Lao Cai has worked in labor dispatch in Dongguan for ten years. In the early days, his approach was to stick with a handful of large electronics factories — when peak season hit, one phone call would bring in a few hundred workers. In the last couple of years he has found that orders have gotten fragmented: at large factories, legal teams now watch the dispatch ratio closely, while mid-sized factories that say they need workers often turn out to want only a dozen or twenty, and insist on "piece-rate settlement, you don't manage the people." He realized that dispatch and outsourcing are two different businesses, with different customers and different ways of negotiating — the customer lists need to be built separately.
First, do the legal math: how many dispatched workers can one factory use at most
Article 4 of the Interim Provisions on Labor Dispatch (MOHRSS Order No. 22, effective March 1, 2014) states that the number of dispatched workers a host employer uses may not exceed 10% of its total workforce; total workforce is defined as the number of employees under labor contracts with the host employer plus the number of dispatched workers it uses.
If we treat a factory's insured headcount as an approximation of the number of employees it has under labor contracts, the compliant dispatch cap works out to roughly one-ninth of its insured headcount:
| Factory insured headcount | Compliant dispatch-worker cap (people) |
|---|---|
| 100 | 11 |
| 300 | 33 |
| 1,000 | 111 |
| 3,000 | 333 |
What this table means for sales: dispatch order volume naturally tracks factory size. A factory with just over 100 insured employees has a compliant dispatch demand of only about a dozen or so people. To land large orders, your list needs to focus on factories with 300 or 1,000+ insured employees.
Article 3 of the Interim Provisions on Labor Dispatch also restricts dispatch to "three-type" positions: temporary positions, which last no more than 6 months; auxiliary positions, which are non-core-business positions that support core-business positions; and substitute positions, positions where other workers can stand in for a host employer's own employees during a period when those employees cannot work due to off-the-job training, leave, and similar reasons. Peak-season manufacturing labor needs often fall neatly into the "no more than 6 months" temporary-position category.
Where's the list: 17,000 factories with 300+ insured employees
On Tianxia Gongchang, I selected 13 labor-intensive manufacturing industries: agricultural and food processing, food manufacturing, wine/beverages/tea, textiles, apparel, leather and footwear, furniture, cultural/educational/arts/sports and entertainment products (including toys), rubber and plastics, metal products, automotive, electrical machinery, and computers/communications/electronics. Active factories break down by insured headcount as follows:
| Insured headcount | Number of factories |
|---|---|
| 100–299 | 38,962 |
| 300–999 | 13,487 |
| 1,000+ | 3,991 |
Factories with 300+ insured employees total 17,478. By industry (a single factory may fall under more than one industry):
| Industry | Factories with 300+ insured employees |
|---|---|
| Computers, communications, and electronic equipment | 4,584 |
| Electrical machinery and equipment | 2,902 |
| Automotive and parts | 2,838 |
| Metal products | 2,401 |
| Rubber and plastic products | 1,878 |
| Textiles | 1,042 |
| Food manufacturing | 1,023 |
| Agricultural and food processing | 826 |
| Apparel | 584 |
| Furniture | 490 |
| Cultural, educational, arts, sports, and entertainment products | 486 |
| Leather and footwear | 455 |
| Wine, beverages, and tea | 444 |
By province: Guangdong 4,203, Jiangsu 2,611, Zhejiang 2,069, Shandong 1,170, Fujian 831, Anhui 748. By city, the top ten are Dongguan 1,011, Suzhou 959, Shenzhen 818, Shanghai 463, Ningbo 463, Foshan 407, Guangzhou 387, Chongqing 379, Wuxi 360, and Zhongshan 350, with Huizhou close behind at 347.
Dongguan, Suzhou, and Shenzhen together account for close to 2,800 factories — the three areas most worth cultivating deeply for dispatch business.
Insured headcount is only a floor
One thing to keep in mind when screening customers by insured headcount: it only counts people for whom the factory itself pays social insurance.
Article 58 of the Labor Contract Law states that a labor dispatch agency is an employing unit and must fulfill an employing unit's obligations toward workers. Dispatched workers' social insurance is paid by the dispatch agency, and outsourced workers' social insurance is paid by the contractor — neither shows up in the factory's own insured headcount. The more dispatched and outsourced workers a factory uses, the further its insured headcount falls below the number of people actually working on its shop floor.
There's another wrinkle: on Tianxia Gongchang, more than half of active factories in the apparel industry show zero or no recorded insured headcount. For a labor dispatch company, a factory with a low insured headcount doesn't necessarily mean low labor demand — asking "roughly how many people are on the shop floor right now" on the phone is more accurate than looking at the insured-headcount figure.
Labor demand follows orders: 84.7% carry the "export-capable" tag
Of the 17,478 factories with 300+ insured employees, 14,798 carry the "export-capable" tag on Tianxia Gongchang — 84.7%. Export-capable factories have order cycles that are more exposed to overseas customers' seasonality, tariffs, and exchange rates, and their labor demand rises and falls along with that.
Two labor-demand peaks that are documented in public reporting:
- Consumer electronics' second-half peak season: according to an August 2026 report by the Shanghai Securities News, August through December is the peak shipping period for the iPhone lineup each year and the industry's high season; the report cited recruitment agencies as saying hourly wages for production-line workers at Foxconn's Zhengzhou plant had risen to 28 yuan.
- Post-Spring-Festival return-to-work recruitment: according to 21st Century Business Herald, after Spring Festival 2026, as of March 8, localities across the country had held a cumulative 32,000 recruitment events, posted 23 million job openings, and transported 430,000 workers via dedicated vehicles, trains, and chartered flights.
For labor dispatch companies, this means two key windows: right now (late September) is squarely inside the electronics industry's peak season, when demand for stopgap dispatch labor is concentrated; before year-end is when you need to lock in post-Spring-Festival labor needs — wait until after the holiday to negotiate, and the workers will already have been taken by someone else.
Four things to nail down on the first call
- How many people are on the shop floor now, do they use dispatch or outsourcing, and roughly what proportion: if the proportion they quote is already close to 10%, this factory doesn't have much room left for dispatch, and outsourcing or recruitment services are what you should be pitching.
- Which months are peak season, and roughly how big is the shortfall: the peak months and the size of the shortfall determine when you need to have workers ready and how many.
- What positions are short-staffed: general labor, assembly, and packaging positions used during peak season can go through dispatch as temporary positions; long-term core-business positions cannot be filled with dispatch labor.
- Do they want to settle by headcount, or by piece rate/process: settling by headcount with the factory managing its own people is how dispatch works; settling by piece rate or process with you managing the people is how outsourcing works. The two types of contract carry completely different risks, so get this clear from the start.
If you do outsourcing, it has to hold up if checked as dispatch
Because dispatch is limited by ratio and position type, some factories turn to "business outsourcing" instead. Outsourcing itself is legal, but when it's outsourcing in name only — with workers actually managed and evaluated directly by the factory and settled by headcount — that's what the industry calls "sham outsourcing that is really dispatch."
From April 18 to July 31, 2025, the Ministry of Human Resources and Social Security and four other departments carried out a special campaign to clean up and rectify order in the human resources market. One of its priorities was to lawfully address unlicensed operation of labor dispatch, including "sham outsourcing that is really dispatch" carried out under the guise of human resources services, sharing, agency, cooperation, subcontracting, franchising, and similar arrangements.
Operating a labor dispatch business also has a threshold: Article 57 of the Labor Contract Law states that a company engaged in labor dispatch business must have registered capital of at least RMB 2 million and must apply for administrative licensing from the labor administrative department in accordance with the law.
For salespeople, staying on the right side of this line is itself a selling point: if you can help a factory keep its dispatch ratio within bounds and turn outsourcing into genuine results-based outsourcing, the factory's legal and HR teams will be willing to work with you for the long term.
A sequence you can run right away
- Pull the list first: screen by industry and insured headcount on Tianxia Gongchang — for example, Dongguan electronics, electrical equipment, complete vehicles and auto parts, metal products, and rubber/plastics factories with 100+ insured employees. You can pull this list directly.
- Split your approach by size: for factories with 300+ insured employees, lead with dispatch plus peak-season stopgap staffing; for factories with 100 to 300, lead with recruitment services and compliant business outsourcing.
- Route by city: cover Dongguan, Suzhou, and Shenzhen thoroughly first, then expand to Foshan, Ningbo, Huizhou, and Zhongshan.
- Time it to peak season: close electronics customers before July or August; get every customer's post-Spring-Festival labor needs locked in before year-end.
- Run the contract past legal first: spell out the dispatch ratio, position type, and settlement method clearly before quoting a price.
You can also just ask Tianxia Gongchang's AI something like "Suzhou electronics factories with 300+ insured employees," and it will break the conditions down into filters and list the factories.
How big is your customer pool, really
Take the customer list you already have, work out the dispatch cap for each factory based on its insured headcount, and add them up — that total is the compliant dispatch volume you can do across this batch of customers. If that number is smaller than your revenue target for the year, either expand your list to factories with 300+ insured employees or shift your business focus toward recruitment services and outsourcing. Doing this math is worth more than making a hundred extra phone calls.
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Published by the Tianxia Gongchang Research Institute. Data notes: factory counts are from Tianxia Gongchang, covering manufacturing factories with active status as of September 2026; statutory provisions are from the Interim Provisions on Labor Dispatch (MOHRSS Order No. 22) and the Labor Contract Law of the People's Republic of China; the special-campaign details are from a notice issued by the Ministry of Human Resources and Social Security and four other departments (2025); labor-seasonality data is from Shanghai Securities News (August 2026) and 21st Century Business Herald (March 2026). This article does not constitute legal advice; consult a qualified lawyer for specific labor arrangements.