In 2016 People’s Republic of China became the world’s largest economy and it is one of the top attractive countries for business. Every year more foreign companies attempt to enter the Chinese market. However, due to the multiple administration procedures and the strict Chinese immigration law, setting business in China is a time- consuming and complex process as well as a significant reason for not entering the market.
In case a foreign enterprise does not have a legal entity in China or the entrepreneur is waiting for the completion of the establishment of a Wholly Foreign Owned Enterprise (WFOE), PEO services are the best solution to ensure the foreign enterprises legally has the employees working in China.
What is a PEO?
A Professional Employment Organization (PEO) is a company that provides services under which an employer can delegate employee management tasks such as payroll, employee benefits and workers’ compensation like HROne. The PEO service enable the HR service provider to hire the client’s employees, thus becoming their employer of record for insurance, mandatory benefits or tax issues. This service is also known as joint employment or co-employment.
PEOs assist small and medium sized enterprises (SMEs), foreign startups or Representative office in
China with human resource outsourcing, payroll processing solutions, employee benefits services and employee dispatch services. Through PEO services a foreigner may launch his business easily and keeps a presence in China while minimizing their risk avoiding long and expensive process of an in house hire.
The Employee Leasing/Talent Dispatch service here also known as labor dispatch, China staff/employee outsourcing, workforce dispatch, contractor. This type of cooperation can be accomplished via the PEO hiring a client company’s employee or potential employee before leasing the employee back to their client. The PEO company turns the management fees of the client company into the staff’s salary. Consequently, PEO is responsible to sign the employment contract with clients’ employees, pay employees wages and manages their employment mandatory benefits and individual income tax in China.
Advantages of Hiring through PEO in China
The Employee Leasing/Talent Dispatch service is coming with plenty of advantages. Where a direct employment is not desired or feasible, PEO services offer even less liability to the employer. The liability is shared between PEO and the company client. Practically, shared responsibility means the elimination of risk could might someone face because of the often Chinese laws & regulations amendments.
An essential advantage is also that the client company does not have any role at the employment administration. The PEO offers a high quality HR services because of the professional and efficient human resource expertise who are familiar to each client specific area of interest as well as the foreign SMEs or startups concerns, worries when operating in China.
In addition, since the payroll calculation and mandatory benefits policies are different from city to city in China, the PEO service relieves the foreign companies from dealing with the complex processes of payroll system and mandatory benefits, tax issues saving time and staff. The great networking with governmental bureaus and customer organizations is one more advantage. Based on the latter the PEO can provide the same packages as a big company can enjoy and directly gives the opportunity to small and medium size companies to become more competitive in the market.
For all the above reasons the employee leasing/labor dispatch model is more attractive to foreign SMEs in China. In case a large company intends to expand its business setting up offices or branches can also use these services. Labor dispatch structure is suitable for any type of industries such as business and management consulting services. All in all, whoever does not have a legal entity and wants to focus on the main subject of his business without being distracted by the administrative processes in China could use the PEO services.
Undoubtedly, Talent Spot companies offer the best employment solution for entrepreneurs who are hesitating to enter the Chinese market and hiring the local employees because they cannot accomplish the establishment and maintenance of a workplace as well as following the relative laws and regulations.
How Talent Spot can be beneficial to your business
Talent Spot service can handle the complete employee benefits for your company in compliance with the local policies and also can take care of the visa for your company's expatriate employees. We can directly hire employees for a company not having a legal entity in China by our specialized Employee Leasing / Talent dispatching services.
