The Growing Role of Employer-of-Record in China’s Talent Ecosystem

China’s labour market is moving quickly. Companies are hiring faster, expanding into new regions, and focusing more sharply on compliance. At the same time, employment regulations continue to tighten, local variations remain significant, and authorities are placing stronger attention on accurate filings, social insurance coverage, and employee protection.

Against this backdrop, the Employer-of-Record (EOR) model has become a practical solution for foreign firms needing a compliant way to hire staff in China without establishing a local entity. Once seen mainly as a temporary measure, EOR has now become a strategic tool for market entry, workforce planning, and long-term talent management.

Why EOR Adoption Is Rising in China

1. Faster market entry

Setting up a wholly foreign-owned enterprise (WFOE) in China can take several months and requires ongoing maintenance. An EOR allows businesses to hire employees almost immediately, enabling them to begin operations while the long-term structure is planned.

2. Increasing compliance requirements

China’s employment framework includes detailed rules covering:

• contracts

• payroll

• social insurance

• individual income tax

• working hours

• statutory leave

• termination procedures
  

An EOR manages these obligations on behalf of the employer, reducing risk and administrative burden.

3. Expansion into multiple cities

Companies hiring across China quickly discover that every city has its own social insurance rates, filing rules, contribution deadlines, and administrative processes.EOR providers already operate in multiple regions, allowing businesses to onboard employees anywhere in the country without navigating separate regional systems.

4. Testing new markets and functions

Many companies use the EOR model to test demand before committing to a local entity or larger team. It is particularly effective for sales roles, engineering support, procurement, and regional management positions.

5. Supporting remote and hybrid talent

As flexibility becomes more common in China, employers need compliant ways to hire staff outside traditional office locations.EOR solutions accommodate employees in both primary and secondary cities, making hiring more adaptable.

6. Reducing internal HR workload

Managing payroll, benefits, and employment filings in China requires specialised knowledge. Using an EOR helps companies avoid the cost and complexity of building a full HR function during early stages of market development.

How the EOR Model Works in China

Under an EOR arrangement:

• The employee signs a contract with the EOR provider.

• The foreign company directs daily work, responsibilities, and performance.

• The EOR handles statutory employment requirements, including:

  • payroll

  • income tax

  • social insurance

  • housing fund

  • onboarding documentation

  • mandatory filings

  • contract renewals

This structure enables compliant employment while keeping management control with the client company.

Common Use Cases for Foreign-Invested Enterprises

Hiring before a local entity is established

Companies planning long-term expansion can start operating immediately by placing staff under an EOR until their WFOE is approved.

Hiring in multiple regions

Businesses with decentralised teams or remote roles can manage all employment through a single EOR provider rather than registering separate entities or locations.

Short-term projects

Contract-based work, pilot initiatives, and temporary assignments can be managed without establishing a formal company.

Local support for global teams

EOR is often used for in-country customer service, technical support, and post-sales roles that need to be close to local clients.

Risk reduction during uncertain market conditions

An EOR can help companies adapt quickly to demand changes without carrying the obligations associated with terminating direct hires.

Key Considerations When Using an EOR in China

1. Choosing a compliant provider

The EOR partner must be licensed to hire employees in China and operate legally in all relevant regions. Unlicensed providers increase risk, particularly around social insurance and tax compliance.

2. Clear division of responsibilities

Companies should maintain clarity over day-to-day work responsibilities, performance management, and communication with the EOR on employment matters.

3. Transparent cost structure

EOR fees vary based on city, seniority, and benefits. A clear breakdown avoids surprises and supports budgeting.

4. Employee experience

Although the EOR is the legal employer, the employee’s loyalty and engagement are influenced by the client company. Clear communication and consistent support strengthen retention.

5. Planning for future transition

If a company later establishes a WFOE, employees can be transferred from the EOR arrangement into the new entity with proper coordination.

What to Expect in the Next Few Years

The role of EORs in China will continue to grow due to:

• stronger compliance oversight at local and national levels

• rising demand for specialised talent

• increased geographic spread of skilled professionals

• more foreign companies choosing flexible, low-risk entry pathways

• faster digitalisation of employment documentation and payroll systems

EOR is evolving from a temporary hiring tool into a long-term component of modern workforce strategy.

How Woodburn Global Can Help

At Woodburn Global, we support foreign companies in every stage of their China hiring journey. Our EOR solutions include:

• Hiring employees legally in China without a local entity

• Drafting and issuing employment contracts

• Payroll administration and tax filings

• Social insurance and housing fund management

• Onboarding, probation, and contract renewals

• Compliance oversight and local bureau communication

• Transition planning for companies establishing a WFOE

Whether you are testing the market, expanding into new regions, or seeking a reliable way to manage employment risk, our EOR support provides a compliant, efficient, and scalable solution for growing your China team.

---

Woodburn Accountants & Advisors is one of China and Hong Kong’s most trusted business setup advisory firms.

Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.

Contact us