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BEIJING--Multinational companies with foreign employees in China should anticipate longer waits and more extensive background checks for visa and residence permit applications as of Sept. 1, when final regulations implementing China's new Entry and Exit Law took effect, practitioners told Bloomberg BNA.
The new rules are the most extensive guidance on China's immigration policies since the government undertook a sweeping immigration overhaul last year, issuing the new Entry and Exit Administration Law of the People's Republic of China on June 30, 2012. The law itself took effect July 1, 2013 (31 HRR 613, 6/10/13).
“This is the biggest immigration law news since June 30 last year,” Gary Chodorow, an attorney at Hong Law Offices in Beijing, told Bloomberg BNA July 24. “From then until now, there's been no clear guidance about how the government was going to enforce the law and now we have some clear guidance.”
State Council Order  No. 637, dated July 12 and posted online July 22, changes requirements and processing times for visas and residence applications, practitioners told Bloomberg BNA.
Under the new rules, processing time for residence permits has been extended to a maximum of 15 working days. That could be a problem for workers who plan to travel, which requires a passport, because the applicant's passport has to be handed over to authorities during processing, according to Grace Shie, a registered foreign lawyer at Baker & McKenzie in Hong Kong.
Previously, the processing time was five working days in cities such as Shanghai, Shie, who leads Baker & McKenzie's global immigration and mobility practice for Greater China, told Bloomberg BNA Aug. 6.
The processing delay could be costly, according to PwC, which noted in an August 2013 tax and business advisory that “the longer waiting time may impact employees' flexibility to travel outside of China, eventually affecting their Chinese individual income tax liability.”
Qu Yunhai, deputy director of the Entry-Exit Administration Bureau at the Ministry of Public Security, said in a press briefing in Beijing Aug. 27 that 15 days is the maximum time frame and that in practice processing could be faster.
If travel is necessary while the residence permit is in process, the applicant may “in special cases” request to take the passport back.
“The passport can temporarily be returned if the national truly has the need to use it,” Qu said.
Qu did not directly answer a reporter's question about whether receipts issued by public security bureaus during the application process could be used to travel domestically in lieu of a passport.
The new regulations also expand the number of visa categories from eight to 12, creating confusion in some companies about which visa business travelers should get, practitioners said.
“There's a bit of a question mark as to what employers should do when they're sending employees to China on business trips and whether changes will be made to business visa requirements,” said Baker & McKenzie's Shie.
Shie expects the consulates and public security bureaus to issue guidance in the coming months about how some of the rules will be applied in practice.
According to practitioners, the new visa categories most relevant to multinational companies in China include:
• F Visa, which under the old rules was used for business travelers who came to China on exchanges or short-term training and under the new regulations will be used for foreigners on noncommercial visits, cultural exchanges, inspections, and similar travel;
• M Visa, a new category for foreigners visiting China for business or trading activities;
• R Visa, a new category for high-level talent and professionals and specialists urgently needed in China;
• S Visa, a new category for visiting spouses, parents, and family members of foreigners working or studying in China; and
• Z Visa for foreigners who work in China.
The “R” visa category, often called the talent visa, could be important to companies because it would allow workers who qualify to stay as long as five years, said Kevin L. Jones, a partner with Faegre Baker Daniels LLP in Shanghai and leader of the firm's labor and employment practice in China.
“That would actually make it easier for employers and employees because they wouldn't have to go through the renewal process as often,” Jones told Bloomberg BNA Aug. 6. It might also allow a foreigner who is beyond China's mandatory retirement age to get a work visa, whereas previously the application might be rejected.
The qualification criteria for the talent visa remain unclear, however, and the regulations only define the visa as being designated for “high level talent” or “talent that is in short supply in China,” Jones said.
Cui Aimin, deputy director general in the Consular Affairs Department at the Ministry of Foreign Affairs, said in a press briefing Aug. 27 that R visa category standards are still “being formulated by the relevant departments.” He did not say when the standards would be released.
Overall, the new Entry-Exit Law and its implementing regulations indicate tighter regulatory enforcement and increased scrutiny of foreigners working and traveling in China, practitioners said.
Foreigners working in China illegally may be fined up to 20,000 yuan ($3,268) and detained for as long as 15 days, and companies that employ illegal workers may be fined up to 100,000 yuan ($16,340) per illegal foreign worker.
Betty Tam, a partner at Herbert Smith Freehills in Shanghai, told Bloomberg BNA Aug. 8 that it might become more difficult for foreigners to get a multiple-entry business visa because the new law reduces the minimum validity of work-based residence permits from one year to 90 days. Instead of issuing business visas, authorities may insist that foreigners apply for a short-term residence permit.
“They will be strict,” said Tam. “I think they will be looking very closely at how long are you here, what are you doing. … Are you actually working, and if you're working, why don't you have a work permit?”
The additional requirements of the application process can cost companies time if not money, Hong Law's Chodorow told Bloomberg BNA. For example, the regulations say that residence permit applicants may have to provide biometric data such as fingerprints. If put into practice, that means applicants would have to apply in person, while before they could apply through an agency.
Companies should be aware that the implementation regulations say that Chinese authorities will audit residence permit applications, Shie said, which means that companies that have filed an application for an employee may receive a telephone call from the local public security bureau to verify the applicant's employment details.
“Be expecting a phone call or possibly even an on-site visit by the authorities,” Shie said.
State Council Order No. 637, notice regarding the Exit and Entry Administration Regulations of the People's Republic of China, is available in Chinese at http://www.gov.cn/zwgk/2013-07/22/content_2452453.htm and an unofficial English translation by Hong Law Offices in Beijing at http://lawandborder.com/translation-foreigner-exit-entry-administration-regulations-of-the-peoples-republic-of-china/. An alert by Grace Shie of Baker & McKenzie is available at http://www.bakermckenzie.com/alchinaentryexitcontrolaug13.
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