I supposed your employee should engage some agent to assist you with the Visa application. It is a super lengthy process.

1. First you apply the Z-visa in Malaysia. Please take note that the Z-visa only valid for single entry, any prior multiple entry travel / business visa will be voided so with this Z-visa, you can only enter China once, until your work permit / residence permit is applied.
(Please take note that at this point, you need to have a medical report done in recognized hospital in China. Which means, prior to applying Z-visa, you should be in China once with business / travel visa, for the medical checkup)

2. After you enter China with the Z-visa, the agent should collect your passport & medical report and start to apply work permit. Normally they prefer to do it in big city, like Guang Zhou, Bei Jing, Shang Hai instead of smaller cities (at least this is what my agent told me). Small cities tend to be more strict with approval. Work permit for alien can take about 2 - 3 weeks.

3. After you obtained your work permit, you will get a small passport like book. You will need to go to some immigration office, have an interview with the officer there. This is for the application for residence permit. In case they ask you, just say you'll stay permanent at the address provided. Then, you submit your passport again for residence permit application.

4. After 7 - 10 days, you will get back your passport.

My work permit valid for 2 years and residence permit valid for 1 year. According to the rules, you are supposed to write in to them in case you change address in China to update on the residence permit or to cancel the residence permit if you leave China after completion of work. No worries, you don't have to do that. Just keep it with you and for the coming 1 year you can have multiple entry to China with the residence permit.

I am not sure if the process might vary at different place, but I think it will be more or less.

Good luck.