China has Lifted Restrictions on Foreign Investment in Human Resources Service Sector
According to the Foreign Investment Law of the PRC, foreign investment in China shall be subject to pre-establishment national treatment and negative list starting from 1 January 2020. Sectors outside the negative list for foreign investment access shall be managed in accordance with the principle of equal treatment of domestic and foreign investors. In order to implement the foregoing principle, the Ministry of Human Resources and Social Security of the PRC has amended the Interim Provisions Concerning the Management of Sino-Foreign Joint Job Intermediaries and the Provisional Regulation on the Establishment and Administration of Job Referral Agencies Sino-foreign Joint Ventures and Cooperatives. The main changes are as follows:
- Cancelled the Restriction on Setting up Wholly Foreign Owned HR Service Companies
In accordance with the previous Interim Provisions Concerning the Management of Sino-Foreign Joint Job Intermediaries, the Provisional Regulation on the Establishment and Administration of Job Referral Agencies Sino-foreign Joint Ventures and Cooperatives and their supplementary provisions, except for qualified Hong Kong / Macao Service Suppliers and some pilot areas which are permitted to set up wholly foreign owned HR service companies, other foreign investors may only set up HR service companies in the form of joint venture with local Chinese companies.
After amendments, the restriction on setting up wholly foreign owned HR service companies has been removed. Foreign investors may set up wholly foreign owned HR service companies in China starting from 1 January 2020.
- Cancelled the Restriction on the Investment Proportion of Foreign Investors
According to the previous Interim Provisions Concerning the Management of Sino-Foreign Joint Job Intermediaries, the investment proportion of foreign investors shall be no less than 25% while the proportion of Chinese investors shall be no less than 51%. The new provisions have cancelled such restriction. Now the investment proportion of foreign investors may reach 100%.
- Cancelled the Restriction on the Relevant Experience Requirement
In accordance with the previous Interim Provisions Concerning the Management of Sino-Foreign Joint Job Intermediaries and the Provisional Regulation on the Establishment and Administration of Job Referral Agencies Sino-foreign Joint Ventures and Cooperatives, both Chinese and foreign investors shall have at least three years of experience in HR service sector. The new provisions have cancelled the foregoing restriction.
- Adjusted the Approving Authority
According to the previous provisions, the approving authorities for the establishment of foreign invested HR service companies are provincial departments in charge of human resources. After amendments, the approving authorities for the establishment of foreign invested HR service companies are adjusted to the departments in charge of human resources at or above the county level.
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