China is one of the leading powerhouse economies in the world and many foreign businesses are looking to penetrate this huge domestic market. Of course, China has a unique culture, not to mention the obvious language barrier and entering the domestic market might seem a daunting proposition, even for the seasoned entrepreneur.
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Professional Employment Organisation
Fortunately, there are PEO companies that can hire on your behalf, which means you don’t have to register as a business entity in order to have employees in China. Such a company can act as an official Employer of Record (EoR), which means you are fully compliant with Chinese business laws. A Professional Employment Organisation can hire local people to work for you without you having to register as a business entity.
Benefits Of PEO
When you take advantage of a PEO, you are not legally the employer, so the PEO will be liable for the employees and you can set up in business as soon as 48 hours by using a PEO service. If time is not on your side and you need to hit the ground running, using a PEO is the perfect way to get things done in super-quick time.
Payroll Services
When you use a PEO, all payroll is handled by the PEO, as they are liable for the employees and this frees you up to focus on other aspects of your business. They work with all payroll software and can seamlessly integrate your payroll into their delivery system. Click here for good management tips.
Business Registration
If you would like to set up a foreign business in China, you have the following options.
- Joint venture company – Find a local partner and set up a joint venture company; some sectors require a local 51% share ownership.
- 100% foreign owned business – Ideal for a foreign company that wishes to set up and trade in China. Hire local and foreign employees directly and you have permission to import/export.
- Representative office – Known as an RO, this is designed for foreign companies and corporations that wish to carry out market research. There are some limitations; you can only hire 4 foreign employees and must use an approved agent when sourcing local labour. Also, there must be a registered office in China.
The best way forward is to schedule a free 30-minute Zoom call with an international law firm and they can advise you accordingly. If you are looking to start as soon as possible, PEO services allow you to hire employees without having a business entity (the PEO is the employer) and the lawyer can help you in many ways. First, you need to familiarise yourself with the various business types and decide which is right for you.
Setting up a company in China cannot be done unless you enlist the services of an established law firm with extensive experience in helping foreign investors set up business entities. Choose wisely and they will facilitate everything and compliance is assured.