Z and M Visa Issues: Seven Things to be Aware of When Employing Foreign Staff in China

By Nathan Wakelin-King

China’s work visa system is complex and fast-changing. For visa applicants and hiring companies alike, relevant legal information can be convoluted and difficult to find. Mistakes made can prove extremely costly in both time and money.  

This article will not go through all the processes involved when hiring a foreign national in China. Rather, it will run through some of the less well-known but potentially important considerations regarding hiring foreign staff in China.

1. Foreign Expert Certificates and Foreign Work Permits are different, and administered by different government offices

Foreign work permits (外国就业许可证) are granted by the labor bureau, whereas foreign expert certificates (外国专家证) are granted by the (separate) foreign experts affairs bureau.

When proving that a candidate has the minimum amount of work experience for a Z-Visa (2 years), we have observed instances where the company chop (official stamp) of the new employee’s previous company was acceptable at the Foreign Experts Affair Bureau, but not at the Labor Bureau.

2. Use of foreign students for unpaid internships is, in theory, restricted

Officially, if a company wishes to employ foreign interns, they must already be studying at a Chinese university under an X-1 (long term) student visa. The student must receive permission from their university, and then apply to the PSB Entry-Exit Administration for a notation on their residence certificate.

Anecdotal evidence shows that using an M visa to come to China specifically for an internship is possible, but unreliable: there is currently ambiguity in Chinese law as to whether an M –Visa for the purposes of an internship is strictly legal, as the legislation neither forbids nor expressly allows the visa being used for this purpose. If a company tries to use an M visa to bring in interns, it is highly advisable to avoid the word “internship” in the invitation letter. Rather, a more ambiguous phrasing should be used, such as “training” or “business”, or even not including any specifications at all.

There have been instances where firms have been monitored by authorities under suspicion of hiring foreign workers/interns without proper papers. Using foreign interns on X-visas without having them apply at their school and PSB is illegal but carries little risk, depending on the nature of the business. Using interns on an L-Visa (tourist visa) is considerably more risky, and both the host company and the intern could be fined if caught.

3. Some countries have bilateral social security agreements with China

This will affect the way social security (社保) is paid to the employee. Countries that have made such agreements so far with China are South Korea, Germany, Finland, Canada, Denmark, and Switzerland.

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4. Foreigners must have set time limits on their work contracts for them to work in China

The maximum contract length for a foreigner in China is a five year term.

5. It is illegal for foreigners to work in an area different to where they have registered

In theory, this potentially includes working concurrently in between two different areas of China.

6. When hiring Chinese staff for the HR component of your China office, make sure they are well versed in the different legal procedures for hiring foreigners in China

This will largely depend on which companies they have worked for previously. If you hire HR staff that have not worked with foreign staff before, make sure that employment regulations for foreigners is part of their induction training.

7. Conditions upon which companies can fire the employee can be negotiated and specified in a foreign employee’s contract

For Chinese workers, the law is less flexible and involves less negotiation between employee and employer.

Finally, it should be noted that the length of time involved in hiring foreign staff is not fixed – all in all, applications can take anywhere from four weeks to several months depending on the candidate and how well the application has been prepared. 

Human Resources and Payroll in China 2015
This edition of Human Resources and Payroll in China, updated for 2015, provides a firm understanding of China’s laws and regulations related to human resources and payroll management – essential information for foreign investors looking to establish or already running a foreign-invested entity in China, local managers, and HR professionals needing to explain complex points of China’s labor policies.

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In this issue of China Briefing, we have set out to produce a guide to employing foreign nationals in China, from the initial step of applying for work visas, to more advanced subjects such as determining IIT liability and optimizing employee income packages for tax efficiency. Lastly, recognizing that few foreigners immigrate to China on a permanent basis, we provide an overview of methods for remitting RMB abroad.

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In this issue of China Briefing Magazine, we look at the challenges posed to manufacturers amidst China’s rising labor costs and stricter environmental regulations. Manufacturing WFOEs in China should adapt by expanding their business scope to include distribution and determine suitable supply chain solutions. In this regard, we will take a look at the opportunities in China’s domestic consumer market and forecast the sectors that are set to boom in the coming years.

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