The explosion of global commerce in the People’s Republic of China (PRC) is leading more and more U.S. companieslarge and smallto increase their presence in China and consider sending U.S.-based employees there to work with affiliated companies, such as a wholly owned foreign enterprise or joint venture. These assignments may be long- or short-term, but longer term assignments present especially acute immigration and employment law challenges.
Options for Structuring the Assignment
There are a number of options available for a U.S. company to structure the assignment of U.S. employees to work in China. The most common way is "expatriation," where the employee remains employed by the U.S. entity while assigned to provide services temporarily to the affiliated company in China. In this case, there is usually no employment agreement entered into between the expatriate employee and the affiliated company in China. The expatriate employee stays on the payroll of the U.S. entity, but the actual payments may be made directly by the Chinese affiliate or the U.S. entity, depending on the circumstances of the expatriation and the relevant tax and employment risks.
