Hire Contractors in China

Nearly half the workforce in China is self-employed, including independent contractors. This creates favorable conditions for any company to operate freely in the region. 

The labor laws allow you to hire independent contractors in China and save costs on HR overheads. 

This guide will give you the necessary knowledge and resources to hire, manage, and pay independent contractors in compliance with Chinese labor regulations. 

Since no mandated contractor law exists, we will also explore practical steps to help you hire contractors smoothly and comply with local regulations.

How to Hire Contractors in China

Below are the two major means of China contractor hiring:

• Hire contractors directly
• Hire contractors through AOR solutions 

Hire contractors directly

Follow these quick steps to hire independent contractors in China as independent workers without an intermediary:

• Shortlist qualified candidates from online job boards and social media sites like Weibo, Zhihu, Baidu Tieba, etc. 
• Develop a clear contract that details the scope of work, payment terms, confidentiality, and intellectual property rights.
• Ensure proper tax reporting and compliance with China's local regulations.
• Create a direct payment system that adheres to foreign exchange rules if the pay comes from outside China.

Hiring contractors through Skuad AOR

Skuad's Agent of Record (AOR) services can make the hiring process of independent contractors in China much easier. 

You can rely on Skuad’s contractor management software to support the following:

• Accurate worker onboarding and classification to avoid misclassification risks.
• Simplify payroll management and guarantee compliance with contractor tax China’s laws.

How to find contractors in China

You can use popular job boards and freelance platforms to start hiring independent contractors in China. Some popular platforms include Zhaopin, ZBJ, ZCool (for graphic designers), Vikecn, and K68. 

You may even work with recruitment agencies specializing in contractor outsourcing in China. Other approaches include tapping into your professional network and asking for referrals for qualified candidates. 

How to pay contractors in China

You can schedule contractor salaries in China per the contract's agreed-upon terms. Choose the payment option that best suits your project needs and risk tolerance:

• Direct Payments via bank transfers and digital wallets: Suitable for small, local projects where you can handle compliance independently.
• AOR Services: Suitable for highly complex projects, international contractors, or long-term engagements, offering a seamless, compliant, and scalable solution.

Additionally, if your contractors operate a business, you must be equipped to process VAT invoices. Fortunately, AOR services like Skuad can help. 

Hiring Contractors Directly vs Hiring Contractors via Skuad

This table compares the impact of directly hiring contractors and hiring via Skuad's AOR services in China. 

You can use this easy checklist to avoid misclassification of employees as independent contractors in China. 

Cost of Hiring Contractors in China

There is no minimum mandate for contractor salaries in China. However, you can set contractor payments per minimum employee wage standards set by local governments. 

From January 2025, the different minimum monthly wages ranged from RMB 1,650 in Lhasa, Tibet, to RMB 2,690/US$370 per month in Shanghai. 

The hourly minimum wages were also different; at RMB 26.4 per hour, the highest paid was in Beijing, while the lowest in Hainan was RMB 16.3 per hour.

How to Convert a Contractor into an Employee in China

It's crucial to convert a contractor to an employee when their responsibilities begin to mirror that of an employee to avoid misclassification penalties closely. Here's a step-by-step guide to the transition process in China:

1. Discuss openly their current responsibilities and how they can become full-time employees. 
2. Clearly outline the new job responsibilities, salary structure (including benefits and bonuses), and expected work hours. 
3. Provide a competitive salary and benefits package in line with local labor market standards.
4. A formal employment agreement outlining employment terms should be drawn up. Details such as job responsibilities, probation periods (if applicable), intellectual property ownership, termination terms, and confidentiality clauses should be included.
5. Set up payroll systems, adhere to local tax codes, and be prepared to give any necessary training. All requirements for administrative steps, such as employment registration and benefits, should also be completed.

Here, you need an Employer-of-Record (EOR) solution to convert contractors into full-time employees following local regulations and without establishing a legal entity in China. 

Challenges of hiring contractors in China

Hiring an independent contractor in China is guided by the country’s dynamic economy and complex legal system. It could sometimes lead to the following challenges:

1) Hiring contractors without a legal entity

• Chinese labor laws usually require companies to have a local legal presence to hire contractors in China. 
• Otherwise, managing contracts, tax filing, and compliance is difficult, exposing the business to legal non-compliance.
• Furthermore, local independent contractors in China may hesitate to work with foreign companies that lack a registered entity, fearing payment delays or unclear terms.

2) Misclassification of workers

• Contractors, including contingent contractors in China, are usually entitled to fewer rights than employees under Chinese labor law. 
• However, Chinese labor authorities can reclassify the contractors as employees under work conditions violations. 
• You will be liable for unpaid benefits, social insurance contributions, and penalties in such scenarios. You may have to transfer benefits retroactively, such as severance pay, overtime, and health insurance.
• Further, misclassification can damage reputations and cause legal problems, especially for multinational companies with operations in China. 

3) Intellectual Property (IP) risks 

• You must set internal policies aligning with China's cybersecurity and data protection laws, such as the Personal Information Protection Law (PIPL) when handling contractor information. 
• For instance, ownership clauses for deliverables for contractors in China must be clearly defined because disputes over intellectual property are common.
• Moreover, success in contractor engagements often depends on trust and long-term relationships, which may be difficult if you are unfamiliar with Chinese norms.

The best alternative for contractor management in China is to rely on third-party entities such as Professional Employer Organizations (PEOs) or Employer of Record (EOR) services.

Hire Contractors in China with Skuad

Skuad helps streamline hiring independent contractors in China. With our AOR contractor management software, we can simplify how you can hire, pay, and manage a workforce remotely. 

Using Skuad, you can easily access talents from 160+ countries. Whether expanding into new markets or scaling your team, Skuad provides the tools and expertise to help you manage your global contractors efficiently and compliantly so you can confidently focus on growing your business.

Book your demo to get started!

FAQs

Can I hire independent contractors in China?

Yes, you can hire independent contractors in China, but doing so requires a thorough understanding of the local labor laws and compliance requirements.

Can a foreign company hire independent contractors in China?

Yes, a foreign company can hire independent contractors in China. Foreign companies can rely on specialized AOR solutions like Skuad to hire contractors in China without establishing a local entity.

How does Skuad help hire and pay independent contractors in China?

Skuad offers agent-of-record solutions to hire and pay independent contractors in China. You can manage multiple contractors—track milestones, work hours, draft contract terms, and more—at once using AOR solutions like Skuad.

What is the difference between an employee and a contractor in China?

In China, the difference between employees and independent contractors is in legal status, benefits, and work arrangements.

Employees are bound by a formal contract with statutory benefits like social insurance, paid leave, and severance pay, while contractors work under a service agreement and receive no benefits. Employers control employees' work hours and methods, while contractors have more flexibility. Employers also employees employees' taxes and soe, whereas contractors pay for their own.

Misclassifying contractors as employees can cause them legal issues based on Chinese labor laws.

How do I pay an independent contractor in China?

You can pay an independent contractor in China using direct bank transfer or employ an AOR solution to manage payroll and tax obligations. If your 

Contractors operate a business, so you must be equipped to process VAT invoices.