June 17, 2019

June 17, 2019

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New Policies and Practices for Hiring Expatriates in China

With more and more expatriates working in China, and some even applying for long-term residence permits, complicated applications procedures have been deemed an impediment to attracting more talented expatriates. In later 2015, for the purpose of facilitating the establishment of the “technology innovation center,” Shanghai issued several local policies encouraging more senior level expatriates to work in Shanghai. In March 2016, a similar set of local policies were issued in Beijing after those policies were successfully implemented in Shanghai. The following provides a brief overview of the new policies and practices for expatriates working in China.

Easier Procedures for Senior Level Expatriates to Apply for Working Permits

Generally, an expatriate must meet the following requirements to successfully acquire a working permit in China: (1) be between at 18 and 60 years old (60 years old is the general retirement age in China); (2) have working experience (in practice, at least two years of full time working experience is required); (3) have no criminal record; and (4) have received a job offer from a Chinese entity.

According to new local policies, if an expatriate is a “senior level expatriate,” the expatriate may apply for a work permit in China even if the expatriate is older than 60 years of age. Moreover, he or she may be issued a special “R visa” instead of a normal “Z visa” for working in China. Finally, the corresponding procedures for applying for a long-term residence permit in China will also be simplified for expatriates falling in this category.

As for the definition of “senior level expatriate,” the two policies provide several examples: (1) one who has received famous international awards or received national level awards from China; (2) a famous professor or scholar; (3) an individual who holds a senior level management position in headquarters of foreign-invested companies.

In addition, the “working experience” requirement has changed. Previously, newly graduated foreign students had no chance of acquiring a work permit in China. According to these two policies, those foreign students who received master’s degrees or above in China can now apply for a work permit in designated areas, such as the free trade zone of Shanghai and Zhong Guan Cun, a technology hub in Beijing that is known as the “China’s Silicon Valley”.

No Work Permit Is Required for Short-Term Work in China

Under the new policies, another change is that an expatriate may not be required to apply for a working permit in China if the total working period is within three months and the short-term work is in the following areas: (1) visiting a Chinese partner to complete certain technical, scientific research, management or guidance work; (2) conducting training in a sports agency in China; (3) shooting films and fashion shows; (4) engaging in foreign-related commercial performance; and (5) other circumstances identified by the department of human resources and social security.

Previously, an expatriate would go through “4-step” procedures for working in China legally: (1) (the employer) applies for a government approval for hiring expatriates; (2) the expatriate applies for work visa (Z visa) by submitting the government approval; (3) the expatriate applies for working permit from labor authority; and (4) the expatriate applies for residence permit with local police.

Now, if an expatriate conduct qualified “short-term work” in China according to the new policies the “working permit” in the third step is not required and the procedures are simplified to “3-step”. Furthermore, if the “short-term” work will be completed within one month, the “residence permit” in the fourth step mentioned above is also not required and the procedures could be further simplified to “2-step”.

Summary

In conclusion, in terms of the labor market, China is stepping into a complicated era. On the one hand, new technology developments and the integrated global economy make it necessary to further open its labor market to attract more talented expatriates. On the other hand, the transition of the Chinese economy also means change in the domestic labor market with a lot of efforts to be made in creating more job opportunities. The policies mentioned above are in their two-year pilot programs, which are only implemented in Beijing and Shanghai.  Nevertheless, the trend of more expatriates working in China and more regulations being implemented in this area can be anticipated.

May Lu contributed to this article.

© 2019 McDermott Will & Emery

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About this Author

Diane M. Morgenthaler, Corporate Tax Planning Attorney, Retirement Plans for Companies, McDermott Will Emery, Chicago Law Firm
Partner

Diane M. Morgenthaler focuses her practice on employee benefits and executive compensation. She represents clients in matters before the US Internal Revenue Service, the Department of Labor and the Pension Benefit Guaranty Corporation.

Diane serves as employee benefit counsel to Fortune 500 corporations and other global corporations, and represents both public and private clients. She regularly designs and implements a variety of employee benefit plans and programs. Diane has extensive experience in employee benefit issues involved in...

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Maureen O'Brien, McDermott Will Emery, qualified plan design Attorney, welfare Administration lawyer
Counsel

Maureen O'Brien is counsel in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office.  She focuses her practice on advising clients on a broad range of employee benefits matters, including qualified plan design, welfare plan design, employee benefit plan compliance issues, fiduciary matters, multiemployer pension plan issues and nonqualified deferred compensation plans.

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