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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