New Permits to be Required for Foreigners doing Short-Term Work in China

In the past, many foreigners came to China for short-term work of less than 90 days by holding a business visa, i.e. M visa. This will be hardly possible, starting from 1 January 2015 due to the Relevant Handling Procedures for Implementation of Short-term Work by Foreigners Entering into China (Trial) jointly issued by the Ministry of Human Resources and Social Security, the Ministry of Foreign Affairs, the Ministry of Public Security and the Ministry of Culture on 6 November 2014 (“Handling Procedures”). The Handling Procedures will take effect on 1 January 2015. The following issues shall be noted: 

1. Foreigners entering into China for the purpose of doing short-term work shall also obtain work permits.

Definition of short-term work 

The following work for a period of less than 90 days is defined as short-term work: 

• Completing specific work for a Chinese cooperation partner in connection with technology, scientific research, management and provision of guidance, etc.; 
• Trial training at a Chinese sports institute (applicable to both athletes and coaches); 
• Shooting a film (including both advertisements and documentaries); 
• Conducting a fashion show (including acting as car models or shooting print ads); 
• Making foreign related commercial performances; and 
• Other circumstances as defined by the labor administration authority. 

Permits required 

• For a foreigner whose working period is less than 30 days, an employment license and a work certificate issued by the competent labor administration authority shall be obtained. In case of a foreign related commercial performance, an approval and a work certificate will be issued by the competent culture administration authority. 
• For a foreigner whose working period is 30 days or more, in addition to the above mentioned permits, the foreigner shall obtain a work related residence permit with a period of 90 days at the competent public security authority. 
• Foreigners whose home countries have signed a bilateral visa exemption agreement with China cannot be exempted from such permits.

Procedures to obtain permits 

• Step 1: the Chinese cooperation partner must obtain an employment license or approval and a work certificate at the competent labor administration authority or the competent culture administration authority; 
• Step 2: the Chinese cooperation partner must obtain an invitation letter at the relevant governmental authority by submitting the employment license or approval and work certificate; 
• Step 3: the foreigner must obtain a working visa (Z visa) at the Chinese embassy or consulate in his home country; 
• Step 4: a foreigner whose working period is 30 days or more, after entering into China, must go to the competent public security authority to obtain a work-related residence permit with a period of 90 days.

2. In case of any breach of the above regulations, the foreigner will be regarded as illegally working in China. Both the foreigner and the Chinese entity who works with the foreigner shall be subject to administrative punishment as provided by PRC law. I.e. the foreigner can be subject to a penalty from RMB 5,000 to RMB 20,000, and in severe cases, even be detained for 5-15 days. The Chinese entity can be subject to a penalty of RMB 10,000 per person with a cap of RMB 100,000 in total. Any illegal income derived can be confiscated. 

3. Notwithstanding the above, the following types of work for a period of less than 90 days will not be regarded as short-term work:

• Provision of repair, installation, commissioning, disassembly, guidance and training services for machinery purchase contracts; 
• Provision of guidance, supervision and inspection for a project located in China which was obtained through bidding; 
• Assignment by an overseas company to complete a short term work at its branch, subsidiary or representative office located in China; 
• Participation in sports events held in China (applicable to athletes, coaches, team doctors and assistants, etc.); 
• Entry into China as volunteer without obtaining remuneration or obtaining remunerations from abroad; and 
• Making performances which are not defined as “foreign related commercial performance” in China. 

The Handling Procedures specifically clarify that a foreigner entering into China for the purpose stated in the above items (1) to (4) shall obtain a business visa, i.e. M visa, for the purpose stated in the above items (5) to (6) shall obtain a visit visa for non-business purpose, i.e. F visa. 

4. The Handling Procedures emphasize that a foreigner shall work in China within the validity period stated in the work certificate and such work certificate cannot be renewed. If a foreigner wants to stay in China for more than 90 days per entrance, in order to perform work falling into the scope of “short-term work” as defined by the Handling Procedures in the above Item 1 and work as stated in the above sub-items (1) to (3) and (5) of Item 3, he shall obtain a work permit in accordance with the PRC Administration Rules on Employment of Foreigners in China. 
Comments

• The Handling Procedures will change the situation for foreigners coming to China to perform contracts. In the past, foreigners could come to China to perform contracts for a short time by holding a business visa. Such a business visa can be renewed or be reapplied for. They had to obtain work permits only if they sign employment contracts with a Chinese entity or are seconded to work in China for more than 90 days. Engineers and professionals coming to China for the purpose of performing technology transfer agreements were expressly exempted from the requirement to obtain work permits under the Circular on Relevant Issues on Implementing Administration Regulations on Employment of Foreigners in China (Lao Ban Fa (1996) No. 65).
• Now after 1 January 2015, foreigners entering into China for doing work of less than 90 days which fall into the scope of “short-term work” as defined by the Handling Procedures must obtain work certificates and such work certificates cannot be renewed. Exemption from such permits can be only granted in those circumstances specified by the Handling Procedures. Further, according to the Handling Procedures, no matter whether a foreigner comes to China to complete technical, research, management or guiding work for a Chinese cooperation partner, to provide services for machinery purchase contracts or projects obtained through bidding, or to work for a Chinese branch, subsidiary or representative office of his employer, as long as the foreigner wants to stay in China for more than 90 days per entrance, the foreigner shall obtain a work permit. This is, to some extent, contradictory to the provisions of the Circular on Relevant Issues on Implementing Administration Regulations on Employment of Foreigners in China (Lao Ban Fa (1996) No. 65), which, so far, has not been abolished.
• Currently, how the Handling Procedures will be implemented and whether the Circular on Relevant Issues on Implementing Administration Regulations on Employment of Foreigners in China (Lao Ban Fa (1996) No. 65) will be abolished or not is not clear yet. Therefore, it is still unclear whether in the future engineers and professionals coming to China for performing technology transfer agreements for more than 90 days shall also obtain work permits or not. Also there are still some other open issues such as how a foreigner shall apply for a work certificate if he concurrently works for several projects in China, what a foreigner can do if he has to stay in China for more than 90 days just because of the delay of the work and whether a foreigner can obtain a new work certificate for the same project after his original work certificate has expired. All these questions need to be further clarified by the Chinese government authorities.
• Overall, the issuance of the Handling Procedures is one of the measures of the Chinese government to better supervise foreigners working in China for a short time. However, due to the change of such policies, foreigners performing contracts in China for both short-term and long-term periods will be affected. Foreign companies who used to assign its employees to perform contracts by holding business visa shall pay close attention to the development of the implementation of the Handling Procedures. We will update you regularly about new development.