China Work Visa Updates
Applying for work permit and visa with WFOE
General Overview of Current Requirements
– Background
Foreign entrepreneurs can apply for work permit and visa by registering a WFOE (Wholly Foreign Owned Enterprise) in China, provided they fulfill the basic requirements set by the government.
Generally, requirements are:
– Hold a formal position in the company (just being a shareholder is not enough);
– Provide 2 years full-time work experience;
– Have academic degree (Bachelor’s, Master’s or PhD) from a recognized university;
– Medical check;
– Resume;
– Have no criminal record;
There are other categories and sub categories of work permit in China, which have slightly different requirements.
Before COVID-19 Pandemic
Before the pandemic, it was much easier and straightforward to get work permit and visa through registering a WFOE in China. As a result, many visa agencies took advantage of the simple policies and “sold” work visas to just anyone who knocked their doors. Thousands and thousands of people – qualified or not – registered their WFOE’s in China and were granted 1-2 year work permit and visas. Part of the attractiveness of getting work permit and visa in China through WFOE was (this fact is still true) that registering a WFOE in trading and consulting and sponsoring foreign employees with work permit and visa did not require any paid up capital (it still doesn’t, however there are other requirements now, which we will talk about below). This aspect, coupled with the fact that China is a major manufacturing hub and has a lot of retail and wholesale markets, naturally, attracted a lot of small and medium businesses to enter China, especially between 2016 and 2020, with their foreign employees, and most of those companies did not make any capital contributions, i.e. they kept sponsoring their foreign employees with work visas without injecting any capital. Also, a great number of foreign students, artists, freelancers etc. living and studying in China started registering their WFOE’s and got work permit and visas – as this was the easiest way to stay and work in China, and most of the time, they continued working for other companies illegally (it is illegal to work for a company which does not directly sponsor one’s work permit and visa) and never bothered running their own companies. In other words, they were using WFOE just for work visa purposes. Consequently, the number of dormant WFOE companies with active foreign staff (active in other companies as illegal employees) kept rising in China and this is when the government decided to take action against people and companies taking advantage of China’s visa policies.
During the COVID-19 Pandemic
Government is taking action against agencies and individuals who are actively “selling” work permit and visas in China (promoting WFOE registration as an easy way to get work permit and visa in China) as follows:
WFOE's must have their physical office before they can sponsor their foreign employees with work permit and visa. This requirement is not new, but it is being enforced much more strictly than before.
Visa officers have started checking WFOEs offices randomly, without giving any notice
New WFOEs have to provide potential contracts with their suppliers and clients, simple business plan, outline of their future prospects etc. for the visa interview. Visa officers have started asking about their businesses, what do they do, what do they want to achieve etc. and the applicants should be ready to answer those basic questions about their companies.
If a company is not new, it has to provide financial statements, tax records, invoices and contracts and other related business documents for the interview. Visa officers have started checking companies' status thoroughly before they grant an extension for work permit and visas.
Also, for already active companies, visa applicants (the ones applying for extension of their work permits and visas) should provide their salary and personal tax records. Visa officers have started calculating the salaries against average living expenses, for e.g. if application is made in Shanghai, the amount of salary paid to an employee should match the average living expenses in Shanghai.
Many agencies and individuals, who promoted WFOE as a quick and easy work permit and visa solution to foreigners, got arrested and their business licenses (if they have any) have been provoked. This process is ongoing.
What to do?
If you want to register a WFOE company in China and sponsor yourself with work permit and visa, Shanghai Silk Road’s advice is:
– Do not register a WFOE only for visa purposes – you will get caught and put yourself in trouble;
– Do no pay anyone for work permit and visa services. Instead, after registering your WFOE, go to the local immigration office, and get first hand information on how to apply for work permit and visa under your own company. They will put you in the right direction. Remember, paying for work permit and visa is as illegal and risky as offering such services.
– After you register your WFOE keep is active – generate income. Otherwise you will not be able to extend your work permit and visa.
– Be careful about those dodgy agencies and individuals who promise you any work permit or visa. These things cannot be promised. Period. They are in the hands of the government – the immigration office. No agency or individual is in position to promise anyone a visa.
– When you go for visa interview, know your company’s numbers – how much tax it paid, how much tax you paid, how much turnover it has etc.