What do you need to know to hire in China?

Employer social insurance in China has five components: pension, medical, unemployment, work injury, and maternity insurance. The pension component is 16% nationally. The remaining components are set by local government and vary by city. Shanghai, Beijing, and Guangzhou each publish their own rate schedules. The housing provident fund adds a further 5 to 12 percent depending on local policy. Teamed's China fee sits inside that total cost envelope.

Teamed's China price is a starting rate, with zero FX in any currency pairing. No setup fees. No exit fees. Salaries, taxes, and benefits passed through at cost on every invoice.

The full breakdown, with worked examples at current city-level statutory rates, is in the cost guide.

Forming a Wholly Foreign-Owned Enterprise requires registered capital, an approved business scope, and municipal registration across multiple government authorities. Setup takes three to six months and comes with ongoing accounting, annual inspections, and tax filings. An Employer of Record is faster and cheaper at low headcount. Teamed runs Chinese payroll, contracts, and social insurance from day one.

The crossover point depends on Chinese salary levels, your city, and accounting overhead. For most tech roles it lands around 5 to 8 employees. The EOR vs entity guide runs those numbers.

Most EOR providers will not tell you when you have crossed it. We do, and we help you move. You progress from contractor to EOR to your own Chinese entity on one platform under Teamed's Graduation Model, with tenure preserved.

The Labour Contract Law of the PRC (2008) is the central statute. It requires a written contract within 30 days of the start date. Missing this window triggers an automatic double-salary penalty for each uncovered month. Fixed-term, open-ended, and project-based contracts are the three permitted types. After two consecutive fixed-term contracts, the employee may request an open-ended contract.

Probation periods are tied to contract length. For contracts of three years or more, the maximum is 6 months. Either side can end the relationship during probation with 3 days advance notice. The hiring guide covers contract structuring, mandatory clauses, and the day-one social insurance registration obligations in full.

Statutory paid annual leave scales with total working life, not tenure with a single employer. Employees with one to under ten years of service get 5 days. That rises to 10 days between ten and under twenty years, and 15 days at twenty or more years. There are 7 national public holidays covering occasions including Spring Festival, Labour Day, and National Day. These run separately from paid annual leave.

Maternity leave is 98 days at the national level under State Council Decree No. 619. Most provinces add a further 30 to 90 days through their own population regulations. Paternity leave is set by provincial regulation and varies from around 10 to 30 days depending on the province of employment. Sick pay during medical treatment leave depends on service length and city-level rules. The benefits guide covers leave, sick pay, and social insurance entitlements in full.

Chinese social insurance is split across five branches for employers: pension (16% nationally), medical, unemployment, work injury, and maternity. The pension rate is uniform. The other four vary by city and are updated periodically by local government. The housing provident fund is separate and adds 5 to 12 percent of salary depending on local rules.

Individual Income Tax (IIT) is progressive. The standard basic deduction is CNY 60,000/year. The first band starts at 3% and the rate reaches 45% on annual taxable income above CNY 960,000. Employers withhold IIT and file returns by the 15 days of the following month. The tax and payroll guide sets out every band and threshold.

The Labour Contract Law sets out three employer-side routes: fault-based dismissal with no notice or severance, non-fault termination with 4.286 weeks notice or pay in lieu, and economic redundancy (collective or individual). Non-fault and economic terminations both trigger Article 47 severance. The formula is 1 month of salary per full year of service. For employees earning above three times the local average monthly wage, the cap is 12 months of salary.

Wrongful termination (firing without a valid Article 39 ground and without proper procedure) doubles the severance obligation under Article 87. There is no minimum qualifying service period before these protections apply. Special protection applies to employees with 15 or more continuous years of service who are within five years of retirement age. Collective redundancy covering 20 or more employees within a 30 days period requires prior consultation and notification to the trade union or workforce. The termination guide covers every route and the arbitration process.

The written contract must be signed within 30 days of the start date. Every month without a signed contract costs double the monthly salary as a statutory penalty, for up to eleven months. Then, if still unsigned, the employment converts automatically to an open-ended contract. Most US buyers miss this because there is no equivalent rule in their home market. The hiring guide covers the required contract clauses.

Severance in China accrues from the very first day. Unlike the UK, Germany, or the US, there is no service threshold before statutory severance is owed. A six-month employee who is laid off on economic grounds is entitled to half a month's salary. A ten-year employee is entitled to ten months. This changes the cost model for every exit scenario from the day of hire. The termination guide and the cost breakdown guide both quantify it.