One Company, Two Systems

HIRING HONG KONG, MACAU, OR TAIWANESE STAFF CAN HAVE A WHOLE HOST O ADVANTAGES FOR BUSINESSES ON THE CHINESE MAINLAND

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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 Kongers 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 Kongers are often well versed in international business practices. Its education system is on par with western countries, and many Hong Kong citizens have studied abroad.

Hong Kong staff have 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 and Taiwanese too. Macau has been a Portuguese colony since the sixteenth century, and has strong historical ties to Portugal and Brazil.

Hong Kong and Macau 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 Chinese, in others they are foreigners.

Taiwan
The third member in this class of not-Chinese but not-foreign is Taiwan. When the Chinese civil war between the Communist Party and the Nationalist Party ended, the Nationalists (or Kuomintang) fled to 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 opening-up policies in the late 70s, pragmatism has prevailed over animosity between 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. Accordingly, 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.

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 an Employment Permit for Residents of Hong Kong, Macau and Taiwan when they:

1. Intend to establish an employment relationship with a company registered in China
2. Want to open a sole proprietorship
3. Are dispatched to work in China by a foreign entity for over three months

Unlike foreigners, they do not need a Short-term Work Permit.

To apply for the work permit, the company needs to submit a few documents:

1. Copy of the company business license
2. Valid Mainland Travel Permit
3. Health certificate of the individual
4. Letter of intent to hire the individual, or other proof of the employment relationship
5. If 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.

Since its establishment in 1992, DezanShira& Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India and emerging ASEAN, we are your reliable partner for business expansion in this region and beyond.

For inquiries, please email us at info@dezshira.com. Further information about our firm can be found at: www.dezshira.com.