How to Hire in Shanghai Easily in 2025

Why Hire in Shanghai? The Benefits of Hiring in Shanghai

• Global Business Hub – Shanghai is home to China’s largest stock exchange and hosts the Asian or global headquarters of many multinational corporations as well as numerous key trade exhibitions.
• Large Pool of Skilled and Unskilled Talent – As the home to numerous prestigious universities such as Fudan University and Shanghai Jiao Tong University, Shanghai produces top-tier talent in finance, engineering, IT, and biotechnology. At the same time, with one of the world’s biggest metropolitan populations, the city provides a huge supply of unskilled or entry-level workers.
• Strategic Location – As a major international port and logistics center, Shanghai provides excellent access to both domestic and global markets. The city is well-developed for global business, offering strong local infrastructure and connections to the rest of China, Asia, and the Pacific.
• Government Support for Innovation – The city offers numerous incentives and options for foreign investment in high-tech industries, R&D, and financial services.
• Advanced Infrastructure – With world-class transportation, telecommunications, and business facilities, including office and coworking spaces in Shanghai, the city is a prime destination for foreign businesses looking to take advantage not only of the local market but also set up regional hubs.

Legal Requirements for Hiring Employees in Shanghai

Foreign companies hiring in Shanghai must comply with Chinese labor laws around employment and management to avoid legal complications. Due to the high level of complexity, local language requirements, and general uncertainty around procedures, many businesses partner with local experts or Employers of Record (EORs) in Shanghai to manage payroll and ensure full compliance. For a more detailed look at Chinese labor laws, consider our guides to labor law in China and elsewhere.

Employment Contracts – Mandatory Written Agreements

All employment contracts must be in writing and made in Chinese. If a bilingual contract is used, the Chinese version prevails in legal disputes.

Failing to provide a written contract can result in penalties, including mandatory compensation or default permanent employment status for the employee.

Taxation and Social Security Contributions in Shanghai

Corporate Tax – Foreign companies operating in Shanghai must pay a 25% corporate income tax (with lower rates in certain industries like those involving high-tech)

Individual Income Tax – Employees (both resident and nonresident) pay progressive income tax ranging from 3% to 45% based on earnings.

Mandatory Benefits (Social Insurance and Housing Fund Contributions)

Shanghai follows China’s national 5+1 Social Insurance System, with some locally specific contribution rates as follows:

• Pension Insurance – Employer: 16%, Employee: 8%
• Medical and Maternity Insurance – Employer: 9%, Employee: 2%
• Unemployment Insurance – Employer: 0.5%, Employee: 0.5%
• Work Injury Insurance – Employer: 0.16%-1.52% (varies by industry risk)
• Housing Fund – Employer and Employee: 5%-7%

It’s important to note that Shanghai’s contribution rates are higher than most other Chinese cities due to higher costs of living and earning potential. This may increase labor costs but also ensures better satisfaction and benefits for employees as the higher amount benefits employees in Shanghai in numerous ways.

Work Permits for Foreign Employees

Companies looking to hire foreign nationals in Shanghai must obtain a work visa (Z visa) as well as a work permit before being able to legally work in the city. Employers must sponsor the visa and provide proof that the role cannot be filled by a local hire.

A residence permit application must also be submitted within 30 days of arrival, with the employee’s continued residence being dependent on success.

Shanghai Hukou Considerations for Local Employees

China’s Hukou system regulates internal migration, affecting employment eligibility and employment benefits for non-Shanghainese residents. In order to counter the disadvantages posed to non-Shanghainese workers moving to Shanghai, companies hiring talent from other provinces may need to offer additional incentives.

Recruitment Strategies in Shanghai

• Online Job Portals – 51Job and Zhaopin are popular local recruitment platforms offering specific pages for Shanghai.
• University Partnerships – Many companies recruit from top institutions like Fudan University, which has business connection services.
• Recruitment Agencies – Using headhunters helps with hiring specialized professionals or reducing the delays and hassles of local hiring practices.

Hiring Skilled Workers vs. Entry-Level Talent in Shanghai

Shanghai presents unique challenges and opportunities for hiring across different experience levels thanks to its large population and internal administrative procedures. Employers must tailor their recruitment and retention strategies in Shanghai to attract both highly skilled professionals and entry-level talent in a competitive job market.

Shanghai is home to some of China’s most experienced professionals in finance, technology, and engineering thanks to its position as a magnet for local and global talent as well as the constant production of skilled graduates. However, competition for skilled workers is fierce, and salary expectations are higher than the national average, requiring employers in Shanghai to offer compelling incentives.

3 Key Points Regarding Competitive Salaries and Benefits

• Salaries – Shanghai has one of the highest salary levels in China. In the financial sector, investment analysts can earn ¥300,000–¥800,000 per year ($42,000–$110,000 USD), while experienced IT engineers often make ¥400,000–¥900,000 per year ($56,000–$125,000 USD).
• Benefits – Besides mandatory social insurance contributions, skilled workers expect private health insurance and, potentially, stock options. Additionally, most professionals in Shanghai expect annual bonuses equivalent to at least one month’s salary at Chinese New Year.
• Housing Allowances – With Shanghai’s high cost of living, companies frequently provide rental subsidies, particularly for expatriates or relocated professionals.

Career Growth and Professional Development

In recent years, skilled employees have prioritized job stability and advancement opportunities in Shanghai. Therefore, companies that provide structured promotion pathways and leadership training see higher retention rates regardless of economic trends.

In particular, as a global business hub, Chinese employees are likely to see Shanghai as offering more international business opportunities than any other Chinese city. Companies that provide overseas training, regional transfers, or international project collaboration attract top-tier talent in Shanghai, especially among those who are globally minded.

Talent Acquisition Challenges

With major global firms like JPMorgan, Tesla, and Alibaba competing for local professionals, Shanghai often experiences talent shortages and high competition in fields such as fintech, AI, and biomedical engineering.

Additionally, skilled workers, knowing their increased value, will often demand flexible work arrangements (e.g., hybrid or remote work). These are less common in traditional Chinese business culture but continuous to be a factor in Shanghai work environments.

Although Shanghai’s business-friendly policies are aimed at streamlining the application for work permits, foreign professionals in highly regulated sectors like finance may face additional licensing requirements, extending hiring timelines and increasing the risks of mistakes.

Hiring Entry-Level Talent in Shanghai

Shanghai produces thousands of highly educated graduates annually, making it an attractive market for companies looking to hire junior employees. Similarly, the city acts as a hub for young migrants from around China. However, businesses looking to make the most of these avenues of entry-level employees in Shanghai must navigate high turnover rates and skill gaps to build a stable workforce.

Shanghai’s Young Talent Pipeline

Each year, Shanghai’s top institutions—such as Fudan University, Shanghai Jiao Tong University, and East China Normal University—produce over 150,000 graduates in finance, technology, and engineering.

The city also has strong vocational programs thanks to the vast number of other higher education facilities. Graduates from these programs often enter skilled technician roles in industries like automotive and electronics but may accept other roles in more in-demand fields or prestigious companies.

Importantly, due to Shanghai’s international business presence, a higher percentage of graduates (some estimates place English fluency between 20-30% of the population, well above the national average) are proficient in English compared to other Chinese cities.

Recruitment Strategies for Entry-Level Workers

Many global companies have formed successful partnerships with local universities in order to secure talent early. Companies like PwC, Huawei, and ByteDance often recruit interns a year before graduation, offering structured internship-to-full-time career pathways.

Platforms like Zhaopin, 51Job, and Boss Zhipin are widely used for entry-level hiring, alongside professional networking sites like Maimai (China’s LinkedIn equivalent). These sites often include Shanghai-specific pages but typically require a strong knowledge of Chinese to navigate successfully.

Addressing High Turnover Rates

Entry-level employees in Shanghai are known to switch jobs frequently, especially within the first 6-12 months. Studies show many in Shanghai change jobs within their first year due to salary dissatisfaction or limited career growth.

Complicating the matter, the average salary for fresh graduates in Shanghai is ¥8,000–¥12,000 per month ($1,100–$1,700 USD), which is already much higher than in many other Chinese cities. As a result, companies must be able to offer at least market-rate compensation to retain young employees.

Cultural and Language Considerations

Mandarin is the official language of China and Shanghai. The local dialect, Shanghainese, is widely spoken amongst those with roots in the city and is largely mutually unintelligible with Mandarin. While all Shanghainese speakers will speak Mandarin, this division can sometimes cause issues in workplace environments that heavily favor one or the other as a day-to-day language. However, while English proficiency varies it is generally considered to be better than in other Chinese cities.

Business environments tend to be hierarchical in Shanghai, as in all of China, and Guanxi (personal connections) plays a crucial role in both career advancement and partnership forming.

Shanghai’s Key Industry for Hiring Companies

Shanghai, as China’s largest commercial hub, plays a critical role in the global economy. The city’s diverse industries are driven by strong government policies, foreign investment, and technological advancements. While traditional sectors like finance and manufacturing remain dominant, emerging industries such as artificial intelligence (AI) and biotechnology are gaining momentum on both the national and global scales.

Finance & Banking

Shanghai is widely regarded as China’s financial capital, home to the Shanghai Stock Exchange (SSE)—one of the world’s largest stock markets by total market capitalization. The city also hosts the Chinese headquarters of major state-owned banks, investment firms, and private equity funds, both local and foreign.

Often compared to New York’s Wall Street or London’s Canary Wharf, the Lujiazui Financial District of Shanghai is home to global banks such as JPMorgan Chase, HSBC, Citibank, and UBS, alongside Chinese financial giants like ICBC and Bank of China.

The Shanghai Free Trade Zone (SFTZ), originally found North-East of the city and now expanded to incorporate several key central districts, allows foreign financial firms to expand operations with fewer restrictions, boosting investment in wealth management, insurance, and fintech.

The internationalization of the RMB (Chinese Yuan) also continues to strengthen Shanghai’s role as a global financial hub. Government-backed financial reforms to support the Yuan are expected to attract more foreign investors and expand Shanghai’s role in global capital markets in the years to come.

Technology & Artificial Intelligence (AI)

Shanghai is rapidly emerging as one of China’s AI and technology innovation centers along with Guangzhou and Shenzhen, with strong support from government policies such as the “Shanghai AI Development Plan” and the “Made in China 2025” initiative.

The Shanghai AI Pilot Zone, launched in 2019, has attracted over 1,000 AI firms to city city already, including global leaders like Microsoft, Amazon Web Services (AWS), and Tesla, alongside Chinese tech giants such as Huawei and Baidu. Shanghai’s AI industry is projected to exceed $50 billion USD in 2025, making it one of China’s fastest-growing tech sectors.

The city also has over 80,000 5G base stations, supporting the expansion of autonomous driving, smart cities, and IoT (Internet of Things) applications.

Furthermore, the rise of deep-tech startups, supported by incubators like the Zhangjiang Hi-Tech Park, makes Shanghai a major R&D center for AI, biotech, and quantum computing.

E-Commerce & Retail

Shanghai is home to China’s largest e-commerce companies, serving as a major logistics and innovation hub for online retail. In particular, Alibaba, JD.com, and Pinduoduo—China’s top three e-commerce giants—have regional offices and R&D centers in Shanghai.

Local live-streaming e-commerce is booming in the city, with influencers and brands driving billions in sales on platforms like Taobao Live and Douyin (TikTok China).

Cross-border e-commerce is also expanding, with Shanghai’s Free Trade Zone allowing easier import/export of luxury goods and international brands. As a result, luxury brands are continually increasing their presence, with companies like Louis Vuitton, Gucci, and Chanel launching Shanghai-based digital marketing campaigns.

Biotech & Pharmaceuticals

Shanghai has established itself as a leading global center for biomedical research, pharmaceuticals, and healthcare innovation, in part thanks to the notability of local academic institutions like Fudan’s Medical University.

The city’s Zhangjiang Biotech Valley, often called “China’s Silicon Valley for Biotech,” houses over 1,500 biotech firms, including global pharmaceutical firms such as Pfizer, Roche, AstraZeneca, and Novartis.

China’s biotech market is expected to reach $150 billion USD in 2025, with Shanghai accounting for a significant share. To support this goal, the Shanghai Biomedicine Industry Plan offers specific grants, tax incentives, and funding for biotech startups and international firms.

Manufacturing & Logistics

While traditional manufacturing is largely shifting to inland China, Shanghai remains a leader in high-tech manufacturing, automotive production, and global logistics thanks to its mix of strong R&D and its coastal location.

Tesla’s Gigafactory in Shanghai is the company’s largest production site outside the U.S., producing over 900,000 electric vehicles (EVs) annually. Shanghai is also a major player in China’s efforts to build a self-sufficient chip industry, with companies like SMIC (Semiconductor Manufacturing International Corporation) leading local production.

In terms of logistics, Shanghai is home to the world’s busiest container port, making it a vital gateway for global trade.

Employee Compensation in Shanghai

Salaries in Shanghai are among the highest in China, being second only to those found in Beijing (often lower by about 5-10%). However, salaries in finance and trade are typically highest in Shanghai, reflecting the city’s economic prominence in these fields. Similarly, although salaries are high, the cost of living (especially housing) is also the highest, which may reduce actual purchasing power compared to cities like Shenzhen and Guangzhou.

Competitive Salary Trends in Key Industries

• Tech & IT – ¥350,000 – ¥800,000 per year
• Finance & Investment – Investment managers: ¥500,000+ per year
• Manufacturing Jobs – Entry-level workers: ¥60,000+ per year
• Retail & E-commerce – Salaries vary widely from ¥100,000 – ¥300,000 per year

Most Common Additional Employee Benefits in Shanghai

• Health Insurance – Many companies offer private healthcare coverage to take advantage of the city’s multiple international hospitals.
• Housing Allowances – Due to high housing costs, housing stipends are common at various levels of the corporate ladder.
• Transportation Benefits – Many companies offer commuter subsidies or company shuttles.

Common Hiring Challenges in Shanghai

• Strict Labor Laws – Employee protections make termination costly.
• High Cost of Talent – The competitive local job market and high cost of living requires strong compensation packages.
• Visa Processing Delays – Foreign work permits require extensive documentation when hiring or transferring employees to Shanghai.

Alternative Hiring Solutions for Foreign Companies

Hiring Independent Contractors in Shanghai

While hiring independent contractors in Shanghai may seem appealing, misclassification risks can lead to penalties and Chinese labor law makes using independent contractors particularly difficult due to the preference many contractors have for black or gray market activity.

If a contractor is found to be operating without a license or operating as an employee, companies may face fines and backdated social security contributions due to the general assumption that working relationships constitute employment according to Chinese labor law.

Setting Up a Legal Entity vs. Using an Employer of Record (EOR)

 Establishing a local entity requires company registration, tax compliance, and HR management. It’s often thought of as the first solution for companies considering expansion to Shanghai or any other market. However, An EOR (Employer of Record) in Shanghai offers a faster, cost-effective hiring solution by handling legal compliance and payroll.

EORs – The Fastest Way to Hire in Shanghai

Navigating Shanghai’s labor market can be complex. An Employer of Record (EOR) service simplifies the process by acting as the local legal employer of your Shanghai-based employees. The EOR manages every element of HR, including payroll and contract management, on your behalf, reducing overheads and streamlining local administrative procedures thanks to industry expertise and experience.

INS Global is a truly local EOR solutions provider, uniquely placed to offer industry-leading services in Shanghai since being founded there in 2006.

Contact INS Global today to learn more about local requirements and the benefits of using an EOR in Shanghai.