstatement orders, or reputational damage. Employers must carefully document grounds for dismissal and follow the legal process precisely.

With Gloroots as your EOR, companies can:

• Handle terminations in full compliance with Chinese labor law.
• Reduce disputes through expert documentation and process management.
• Protect both the business and the employee relationship during exits.

Q: What is the offboarding process in China?

Narrative Overview

Offboarding in China is not just an internal HR exercise — it is a compliance-heavy process governed by the Labor Contract Law and local labor bureau requirements. Employers must carefully manage the exit clearance, final settlement, and documentation, while ensuring employees receive their entitlements on time.

Failure to follow correct offboarding procedures can expose companies to labor disputes, financial penalties, and reputational risks. Employers must also provide proper documentation, such as the Certificate of Employment (service certificate), which is often required for future employment.

With Gloroots as your EOR, the entire offboarding workflow is streamlined — from clearance and payroll settlement to benefits closure and documentation — ensuring a smooth, compliant exit for both employer and employee.

Key Phases of the Offboarding Process in China

1. Resignation or Termination Notice
   • Employees must give written notice (30 days for permanent staff; 3 days during probation).
   • Employers must provide statutory notice or pay in lieu of notice.
2. Exit Clearance
   • Employee returns company property (laptops, phones, ID cards).
   • HR verifies that projects and responsibilities are handed over.
   • Departments (IT, Finance, Admin) sign off on clearance forms.
3. Final Pay & Benefits Settlement
   • Employers must pay outstanding wages, unused annual leave, and statutory severance (if applicable).
   • Mandatory contributions (social insurance and housing fund) are settled and deregistered with local authorities.
   • Payment must be made promptly, usually within the final payroll cycle.
4. Certificate of Employment (Service Certificate)
   • Employers must issue a certificate stating employment duration, job role, and reason for departure.
   • This is a statutory requirement and must be provided upon request.
5. Exit Documentation & Records
   • Payroll and tax records must be updated and reported to authorities.
   • Employment relationship is formally terminated with labor bureau filings.
6. Optional Exit Interview
   • Not mandated by law but recommended to gather employee feedback and maintain employer brand.

Offboarding: Direct Entity vs Gloroots EOR (China)

Why This Matters

In China, offboarding is legally sensitive. Employers must settle dues quickly, issue certificates, and close social contributions properly. Mishandling exits can trigger disputes before labor arbitration bodies.

With Gloroots as your EOR, companies can:

• Guarantee compliant and timely final settlements.
• Ensure employees receive all statutory documents.
• Protect employer reputation with a professional offboarding experience.

Q: What costs and financial planning do you need with an Employer of Record in China?

Expanding into China requires thoughtful financial planning, as the country’s labor and compliance framework involves high statutory contributions, administrative costs, and entity setup investments. For companies establishing their own entity, costs include registered capital requirements, legal and accounting fees, payroll software, and HR staff. Beyond setup, employers must budget for social insurance, housing fund contributions, severance liabilities, and annual compliance audits.

Using an Employer of Record (EOR) like Gloroots dramatically reduces these costs. With Gloroots, businesses avoid entity setup expenses and instead pay a transparent service fee that covers employment contracts, payroll, tax filings, and benefits administration. This model is particularly efficient for companies that want to test the Chinese market, scale flexibly, or hire small teams without committing significant upfront capital.

Key Cost Considerations in China

• Entity Setup & Maintenance
  • Wholly Foreign-Owned Enterprise (WFOE) setup may require USD 150,000–500,000 in registered capital depending on sector and region.
  • Ongoing costs include office leases, accounting, audits, and dissolution costs if exiting.
• Employer Payroll Contributions
  • Employer costs can reach 30–40% of gross salary due to mandatory social insurance and housing fund contributions.
• Employee Costs
  • Competitive salaries in Tier 1 cities (Shanghai, Beijing, Shenzhen) are significantly higher than in Tier 2 and 3 cities.
  • Employers must also budget for 13th-month pay, widely expected as part of compensation packages.
• Severance Liabilities
  • One month of salary per year of service for most dismissals, capped at 12 months, must be factored into financial planning.
• EOR Fees
  • Instead of upfront entity and compliance costs, companies pay a monthly EOR fee per employee, covering contracts, payroll, and statutory contributions.
  • This enables predictable budgeting and reduces legal and administrative overhead.

Costs: Direct Entity vs Gloroots EOR (China)

Why This Matters

Operating in China can be costly and complex if you establish a direct entity. Beyond the large upfront capital, companies must manage ongoing compliance expenses and bear long-term financial liabilities.

With Gloroots as your EOR, businesses gain:

• Predictable monthly costs instead of heavy upfront investment.
• Full compliance coverage in payroll, taxes, and benefits.
• Financial agility to enter, scale, or exit the Chinese market quickly.

Gloroots makes financial planning in China transparent, flexible, and risk-free—helping companies expand confidently without unnecessary overhead.

Q: What challenges might you face, and how do you solve them using an EOR in China?

China offers enormous opportunity, but expanding into the market comes with regulatory complexity, cultural nuances, and high compliance costs. Companies face challenges such as lengthy entity setup, strict employment laws, city-specific regulations, and difficulties in managing payroll and benefits consistently.

For global businesses, these hurdles can delay market entry and create legal and financial risks. Missteps in employee classification, tax filing, or termination procedures may quickly escalate into disputes before labor authorities.

An Employer of Record (EOR) like Gloroots helps overcome these challenges by providing an already-compliant employment infrastructure. With Gloroots, companies can hire in weeks instead of months, run compliant payroll across multiple cities, and manage employees without setting up a local entity. This makes market entry faster, safer, and more cost-efficient.

Common Challenges & EOR Solutions in China

Why This Matters

China is a high-potential but high-regulation market. Delays, missteps, or misclassifications can quickly escalate into compliance risks. Companies entering China need to focus on growth and innovation, not navigating bureaucracy.

With Gloroots as your EOR, you can:

• Eliminate entity setup delays and start hiring in weeks.
• Ensure error-free payroll, tax, and compliance across provinces.
• Reduce risks tied to termination disputes and misclassification.
• Scale flexibly, entering or exiting the market without heavy cost or time commitments.

Gloroots makes expansion in China fast, compliant, and risk-free, so you can access the world’s largest workforce with confidence.

Conclusion

China offers unmatched access to the world’s largest and most diverse workforce, alongside opportunities in technology, finance, manufacturing, and innovation. But navigating China’s labor laws, payroll requirements, and entity setup is complex, time-consuming, and costly.

With Gloroots as your Employer of Record (EOR) partner, you can hire employees in China quickly, compliantly, and cost-effectively—without establishing a local entity. From drafting bilingual employment contracts to managing payroll, social insurance, and offboarding, Gloroots simplifies every stage of workforce management in China.

For companies looking to expand into China, Gloroots is the most efficient, risk-free way to build a presence and tap into world-class talent.

Gloroots makes global hiring simple and compliant.

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