Hiring talent in China presents a valuable opportunity for global companies entering Asia’s largest economy, but navigating complex labor laws, tax regulations, and regional compliance can be challenging. EOR service providers offer a fast, compliant alternative to setting up a legal entity, enabling foreign businesses to hire seamlessly. This guide compares Employer of Record (EOR) vs. entity establishment in China to help you choose the right hiring model for your 2025 expansion.
Table of Contents
- Introduction to Remote Hiring in China
- EOR vs. Setting Up an Entity in China
- Cost Implications of Entity vs. EOR in China
- Compliance and Legal Exposure: Entity vs. EOR
- Foreign Compliance: Setting Up a Legal Entity vs. Using EOR in China
- Switching from EOR to Entity Establishment in China
- Choose Asanify for EOR in China
- FAQs
- Conclusion
Introduction to Remote Hiring in China
Remote hiring in China has become a preferred strategy for foreign businesses aiming to build local teams without legal or infrastructure burdens. While the talent pool is vast, onboarding employees compliantly can be challenging due to local laws, regional tax differences, and foreign ownership regulations.
Foreign companies typically choose between:
- Setting up a legal entity (like a WFOE)
- Partnering with an Employer of Record (EOR)
Both approaches have pros and cons depending on the stage, scale, and goals of your business.
EOR vs. Setting Up an Entity in China
Setting up a legal entity in China offers full operational freedom but involves high costs, time, and risk. In contrast, EORs provide a faster, low-risk method of hiring local employees without incorporation.
Factors to Consider When Choosing EOR or Entity Establishment
When deciding between EOR and a legal entity, consider:
- Speed of hiring: EORs can onboard in days; entity setup may take months.
- Business goals: EOR suits short- to mid-term hiring; entities are better for long-term strategic presence.
- Administrative overhead: Entity setup involves accounting, banking, licenses, and compliance filings—EORs manage this for you.
Why Time to Market Matters for Global Companies
Entering the Chinese market quickly can give you a competitive edge. Delayed hiring through slow legal setup can result in lost opportunities and higher costs. EORs enable faster go-to-market by removing legal bottlenecks.
Cost Implications of Entity vs. EOR in China
Understanding the cost structures of both models is critical for planning. While EORs offer simplicity, entities provide long-term control—at a price.
Setup and Maintenance Costs
- Entity: Company registration fees, legal advisors, office lease, staff, tax agents, and capital injection.
- EOR: A fixed monthly service fee and employee-related costs (salary, benefits, payroll).
Compliance Costs
- Entity: Annual audits, business license renewals, multiple tax filings, labor bureau registrations.
- EOR: Bundled into the service fee, including mandatory benefits, payroll, and taxes.
Time Savings
- EORs can onboard employees within 7–10 days.
- Entity setup in China can take 3–6 months depending on province, business scope, and approval stages.
Suggested Read: Employer of Record China: A Comprehensive Guide 2025
Compliance and Legal Exposure: Entity vs. EOR
China’s labor laws are strict and vary by region. Mistakes in payroll, termination, or benefits can lead to fines or lawsuits.
EORs help avoid:
- Labor contract violations
- Non-payment of statutory social contributions
- Misclassification of employees
They act as the legal employer, taking on the burden of compliance while protecting your business from legal risks.
Foreign Compliance: Setting Up a Legal Entity vs. Using EOR in China
Foreign businesses must weigh the pros and cons of direct legal presence vs. outsourcing employment compliance to an EOR.
Setting Up a Legal Entity
To register a Wholly Foreign-Owned Enterprise (WFOE), you’ll need:
- Chinese name registration
- Business license from MOFCOM
- Local bank account, tax registration, social insurance account
- Lease agreement and statutory capital requirements
Using an Employer of Record (EOR)
An EOR lets you:
- Hire employees legally without WFOE registration
- Ensure statutory benefits, taxes, and labor laws are followed
- Manage payroll, contracts, and expenses via one platform
Switching from EOR to Entity Establishment in China
Some companies start with an EOR and later transition to a full entity when their headcount or business strategy grows.
When to consider switching:
- You plan to scale a long-term China operation
- You need control over physical offices, invoicing, or branding
Steps:
- Set up WFOE and obtain licenses.
- Notify and transfer employees from EOR to your legal entity.
- Ensure smooth contract and benefits transition.
Choose Asanify for EOR in China
Asanify is a trusted Employer of Record (EOR) partner for global companies hiring in China, offering expert support in local labor law, regional compliance, and bilingual service. It enables fast onboarding in under 7 days and provides localized employment contracts, payroll processing, and automated tax and social insurance calculations. Asanify also supports multi-country employee management through a single platform, making it ideal for globally distributed teams. For companies planning to establish a legal entity later, Asanify ensures a smooth transition with expert compliance guidance. With Asanify, you can scale your team in China quickly, compliantly, and without operational hassle.
Conclusion
Expanding into China offers global companies access to top talent, but the complexity of labor laws, tax regulations, and regional compliance can create significant barriers. Choosing between setting up a legal entity and using an Employer of Record (EOR) depends on your scale, timeline, and compliance needs. For most businesses, an EOR provides a faster, more cost-effective, and fully compliant way to hire in China without establishing a local entity. Asanify simplifies this process by offering quick onboarding, localized payroll, automated tax handling, and expert support across provinces. Whether you’re entering the market or scaling operations, Asanify enables you to hire confidently, stay compliant, and grow without legal or operational hassles.
FAQs
An EOR legally employs your staff in China and manages payroll, taxes, and compliance.
EORs ensure you meet contract, payroll, and benefits regulations across provinces.
EOR costs include a monthly service fee plus employee-related expenses (salary, tax, insurance).
Employees receive statutory social insurance, health benefits, paid leave, and labor protections.
EORs calculate net salary, withhold taxes, submit social contributions, and issue payslips monthly.
Yes, though contractor classification must be carefully handled to avoid misclassification risks.
EORs offer speed and simplicity, while entities offer control and permanence—but with high setup costs.
Yes, written contracts are legally required and must include specific terms and social coverage.
Foreign companies must withhold income tax and pay employer contributions to social insurance.
EORs follow provincial laws; typically, 98 days for maternity leave and 7–30 days for paternity.
EORs enroll employees in China’s social medical insurance scheme and may offer supplemental plans.
It includes pension, medical, unemployment, maternity, and work injury insurance for all full-time employees.
Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant or Labour Law expert for specific guidance.
