Cost of Hiring Through an EOR: Mexico Compared to China
For global companies, expanding into new markets often comes down to one crucial question: how much does it cost to hire employees? Both Mexico and China are attractive destinations for international expansion, offering large talent pools and strategic advantages for manufacturing, logistics, and technology.
However, labor costs, taxes, and compliance obligations vary widely between the two countries. Partnering with an Employer of Record (EOR) allows companies to hire legally while simplifying payroll and compliance, but the total cost of hiring still depends on local laws.
This article compares the cost of hiring through an EOR in Mexico vs. China to help businesses plan their global workforce strategy.
Cost Components of Hiring Through an EOR
When hiring employees, companies must account for more than just salaries. The total cost includes:
Base salary (depends on industry and role).
Employer contributions (social security, housing, insurance, retirement).
Mandatory benefits (vacation, holiday pay, profit sharing in Mexico).
EOR service fees (administration, compliance, and payroll support).
Hiring Costs in Mexico
In Mexico, employer contributions and benefits typically add 15–25% on top of base salary.
Key cost drivers include:
Social Security (IMSS): Covers healthcare, disability, and work-related risks.
Housing Fund (INFONAVIT): 5% of employee wages.
Retirement Savings (SAR): ~2%.
Profit Sharing (PTU): 10% of taxable profits must be distributed annually.
Mandatory bonuses: At least 15 days of salary as a Christmas bonus (aguinaldo).
📌 Example: For an employee earning $20,000 MXN/month (~$1,200 USD), the total cost with contributions and benefits could reach $24,000–$25,000 MXN/month (~$1,450 USD).
Hiring Costs in China
In China, employer contributions are generally 30–40% of an employee’s salary, though exact rates vary by city.
Key cost drivers include:
Five Insurances: Pension, medical, unemployment, work injury, and maternity.
Housing Fund: Between 5–12% of salary (sometimes higher in major cities like Shanghai or Beijing).
Paid leave and benefits: Annual leave increases with seniority, plus public holidays.
Mandatory severance: One month’s salary per year of service upon termination.
📌 Example: For an employee earning 15,000 RMB/month (~$2,000 USD), the total cost with contributions could reach 20,000–21,000 RMB/month (~$2,700–$2,800 USD).
EOR Service Fees
EOR providers charge additional fees for managing payroll, compliance, and HR functions. These fees are usually:
Mexico: $500–$800 USD per employee per month (depending on services).
China: $700–$1,000 USD per employee per month (higher due to administrative complexity).
Factor | Mexico | China |
|---|---|---|
| Employer Contributions | 15–25% of salary | 30–40% of salary |
| Profit Sharing (PTU) | Yes – 10% of company’s profits | No |
| Housing Fund | 5% | 5–12% |
| EOR Service Fees | $500–$800 USD per employee | $700–$1,000 USD per employee |
| Total Cost (mid-level role) | ~$1,450 USD/month | ~$2,800 USD/month |
📌 Key Insight: Hiring through an EOR in Mexico is generally more cost-effective than in China, especially for mid-level roles in manufacturing, tech, and logistics.
Mexico vs. China: Cost Comparison
Factor | Mexico | China |
|---|---|---|
| Employer Contributions | 15–25% of salary | 30–40% of salary |
| Profit Sharing (PTU) | Yes – 10% of company’s profits | No |
| Housing Fund | 5% | 5–12% |
| EOR Service Fees | $500–$800 USD per employee | $700–$1,000 USD per employee |
| Total Cost (mid-level role) | ~$1,450 USD/month | ~$2,800 USD/month |
📌 Key Insight: Hiring through an EOR in Mexico is generally more cost-effective than in China, especially for mid-level roles in manufacturing, tech, and logistics.
Strategic Implications for Employers
Mexico: Lower overall hiring costs and nearshoring advantages make it an ideal option for U.S. and European companies.
China: Despite higher costs, China remains attractive for companies seeking access to large-scale manufacturing and domestic markets.
EOR Benefit: By managing compliance, payroll, and tax, EOR providers allow companies to focus on strategic decision-making rather than administrative complexity.
Conclusion
The cost of hiring through an EOR differs significantly between Mexico and China. While China requires higher employer contributions and EOR service fees, Mexico introduces unique costs like profit sharing (PTU).
For most businesses, Mexico offers a more affordable and flexible option for expansion, especially in industries tied to North American supply chains. An EOR partner ensures compliance in both markets, enabling companies to scale confidently without worrying about hidden costs.
