Posted on September 11, 2015 by China Briefing
By Dezan Shira & Associates
Legal Editor: Steven Elsinga
There are a variety of reasons why a foreign investor might consider hiring staff from Hong Kong, Macau or Taiwan. In this article, we walk investors through the procedures for hiring employees from Hong Kong, Macau and Taiwan and discuss the benefits offered to such employees working in China.
Hong Kong
As a former British colony, Hong Kong people are familiar with Chinese and western culture and often speak and read both English and Chinese. With the city’s role as a major global financial center, Hong Kong people are often well versed in international business practices. Its education system is on par with that of western countries, and many Hong Kong citizens have studied abroad.
Hong Kong staff has the benefit of offering both a Western level of education and professionalism, as well as familiarity with the Chinese language and culture. This can be especially useful in managerial roles with local Chinese staff.
Macau
Much of this applies to Macanese (people from Macau) and Taiwanese as well. Macau has been a Portuguese colony since the sixteenth century, and as such has strong historical ties to Portugal and Brazil.
Hong Kong and Macau were handed over to Chinese sovereignty in 1997 and 2000, respectively. They did however maintain a high level of autonomy over their internal affairs, including nationality. While officially Chinese citizens, Hong Kong and Macau individuals have a special status internally. In many ways Hong Kong and Macau are treated as being different countries, yet in many other ways, they are a part of China. The same applies to the status of their citizens. In some ways they are considered China, in other ways they are foreigners.
Taiwan
The third member in this class of not-China, not-foreign is Taiwan. When the Chinese civil war between the Communist Party and the Nationalist Party ended, the Nationalists (or Kwomintang) fled to the island of Taiwan, awaiting the right time to retake Mainland China. The official position is that both governments – Beijing and Taipei – see the other as an illegitimate rebel government.
Since China embarked on its reform and open-up policies in the late 70s, pragmatism prevailed over animosity in Mainland China and Taiwan. The two countries have grown closer together, especially integrating in economic terms. For cross-border business purposes, China treats Taiwan as it does with Hong Kong and Macau – part of China, but an entity with its own laws.
Taiwanese too, offer foreign companies the combination of understanding both Western and Chinese business practices. As with Hong Kong and Macau, Taiwan was a capitalist country while China was communist. In that way, these territories and their people have far more experience functioning in a capitalist economy than Mainland China has. It is therefore common to see Taiwanese managers running Chinese companies.
Entry and residency
Being neither fully foreign, nor fully Chinese, citizens from Taiwan, Hong Kong and Macau enjoy a special status in Mainland China. Hongkongers and Macanese can apply for a document called the Mainland Travel Permit for Residents of Hong Kong and Macau. The Permit is valid for five years and allows the holder unlimited entries to the Mainland, and residency. To be able to reside on the Mainland, the holder does have to register with the local government.
These documents need to be applied for with the China Travel Service, which is run by the Ministry of Public Safety of the People’s Republic of China. It has branches in Hong Kong and Macau. Taiwanese citizens too need to apply for their Mainland Travel Permit with the China Travel Service branches in Taiwan, Hong Kong or Macau. As of July 2015, the entry and residency rules for residents of Hong Kong and Macau apply to Taiwan as well. This means that Taiwanese can simply travel to the Mainland with their Mainland Travel Permit for Residents of Taiwan and reside there. Previously, a visa-like permission was required.
Hiring Procedures
A uniform set of rules applies to hiring individuals from Hong Kong, Macau and Taiwan.
When a company registered in China wants to hire a foreigner, both the employer and the employee need to apply for separate licenses: the Alien Employment License and the Alien Employment Permit. In addition, the foreigner needs a Z-Visa to enter China, and a Residence Permit to stay.
The procedure is much easier for Hongkongers, Taiwanese and Macanese. These individuals need a Employment Permit for Residents of Hong Kong, Macau and Taiwan when they:
Intend to establish an employment relationship with a company registered in ChinaWant to open a sole proprietorshipAre dispatched to work in China by a foreign entity for over 3 months
Unlike foreigners, they do not need a Short-term Work Permit.
The only requirements are that they are aged between 18 and 60, in good health and hold a valid Mainland Travel Permit.
To apply for the work permit, the company needs to submit a few documents:
Copy of the company business licenseValid Mainland Travel PermitHealth certificate of the individualLetter of intent to hire the individual, or other proof of the employment relationshipIf applicable: professional certification required for the position
The license is generally issued within ten days, after which the individual is allowed to work. Taiwanese, Macanese and Hongkongers are allowed to participate in China’s social security system.
Other benefits
Apart from easier immigration requirements, individuals from Taiwan, Hong Kong and Macau often don’t face the same restrictions as foreigners when taking up certain professions or investing in certain sectors in China.
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