How to pay an engineer in China

Why this is harder than paying a contractor in Berlin

Inside the EU or between the UK and US, paying an overseas contractor is close to a solved problem: they invoice you, you pay the invoice, and your accountant records it. China is different for one structural reason — the renminbi is not freely convertible, and moving money across the border is a regulated activity rather than a banking formality.

In practice that means a payment into China is checked against what it is for. Banks ask for the contract, the invoice and sometimes tax documentation before releasing funds, and an individual receiving regular foreign payments can face questions about whether the income has been declared. None of this is exotic or improper — it is simply administration that neither you nor the engineer is set up to absorb, and it lands every single month.

The second problem is quieter and worse. If you pay an individual in China directly and regularly, and you direct their work, you are exposed to an argument that you have an employment relationship there. That question — whether your company has created a taxable presence, and whether the person is a contractor or a de facto employee — is decided by facts, not by what your contract calls them.

The three routes, and what each really costs

1. Pay the individual directly

Cheapest on paper and the most expensive in practice. You take on the cross-border payment mechanics, the currency conversion, the documentation each bank will want, and the classification risk above. You will also discover that the payment rail you chose in month one behaves differently in month seven, because the rules did not change but your volume did.

It can work for a single short engagement where the total value is small. It does not scale to a person you want on your team for two years.

2. An employer of record

An EOR employs the person locally on your behalf. It is the right answer when you want genuine employment — statutory benefits, local contributions, an employment contract under Chinese law — and it is the most administratively complete option.

What you pay for is that completeness. EOR pricing is typically a percentage of salary or a fixed monthly fee per head, and the trade is that you gain a local employer and lose some flexibility: notice periods, benefits and termination follow local employment law rather than a contractor arrangement. We compare the models in more detail in employer of record vs contracting through an agency.

3. Contract through an intermediary in your own country

This is how we do it, and the reason is narrow: it moves the border to the side of the transaction that can absorb it.

You contract with ProdReady Recruitment, a UK limited company. You receive one invoice, in sterling or dollars, on ordinary commercial terms — the same as any other supplier on your ledger. We hold the contract with the engineer and handle the payment into China, the currency, and the documentation that goes with it.

You need no Chinese entity, no foreign payroll, no local bank relationship and no monthly conversation about remittance paperwork. From your finance team's point of view, you have engaged a UK supplier.

What this does not solve

Being straightforward about the limits, because they matter more than the convenience:

• It is not employment. The engineer is contracted, not employed by you or by a local employer. If you specifically want the commitment and protections of local employment, an EOR is the better instrument.
• It does not decide your IP position. Payment and ownership are separate questions, and assignment has to work under the law governing the engineer's contract as well as yours — see who owns the IP.
• It does not answer export control. Whether you can grant this person access to your systems is a different question from whether you can pay them, and a stricter one. See export control when your AI engineer is in China.
• It is not tax advice. Your own position — deductibility, VAT treatment, whether anything is reportable — depends on your circumstances and belongs with your accountant. We can describe precisely what the arrangement is so they have something concrete to look at.

What to ask before you sign anything

Whichever route you take, these are the questions worth putting in writing:

• Who holds the contract with the engineer, and under which country's law?
• Who bears the currency risk between your invoice and their payment?
• What happens to the engineer's pay if your invoice is late?
• What notice applies on each side, and who can end the engagement?
• Where does the IP chain start and end? Ask to see the clauses, not a summary.
• If the arrangement ends, what happens to access, credentials and work in progress?

A provider who cannot answer those quickly is telling you something. The fourth and fifth are the ones most often glossed over, and they are the two that cause damage later rather than friction now.