Nowadays with the CHINA opening wider to the world and providing more investment opportunities for foreign companies, more and more foreign invested companies tend to expand their business in China. Moreover according to the global recruiting trends in 2017，it turns out that the staffing agencies play more and more important role in China, which reveals Labor Dispatch will also be an approach to ease the company operating when the foreign companies set up the business in China. If you still confused about what is the Labor Dispatch and how it works, check out this article.

How Does Labor Dispatch in China Work?

A labor dispatch agreement in China is divided into three parts:

•The Client (A foreign company wanting to run a business in China)
•The Delegate (The Client’s representative sent to or recruited in China)
•The Consulting Company or Professional Employment Organization (PEO) which is the legal representative of the delegate in China, operating as the Client’s administrative subsidiary

While all employees are administratively managed by the PEO, the client company only has to focus on their work performance. The PEO therefore ensures the handling of all the dispatched employees’ labor market issues as well as any and all legislative challenges.

What Is Included in a Labor Dispatch Contract?

Labor dispatch, also known as an umbrella process, involves a large range of services being provided by the Professional Employment Organization (PEO) for your Consultant(s) in China, including:

•Legal Worker Registration in China

•Working Visa & Residential Permits for Foreign Employees

•Salary Sponsorship

•Tax Declaration & Optimization

•Expenses & Allowance Management

•Financial Reporting

•Recruitment & Headhunting (optional)

•Insurance (optional)

•Clients’ Payment in China (optional)

•Suppliers Invoicing (optional)

•Office Rental (optional)

The PEO is able to hire an unlimited number of employees in your place (while acquiring the necessary Chinese working licenses if they are foreigners). Among other services, it will pay the agreed upon salaries and insurance contributions (and/or maternity compensation) to your employees. The PEO can also help you rent an office space, necessary for many administrative procedures.

Depending on your business, it is possible to receive payments from your Chinese clients from within China and then pass it on to your company’s foreign account when desired. Similarly, the PEO can help you to directly invoice your suppliers and pay taxes on the profits generated by your business in China.

Advantages and Limitations

Talent spot one of the premium recruitment agencies in China can facilitate your HR solutions including the Labor Dispatch. In addition our HR solutions include temporary/permanent staffing, executive search, RPO, on-site managed recruitment, payroll services and so on, click Talent Spot to check out our staffing services.