You have found a candidate in China, but your company has no Chinese subsidiary. An employer of record (EOR) says it can hire the person locally while you direct the work. Is that enough to proceed?
The short answer: a China-based provider may offer a local employment arrangement, but “EOR” tells you very little about its legal structure. Before sending an offer, find out which company will sign the worker's contract, how you will work with that company, and whether the proposed role fits the arrangement. The answer may look different for one short project and a permanent sales team.
This guide is for companies considering a hire before they have their own entity in China. If you already employ people through a Chinese company and only need someone to run the monthly process, start with our China payroll services guide.
What does a China EOR actually do?
In a typical proposal, a local provider offers to sign the employment contract and administer salary, individual income tax withholding and social insurance. The overseas client describes the job and pays the provider under a separate service agreement. That is a commercial description, not a substitute for identifying the legal arrangement. The contract, the employer named in it and the way the person is supervised all matter.
Chinese law requires a written employment contract when an employment relationship is established. If it is not signed at the start, the Labour Contract Law requires one within a month of the worker starting. The contract must identify the employer and address matters including work location, duties, pay and social insurance. Ask to see the draft before the candidate accepts an offer, not after their first payday.
The first question: who is the employer?
Ask the provider for the full Chinese legal name of the entity that will employ the worker. Then trace the arrangement across three documents:
| Document | What to check |
|---|---|
| Employment contract | Which entity signs with the worker? Where will the person work, and what job will they perform? |
| Your service agreement | Which entity supplies the service, who gives day-to-day instructions, and who handles an employment dispute? |
| Monthly payroll record | Who pays the salary, withholds individual income tax and arranges social-insurance registration and contributions? |
These names and responsibilities should make sense together. China's Individual Income Tax Law makes the payer of income the withholding agent. The Social Insurance Law requires an employer to apply for an employee's social-insurance registration within 30 days of the start of employment and to pay its contributions as required. A provider's monthly invoice is not evidence that either filing has been completed; ask what records it will give you.
Is the proposal labour dispatch?
This is the point most easily lost behind the EOR label. A provider may call its product “employment outsourcing”, “staffing” or “EOR”. If it is labour dispatch in substance, China's dispatch rules need a close review. The Labour Contract Law requires a licence to operate a labour-dispatch business. For ordinary user companies, dispatch is restricted to temporary, auxiliary or substitute positions, and the Interim Provisions on Labour Dispatch set a 10% limit on dispatched workers in the user's total workforce. Article 25 of those provisions exempts foreign companies' permanent representative offices in China, among others, from the position and ratio limits. An overseas company with no China presence should not assume that exception covers its proposed hire.
That does not mean every EOR proposal is dispatch. It means a provider should explain the basis for the proposed hire, whether dispatch law applies to the facts and, if it does, how the role and parties meet the applicable rules. Ask for the licence if dispatch is the stated model.
Be especially careful with a continuing, core job that you will manage directly. Changing “dispatch” to “outsourcing” on the invoice does not settle the classification. In its 2026 labour-market enforcement notice, the Ministry of Human Resources and Social Security specifically identified unlicensed dispatch and “outsourcing in name, dispatch in reality” as enforcement targets. Have China employment counsel review an unclear structure before the person starts.
What should you ask an EOR provider before making an offer?
Send the provider the actual job description, work city, reporting line and intended duration. Then request written answers to these questions:
- Who signs? What is the legal name of the employing entity, and can we review the proposed employment and service agreements?
- What is the legal model? Is this direct employment by the provider, labour dispatch, a genuine outsourced service or something else? If dispatch is involved, what licence and role analysis support it?
- Who manages the person? Who assigns work, approves leave, sets hours, provides equipment and deals with complaints? Do the agreements match the day-to-day reality?
- Who handles statutory work? Who calculates salary, withholds and reports individual income tax, registers and pays social insurance, and gives the worker their records?
- What happens when the role ends? Who handles the employment process, notices, any statutory payments and a move to your own Chinese company if you establish one later?
If the candidate is a foreign national working in China, add one more question: which entity will apply for the appropriate work permit, and does the proposed contract support that application? The government's 2026 guide for business expatriates describes employer-led work-permit applications. Do not treat an EOR sales proposal as proof that the candidate can begin work.
How do you compare EOR costs in China?
Ask for an itemised illustration for your candidate and work city. Separate the worker's gross salary, estimated employer contributions, any benefits, the provider's fee, onboarding charges, deposits, expense processing and foreign-currency payment terms. Also ask how corrections or an exit are billed. No single monthly number tells you what the employment arrangement will cost.
Request a sample payroll statement with personal details removed. It should show how gross pay becomes net pay, what the employer pays on top and which amounts are included in the provider's invoice. For a provider that only administers payroll for your own Chinese company, the employer relationship is different; our payroll guide explains that comparison.
EOR or your own Chinese company?
| EOR arrangement | Your own China company | |
|---|---|---|
| Who employs the worker | The provider's local entity | Your company directly |
| Setup time before hiring | Short, if the structure is sound | Weeks to months for registration, banking and tax setup |
| Legal model to verify | Provider's basis (direct employment, dispatch or outsourcing) and any dispatch licence | Standard employer obligations under the Labour Contract Law |
| Cost profile | Per-employee provider fee on top of salary and contributions | Entity running costs (accounting, filings, office) plus employment costs |
| Control over the employee | Shared; the agreements must match day-to-day reality | Full, within employment law |
| Long-term team or local contracts | Increasingly awkward | The natural structure |
| Exit path | Provider handles termination process; check how moves to your own entity are handled | Direct, subject to statutory procedures |
When might your own Chinese company be a better fit?
An EOR proposal can be worth examining when you need to evaluate a limited local hire and the provider can explain a compliant structure for the real job. If you expect an ongoing team, local contracts or a managed China operation, compare the cost and control of forming your own company. A service contract alone does not answer every employment, operating or tax question raised by those activities.
Our guide to registering a company in China covers the setup decision. If you already have a foreign-owned company, the annual compliance guide shows the recurring work that follows hiring.
Before choosing either route, write down the role you actually need. A provider should be able to explain how this particular person can be hired for this particular job in this city, not just promise “China coverage”.
Common questions
Is using an EOR legal in China?
It depends on the underlying arrangement, not the label. A provider must have a lawful basis for employing the worker, and if the model is labour dispatch in substance, dispatch licensing and the temporary, auxiliary or substitute position rules apply. Have an unclear structure reviewed before the hire starts.
How much does an EOR in China cost?
There is no reliable single figure. Compare itemised quotes that separate the worker's gross salary, employer social-insurance contributions, the provider's fee, onboarding charges and exit costs, and ask for an anonymised sample payroll statement.
Can a China EOR sponsor a foreign employee's work permit?
Work-permit applications are employer-led, so the employing entity in the EOR structure must support the application. Confirm in writing which entity applies and whether the proposed contract supports it before promising a start date.
When should I switch from an EOR to my own Chinese company?
When the role becomes ongoing, when you need a local team or contracts, or when the per-employee provider fees approach the running cost of your own entity. Plan the employment transfer with the provider before setting a date.
Official references
- Labour Contract Law, especially Articles 10, 17 and 57–66, in the State Taxation Administration's policy library
- Interim Provisions on Labour Dispatch, including the 10% rule and Article 25 exception
- Social Insurance Law, especially Articles 58 and 60
- State Taxation Administration: Individual Income Tax Law, especially Articles 9, 10 and 14
- Ministry of Human Resources and Social Security: 2026 action on unlicensed dispatch and disguised outsourcing
- Ministry of Commerce: 2026 Guide to Working and Living in China as Business Expatriates
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