By Gidon Gautel
China’s new work permit system for foreigners was rolled out nationwide on April 1 this year. The new system has introduced a three-tier talent grading system for expatriates. Expats are placed in either Tier A, B, or C, depending on the number of points they earned under the point scoring system, or by fulfilling a condition that automatically places them in a given tier.
Authorities have transparently shared information on the three-tier talent grading system with the public to help employers and expats understand eligibility and tier category requirements. Based on this official information, the International Payroll & Human Resources team at Dezan Shira & Associates has developed a simple calculator to help employers and expats research eligibility and tier category requirements before applying.
While this calculator is based on publically available information provided by the authorities, and was verified by China-based human resource (HR) professionals, we note this calculator should be used for research purposes only. The calculator does not guarantee that any individual is certain to fall into the tier it displays; employers and expats should contact an HR professional for further information regarding work visa or permit applications.
The application experience
One expat, who has received the new permit, as well as older versions, was able to comment on the application process. The manager, based in Shanghai, explained “I did not go through the direct scoring system, but was assigned a tier, which is printed on the Worker Permit card (similar to the Chinese ID card) that I received.”
Commenting on how transparent the application process was, and whether it was clear why the tier rating was assigned, the expat said: “While convoluted, the work permit application process was transparent. The rating system is based on a series of qualifications, such as knowledge of Mandarin, past work experience, the global ranking of your alma mater, patents filed under your name, and more.”
However, the expat also noted that, in some respects, the process of applying for, and receiving, a permit may have become more stringent and time consuming. The expat said, “The process requires a notarization of your degree, as well as a notarization of the non-criminal record. For Americans applying from inside China, this may present a problem as I realized through my personal research that the US consulate in China does not issue notarizations of educational certificates. They must apply to the relevant offices in the US, or go through the Chinese Ministry of Education.”
This suggests that, as with several newly implemented reforms, applicants and their employers should allow additional time to prepare for new documentation requirements, and discuss application documentation and procedures with trusted HR advisors.
Assessing the new system
The new system is still in its early days. However, it is possible to draw some early conclusions based on its current trajectory.
Thibaut Minot, Senior Associate for Business Advisory Services at Dezan Shira & Associates argues the new system is a welcome change for many work permit applicants simplicity: “Historically, the Chinese work permit system has felt opaque and complex to navigate for many foreigners, with guidelines and application processing timelines often seen as unclear. The new work permit system, which strives to set in place a more systematic approach to reviewing applications, brings welcome clarity and should hopefully make it easier for applicants to understand the requirements, and supporting documentation to be provided, depending on one’s profile”.
Minot also pointed out that some Tier A and B applicants may even enjoy some perks from the new system. Minot said, “For the lucky ‘Tier A’ status applicants, their unique skills and exposure to China will be rewarded with a streamlined application process, and potentially shortened processing times. For the larger group of ‘Tier B’ status holders, fewer application documents required should also make the application procedures less cumbersome to complete for expats.”
In theory, the new application system could also carry some benefits for businesses that employ expats. Vivian Mao, Senior Manager for Business Advisory Services at Dezan Shira & Associates, states: “The tier system does indeed help HR to build a clear picture on the classification of expatriates, and the corresponding requirements and procedure for work permit applications.”
She does, however, add a caveat: “Since this policy and the online application system were newly launched nationwide very recently, in April this year, the online application system for companies is sometimes unstable. Additionally, some employment agencies have not reached out to provide unified rules to verify and approve work permit applications. Thus, in practice, we are facing a situation where the actual approval period is longer than the period stipulated.” She, however, goes on to say that this is most definitely temporary: “We believe that after a few more months, the online application system and relevant policies will function more smoothly and efficiently.
Though some complications may exist for employees currently trying to obtain the new work permit, pro-talent labor entry reforms show the government is determined to attract foreign skilled labor. Within time, the new system will be implemented more assuredly. Sticking points and bottlenecks will be ironed out, and China will progress a step further towards attracting and easing passage for talented individuals to come and work in the Middle Kingdom.
China Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Asia, including ASEAN, India, Indonesia, Russia, the Silk Road, and Vietnam. For editorial matters please contact us here, and for a complimentary subscription to our products, please click here.
Dezan Shira & Associates is a full service practice in China, providing business intelligence, due diligence, legal, tax, IT, HR, payroll, and advisory services throughout the China and Asian region. For assistance with China business issues or investments into China, please contact us at email@example.com or visit us at www.dezshira.com
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
This Dezan Shira & Associates 2017 China guide provides a comprehensive background and details of all aspects of setting up and operating an American business in China, including due diligence and compliance issues, IP protection, corporate establishment options, calculating tax liabilities, as well as discussing on-going operational issues such as managing bookkeeping, accounts, banking, HR, Payroll, annual license renewals, audit, FCPA compliance and consolidation with US standards and Head Office reporting.
In this issue of China Briefing magazine, we provide foreign investors with best practices for implementing internal controls in China. We explain what makes China’s internal control environment distinct, and why China-based operations need to prioritize internal control. We then outline how to execute an internal control review to gauge organizational resiliency and identify gaps in control points, and introduce practical internal controls for day-to-day operations. Finally, we explore why ERP systems are becoming increasingly integral to companies’ internal control regimes.