Last Updated: September 15, 2026 | Reviewed by Out2China Quick Answer Foreign companies can work with indepe...
By Janey Fan (范军) — International Payroll & Tax Specialist (国际薪税师), Out2China Written and reviewed by Janey Fan (范军), International Payroll & Tax Specialist, CHRO Certificate EOR is generally the service to examine when an overseas company does not yet have a Chinese entity that can employ the intended team. A named Chinese entity enters into the employment documentation and administers the employer-side processes set out in the contracts. PEO, as Out2China uses the term, is managed HR for a company that already employs staff through its own Chinese entity. The client's entity remains the employing unit named in the labour contract, while the provider manages agreed payroll, employee administration, employee relations and HR compliance work. PTM covers a narrower, transaction-led need. Labour dispatch is different again because it is a regulated form of employment with its own permit and role conditions. If you are already comparing providers, review Out2China's China EOR and PEO services after using the table below to identify the service category that fits your current structure. An EOR vs PEO comparison in China should start with one document: the labour contract. If the provider signs it through a Chinese entity, you are examining an EOR arrangement. If your own Chinese entity signs it and the provider manages HR operations around that employment relationship, you are usually looking at PEO or another form of HR outsourcing. The distinction is straightforward, although providers do not use the term PEO consistently. It commonly refers to managed HR services, but some providers also use it for EOR or labour dispatch. EOR and PEO are service names, not two statutory categories defined as such in Chinese employment law. Contracts, registrations, licences and the actual working arrangement determine what the service is doing. For a buyer, the first decision is therefore not which acronym sounds more familiar. It is whether the company already has a Chinese employing entity, how much HR responsibility it wants to outsource, and whether labour dispatch is part of the proposed structure. The useful starting question is: which entity will appear as the employing unit in the labour contract? The answer separates EOR and labour dispatch from services delivered under the client's own entity. The depth of support then separates PTM from PEO. PTM stands for HR Transactions / Payroll & Tax Administration. It is designed for companies that want a provider to run defined transactions, such as payroll calculations, filings and routine employee administration, while the client's team continues to own broader HR management. In plain language: PTM processes HR transactions, PEO manages HR operations, and EOR provides the local employer. Labour dispatch should be assessed on its own terms. This is a purchasing map, not a legal conclusion about a particular engagement. The service agreement, labour contract, actual work arrangements, employee location and relevant licence or filing still need to be reviewed together. In China, PEO is more often a market service name than a separate statutory employment model. A US PEO is commonly built around a co-employment arrangement. In the China market, PEO often describes an ongoing service for a company that already has a Chinese employing entity and wants a professional provider to manage payroll, social insurance, individual income tax, HR administration, employee relations and HR compliance. The company's own Chinese entity remains the employing unit in the labour contract. Some providers also use PEO to describe EOR or labour dispatch. That is why the name alone cannot settle the comparison. Buyers should check the labour contract, services agreement and actual employment arrangement before deciding what structure has been proposed. For companies with an established entity, the practical difference between PTM and PEO is the depth of support. PTM is appropriate when the company mainly needs recurring transactions completed accurately and on schedule. PEO fits when it also wants the provider to coordinate the wider employment-administration cycle, handle employee questions, maintain HR documentation and support ongoing HR management. The client's entity remains the employer in both cases. Outsourcing the work does not change the name on the labour contract. EOR becomes relevant when a company wants to hire in mainland China but does not yet have a Chinese entity that can employ the intended team. The provider proposes a named local entity to enter into the employment documentation and run the agreed payroll and employment processes. Before accepting that description, ask for the full Chinese name and Unified Social Credit Code of the proposed employing entity. Compare the labour contract with the services agreement. Both documents should give consistent answers about payroll, social insurance, day-to-day coordination, employee communications and the process for changes or exits. The city matters as well. Social insurance and housing fund administration can vary by location and employee circumstances. A broad statement that a provider can cover China is not a substitute for an employee-level onboarding plan. An EOR can also be a bridge while a company tests demand or prepares its own entity. It is not automatically the best permanent structure for every team. Companies planning a substantial local operation should also compare EOR with establishing a WFOE and understand how employees could later move to the new entity. Chinese employment obligations attach to the employing unit and are assessed through both documentation and the facts of the working relationship. The Labour Contract Law requires a written labour contract when an employment relationship is established. The Social Insurance Law places registration and contribution duties on the employing unit. The Supreme People's Court's Interpretation (II) on labour disputes also addresses specified disputes involving affiliated entities that alternately or simultaneously use a worker. Courts may examine work management, remuneration, social insurance and other facts rather than relying only on the heading of a commercial agreement. This is why a services proposal cannot answer the whole question. A buyer needs to see who signs the labour contract, which entity is used for statutory registrations, and whether the way the employee will actually work matches the documents. Labour dispatch is not another translation of EOR or PEO. The dispatch agency is the employing unit and must hold the required labour dispatch permit. The Interim Provisions on Labour Dispatch describe dispatch as a supplementary form of employment and set rules concerning temporary, auxiliary or substitute positions and the proportion of dispatched workers used by a receiving unit. If a provider proposes labour dispatch, ask it to identify the structure in writing. Review the permit, the role, the receiving unit and the relevant headcount. A long-term core role should not be moved into a dispatch arrangement merely because the proposal uses the commercial label EOR or PEO. Out2China can support more than one service structure, but the structures should not be blended in the contract or described as interchangeable. The correct route depends on the facts of the engagement and should be reviewed before the employee starts work. The following checks reveal more than a generic feature table: The exit question deserves a direct answer before contracting. A commercial decision to remove a position does not itself establish the legal basis for terminating an employment contract. The employing unit should review the proposed route, documentation, cost and unresolved risk before action is taken. Out2China uses PTM for defined HR and payroll transactions, PEO for continuing managed HR under the client's Chinese entity, and EOR for an arrangement in which Out2China's named Chinese entity enters into the employment documentation. If labour dispatch is proposed, it is documented and reviewed as labour dispatch. A Human Resources Service Licence reflects the authorised scope of the relevant HR services. It is not the same as a Labour Dispatch Operation Permit, and it does not mean that every arrangement marketed as EOR automatically complies with Chinese employment rules. Our current service materials identify Xin Ling Hang (Shenzhen) Management Consulting Co., Ltd. and Human Resources Service Licence No. (粤)人服证字〔2026〕第0304004823号. The same entity holds Labour Dispatch Operation Permit No. 440304000260041, valid from 4 August 2026 to 3 August 2029 and issued by the Human Resources Bureau of Futian District, Shenzhen. The licence and permit show the documented service permissions held by the named entity. The proposed role, city, contracts and actual arrangement still need to be assessed for each engagement. Out2China's published EOR service fee is US$298 per employee per month, plus a one-time onboarding fee of US$298 per employee. Salary and statutory employer costs are additional. Use the published pricing and China employment cost calculator to compare total employer cost rather than the service fee alone. Companies that already have a Chinese employing entity can review Out2China's payroll, tax and managed HR support before deciding whether PTM or PEO is the better operational fit. Start with your entity status, then decide how much of the HR function you want a provider to run. Choose PTM when your Chinese entity and HR team are in place, but you want reliable processing of defined payroll, tax and employee-administration transactions. Choose PEO when the entity is in place but you want a provider to manage a wider part of the employment-administration cycle. Examine EOR when you do not yet have a Chinese employing entity. Assess labour dispatch separately whenever it is proposed, because its permit and role requirements are not the same as EOR or managed HR. The label on a proposal matters less than the entity, contract and operating process behind it. A provider should be able to show all three before asking you to sign. No. In Out2China's service framework, PEO is managed HR for a client that already has a Chinese employing entity. EOR uses a named provider entity to enter into the employment documentation when the client does not have an eligible local employer. Other providers may use the terms differently, so check the contracts and actual arrangement. The usual reason to examine EOR is that the overseas company does not yet have its own Chinese employing entity. The provider's proposed entity, the role, the city and the complete contract set should still be reviewed before onboarding. Yes. Once a company has a Chinese employing entity, it usually no longer needs EOR, but it may still need PEO or Managed HR services to manage payroll, individual income tax, social insurance and housing fund administration, HR administration, employee relations and HR compliance. The labour contract remains signed by the company's own Chinese entity. PEO is a market service name in this context; it does not mean that Chinese law provides the same co-employment legal structure as the US model. PTM focuses on defined HR, payroll and tax transactions. PEO provides broader, continuing management of HR administration and employee-support processes. In both models, the client's Chinese entity remains the employing unit in the labour contract. No. Labour dispatch is a regulated arrangement with a permit requirement and rules concerning roles and headcount. If a provider proposes dispatch, review it as dispatch rather than relying on an EOR or PEO label. The published service fee is US$298 per employee per month, plus a one-time onboarding fee of US$298 per employee. Salary, social insurance, housing fund and other statutory employer costs are additional and depend on the employee and location. The transition can be planned, but it is not an account-name change. The parties may need new employment documentation, a decision on service-length treatment, payroll cutover, employee consent where required, and changes to statutory registrations. Ask for the proposed process and cost before the initial engagement begins. Compare your China employment options Bring the intended hiring city, role, headcount, start date and current entity status. The team can then explain which service route to examine and which documents you should request.
EOR vs PEO in China: the short answer
Four service models, one starting question
Service What the provider does Typical starting point Employing unit in the labour contract PTM: HR Transactions / Payroll & Tax Administration Runs agreed HR, payroll and tax transactions The client has a Chinese entity and retains its own HR management The client's Chinese entity PEO: Managed HR / Employment Administration Manages ongoing HR administration, payroll, employee relations and agreed HR compliance work The client has a Chinese entity but wants continuing HR management support The client's Chinese entity EOR: Employer of Record Provides the named Chinese employing entity and administers the agreed employment processes The client does not yet have a Chinese entity that can employ the team Out2China's named Chinese entity Labour dispatch Employs and dispatches workers under a regulated dispatch arrangement Dispatch is specifically proposed and the role, headcount and structure have been reviewed The licensed dispatch agency What PEO means in China
When EOR is the better fit
Why the labour contract still matters
Labour dispatch is a separate, regulated arrangement
Seven checks before you choose a provider
How Out2China positions PTM, PEO and EOR
How to choose the right model
Frequently asked questions
Is a PEO the same as an EOR in China?
Do I need a Chinese entity to use an EOR?
If I already have a WFOE, do I still need a PEO?
What is the difference between PTM and PEO?
Is labour dispatch the same as EOR?
How much does Out2China EOR cost?
Can employees later move to our own Chinese entity?
Primary legal sources
Last Updated: September 15, 2026 | Reviewed by Out2China Quick Answer Foreign companies can work with indepe...
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