Oct. 12 – Many foreign-invested companies and representative offices in China have a contract in place with a FESCO (Foreign Enterprise Service Company) for labor dispatch, payroll and/or additional services for Chinese employees.
Many foreign investors assume that FESCO is a single organization, but in fact it is a generic term used by dozens of local HR companies around the country. There are often multiple competing “FESCO” organizations in each city, some subsidiaries or affiliates of companies in another part of the country, some partially state-owned and some 100 percent privately-owned.
The English term “FESCO” is a generic one, indicating nothing more than the type of service provided by the company. Because of the widely-held misconception that FESCO is one company, the “brand” is a powerful marketing tool, and the term is often casually used to refer to companies providing similar services.
“It is important that foreign investors realize that FESCO is not a single organization. Many general managers operate under the misconception that their organization (especially if it is a representative office) has no negotiating power with FESCOs, and simply accept the quoted price without question,” says Adam Livermore, Regional Manager, Dezan Shira & Associates, Dalian Office.
Some FESCOs also carry out services such as executive search work (headhunting) on behalf of their clients, which could create a conflict of interest between payroll clients (who supply confidential personal and salary information) and headhunting clients (for whom the knowledge of such confidential data is valuable).
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