China became the world’s largest economy in 2015. Since then China’s GDP has reportedly continued to grow at a rate of 6.9% each year. The booming economy has attracted a large number of investors from all over the world. A large number of multinationals have chosen to set up Wholly Foreign-Owned Enterprises (WFOE) in China.
While WFOEs give you complete ownership of your business and help you navigate many regulations with ease, setting up a WFOE in China is a complex and time-consuming process. In fact, the complexity of the process is what holds many investors back from pursuing their growth objectives here. Most WFOE’s choose to contract PEO services to help them navigate through the strict Chinese employment and immigration laws.
What Does PEO Stand For?
PEO is an acronym for a Professional Employment Organization. PEO’s assist small and medium-sized enterprises in China including the WFOEs by providing HR solutions such as;
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payroll processing solutions
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hire staff members
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visa processing
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expense management
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employee benefits and workers’ compensation
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employee dispatch services
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social insurance
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tax compliance and submission
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office rental
The PEO also takes care of legal formalities on behalf of the foreign company. This makes it easier for the company to operate its business and establish a strong presence in the Chinese market. PEOs are licensed and fully registered to carry out the various legal activities under Chinese law.
Benefits of Contracting A PEO:
PEOs have experience and market reach to deal with various administrative issues that a newly established foreign company is unlikely to possess.
Here are a few essential advantages PEOs offer newly formed WFOEs:
Local Experts
PEOs are more aware of the ever-changing rules and labor laws in the Chinese economy. They are experts of the local market issues and can help with most administrative problems.
More time for business strategy
PEOs offer quality professional and efficient HR services and take over the mundane and time-consuming tasks such as payroll, and employee recruitment and benefits. This frees up more time for the owners to focus on establishing a better reputation for their company in the local Chinese market through a well-designed business strategy.
Tax-exemptions
The structure defined by a PEO is non-taxable which means WFOEs will have to pay fewer taxes if they outsource the HR to a licensed PEO.
Shared Liability
PEO services offer less liability to the company in case direct employment is not feasible or desires. The PEO and the company clients share the responsibility in case of risk of elimination under Chinese regulations and laws.
To learn more about the cost and process of hiring a PEO for your company in China, get in touch with
Business China today at +86-020-2917 9715. We offer expert legal advice for WFOE registration and representative offices for foreign businesses in the Chinese market.
