Dalian Restricts Work Permits for Foreigners

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Aug. 11 – Beginning August 1, the Dalian government introduced a new policy restricting the ability of foreign investors with a registered capital of under RMB3 million to obtain work permits for their foreign staff, effectively stopping foreign employees that want to work for such companies from being able to apply for a Z visa to work in China.

The policy, which was released by the Dalian Human Resources and Social Security Bureau, affects foreigners that are applying for new visas, while those that already have obtained Z visas or residence permits will be able to extend them in the future. However, companies that have been incorporated in Dalian but do not reach this registered capital requirement of RMB3 million will not be able to hire non-Chinese staff in the future.

This measure is likely to affect companies in the service and IT sectors more than the manufacturing sectors, as service and IT enterprises tend not to be capital intensive, relying instead on generating income to grow their operations. The policy is likely to have a particularly large negative effect on innovation and entrepreneurship in the area.

Business analysts are advising smaller investors to take this policy into account when deciding where to locate their operation. It is not clear whether in the future this policy will be extended to other parts of China or whether this is just a local initiative by the Dalian authorities.

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5 thoughts on “Dalian Restricts Work Permits for Foreigners

    Alex says:

    That’s very informative. Does this also apply to WFOEs that apply for a single working visa for a (the) single foreign owner?

    Editor says:

    Dear Alex,

    Our understanding of the regulation is that if you will be employed here in China (regardless of the position you will take) you will need to get a work permit. The document mentions no exceptions for owners / GMs etc. Therefore we can interpret that no exception is made for these positions.

    Note that the owner of a company is not necessarily an employee of the company. If he / she is not working on a regular basis in China there is no need for a Z visa for this individual – when it is necessary to come to China the company can issue an invitation letter and based on this the individual should be able to apply for a F visa. This regulation mainly affects people that will be permanently or semi-permanently based China and working for a company incorporated in Dalian.

    Vic Williams says:

    I see two problem areas.

    1) Upgrading training in IT. People like IBM have IT ops that need updating and that often comes from smaller specialty outfits, who now have to slide in another way.

    2) Various companies base people in Dalian/Qingdao and have them do periodic inspection trips, mostly to the south, Pearl River Delta and so on. With other changes inland, such people could have started doing trips up towards Harbin. An outfit I know is moving such people to Hainan Island, but I think they’ll cook out.

    Chris Devonshire-Ellis says:

    It’s certainly a strange move by the Dalian Government, I can’t see what they hope to achieve by it. I’m meeting with them at the month end at the North China investment forum in Changchun, I’ll broach the subject and ask for clarifications. Sometimes these rules appear and are short lived. We’ll see. Thanks – Chris

    Kumar Shankar C says:

    Hi,
    What is the current status in Dalian ? Are they still restricting the Work permits for foreign staff. Kindly update.

    Thanks,
    Kumar Shankar C

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