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  China's visa rule to make hiring expats tough

China has begun tightening its work visa application process for foreigners to keep out people with a criminal record, but critics say the implementation of the provision is "ill-conceived" and will impede even Fortune 500 companies' ability to hire expatriate talent.

Under the amended rules, foreigners applying for - or renewing - work visas (Z visas) must additionally submit a certificate from a police station in their home country - and authenticated by the Chinese embassy in that country - declaring that the applicant does not have a criminal record.

Initially, the additional paperwork requirement will apply only for foreign workers in Guangdong, the booming province in southern China that's better known as the "world's factory floor". But given that Guangdong has always been a "laboratory" for China's economic and administrative reforms, the provision is certain to be implemented nationwide, reckon immigration lawyers and business consultants.

The new regulation may have been inspired by some recent instances of Chinese businesses being defrauded by foreign-national employees who (it was later revealed) had previous criminal records in their home countries, say lawyers.

In itself, the 'no criminal record' certification isn't an unreasonable requirement. "The motive (for the introduction of the new provision) is to put in place reasonable criteria for people to obtain a work permit," says Chris Devonshire-Ellis, senior partner at Dezan Shira & Associates, a professional services firm providing FDI, legal, tax, accounting and due diligence services for multinational corporations.

But there are "serious shortcomings" in the manner in which it has been implemented, he adds. "It will have a negative impact on the ability of foreign-invested enterprises in China to be properly managed, and a negative impact in the way foreign business people view China as being a reasonable place to work."

As a result of this provision, "it's going to be very frustrating for well-meaning businessmen and employers to get the right quality of senior executives and expatriate personnel into position in China," says Devonshire-Ellis.

Indians face 'discrimination'. In particular, notes Devonshire-Ellis, "certain nationalities, among them Indians, face discrimination in obtaining China visas purely on the basis of their passport."

Although this appears to be a haphazard situation, implemented differently across the country, China's administrative infrastructure appears unable to determine whether an individual is "undesirable" or a senior executive in a multinational. "This is becoming an area of concern and is damaging China's foreign direct investment environment," he adds.

There appears to have been "little or no dialogue" between Chinese immigration authorities and the international community about the implications of putting in place the 'no criminal record' regulation, says Devonshire-Ellis.

In some countries, like New Zealand, there is no such certification process in the first place. In others, such as the US, "there is no formal or well-defined procedure to obtain such a document."

In effect, China has invoked its domestic administrative system, which is based on the restrictive hukou (household registry) system, and imposed it on foreign nationals who apply for a work visa. Under the hukou system, a Chinese national's personal records are stored in their hometown, which is their place of birth. All requests to relocate in China or to engage in business are serviced by the local police station in the hometown, notes Devonshire-Ellis. "But such a procedure simply cannot be assumed to be in place in other countries, and in fact it largely isn't," he observes.

Complying with the new regulation is also fraught with logistical nightmares for those who are already working in China and need to renew their visas. "The request for a certificate from a police station in the applicant's country of origin ignores the fact many expats have worked overseas for years and may not have any contacts with their local police station in their home country," points out Devonshire-Ellis. "Second, it requires an expensive trip back home to secure such documentation."

In any case, in many countries, the administrative procedure to supply such a document does not exist. Even if it does, it's unlikely to be issued by "the local police station" in countries such as the United Kingdom, most European nations, and the US and Canada, where the registry of criminal offenders is maintained at a national, not local, level.

The latest work visa measure comes barely five months after China tightened the provision for securing business (F) visas and tourism (L) visas. In the run-up to the Olympics, and following the riots in Tibet in March, China introduced stringent provisions that still remain in place. Immigration lawyers in Shenzhen expect the F visa and L visa provisions to be relaxed a bit after the Paralympics in Beijing, but with greater monitoring to prevent their abuse.

DaCare is the leading bi-lingual executive search firm in China. Ranked top 10 in China by People's Daily.