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Economic Downturns. Bad for Foreigners. In China And Always.

Posted in China Business, China Travel, Legal News

I am just returning from a delightful family vacation in San Juan, Puerto Rico, where we got around mostly by taxi. Both my kids speak Spanish fairly well and I am totally willing to fake it. One of the things I quickly learned from our conversations with the taxi drivers is that there is a big split between the Puerto Ricans and the Dominicans. We heard of this during our first day there, in our second cab ride.

Our first cab ride had been from our hotel, with a very polite, very well spoken Dominican cab driver. Our second cab ride was from San Juan’s old town, and this driver was a very young Puerto Rican, who made it a point to spend maybe the first five minutes of the ride lecturing us on the differences between Puerto Rican and Dominican cabbies. As we careened wildly through San Juan’s streets, with the car radio blasting out Spanish hip-hop, he told us of how the Dominicans are all crazy drivers and how it is not even safe to get in their cabs. He then proceeded to make sure we knew that the Dominicans are all money-hungry and that is the only reason they drive a cab at all. My poor Spanish and being with my family prevented me from asking if he was driving a cab for charitable reasons. Lastly, the Dominicans are all in Puerto Rico illegally and they do not pay their taxes.

In other words, absolutely nothing we all haven’t heard a million times in a million places about some immigrant or minority group somewhere.

I am telling you about the cab situation in San Juan to highlight how routine this sort of thing is, not that it is ever right. And I certainly do not have to be a sociologist to point out that these sorts of comments and, more importantly, actions based on these sorts of comments, increase when times are bad or even when times are perceived to be bad.

I thought of that today when I read a post on Shanghaiist entitled, “Crackdown underway on foreigners teaching without work visas.” The gist of the post is that the Shanghai Daily had run an article letting everyone know that the Shanghai police are reminding “foreigners without work visas not to look for employment in the city.” This reminder also notes that if you are “found out, you’ll be fined and deported.” I also thought of the San Juan comments when I returned maybe the tenth email from a Shanghai-based consultant friend of mine, who has, over the last three months or so, been screaming about the various things the Chinese government is doing (starting with its imposing the social insurance taxes on foreigners) to drive down the population in China. My response to him is usually just to tell him that my law firm has been seeing an increase in requests for help from businesspeople deported from China for not having a proper visa.

The bottom line is that as China’s economy heads South, or even as fears of its doing so increase, we can expect that pressures on foreigners operating illegally in China will increase.  To repeat, pressures on foreigners operating illegally in China will increase. I repeated this sentence because it seems like whenever I write about China cracking down on those there illegally, someone almost always attacks me for criticizing China for following the law. Wrong. I am drawing no moral conclusions here. All I am saying is that right now (and the next six months) is not a good time to be operating illegally in China as you can expect China to step up enforcement of its laws against foreigners and your chances of being caught in that have just gone way up.

If you are working in China without a work visa or running an unregistered business, you are at risk. You will be seen as taking jobs from locals and there will be little to no sympathy shown.

UPDATE: Just saw that the Lost Laowai Blog did a post, entitled, “From Foreign Friends to Foreign Felons – new law wants your foreign fingerprints,” on a China Daily post discussing how China is looking to tighten its enforcement and its laws regarding foreigners overstaying their visas. Many see this (and China’s mandating that foreigners pay into China’s social insurance as another example of China’s tightening the screws on foreigners. Though I have a tough time challenging China on a legal basis for these new laws (and I recognize that the United States already has similar laws in place), I do not think it a coincidence that these laws were enacted and are being proposed during tough times. China’s paranoia about foreigners taking jobs from Chinese nationals is probably justified, but by the same token, if you are a foreigner in China right now and feeling a bit paranoid yourself, that too is entirely justified as well. 

What are you seeing out there and what do you think about it? 

  • fengbide

    In my experience as a government lawyer – compliance goes up, if you have easy systems to comply with. Non-compliance is a factor of Kafkaesque bureaucracy.
    Westerns understand the rule of law, so it’s not that they don’t want to comply (well most people do anyway). If it is simply too hard to comply, not by failing to meet criteria, but through practical impediments you end up with high non-compliance rates.
    Just about every government form in Australia is easily located on govt. websites and can often be submitted online or the hard copy posted (I renewed my driver’s license from China).
    Dan – I love the blog, it’s a pleasure to vote for it.

  • Robert Kalsbeek

    Hi Dan.
    Your comments are correct and while it may suggest that foreigners are always to blame, it is clear from my three year experience with the same English school that many Chinese employers are also pressuring foreigners not to comply.
    In my school it happened a few times that foreigners were “forced” to work without proper papers as to complete their contract.
    But by simply refusing to participate it was possible to get an one month extension to my work visa.
    Anyway, another great post and keep them coming.
    It will be a pleasure to vote it best again.
    Robbie.

  • Mark

    For clarification, a “Z” Visa is not a work permit. A “Z” Visa allows you to enter China one time to accept a job that has been offered. Nothing more, nothing less. A ” Z” Visa is typically valid for 30 days in-country. During this time, you must make application for an Alien Employment Permit that does allow you to work in China for a specified employer.

  • http://wangbo.blogtown.co.nz Chris Waugh

    fengbide: “Westerns understand the rule of law, so it’s not that they don’t want to comply (well most people do anyway)”
    I’m not entirely convinced. I’ve met an awful lot of Westerners who seem to think that they should be allowed to flout Chinese law. Sometimes “too hard to comply” is used as an excuse. For example, when I was applying for a Chinese drivers license, an Englishman told me that the cops will make any excuse to not process my application because they don’t want the hassle of having to deal with a foreigner. An American told me he’d met somebody who’d been involved in an accident while riding his scooter and was a bit worried the cops would get involved because he didn’t have a license because the cops would make it too difficult to get a license because the cops didn’t want the hassle of dealing with a foreigner. Utter nonsense. It is in fact very easy for a foreigner to get a Chinese drivers license (at least, here in Beijing), it’s simply a matter of finding the necessary information, which is easily available to those who ask the traffic management bureau, then getting the necessary paper work together then passing the test. And my experience is that is how things generally work. Get the information you need, do your paperwork, cross the ts, dot the is, and you can get things done properly and legally. I’m sure business law is far more complex than any of the stuff I’ve had to deal with and involves far more opportunities for things to go wrong, but I’ve seen nothing to suggest the same principle does not apply and plenty to suggest that a lot of Westerners in China seem to think they should be allowed to get away with whatever they want to do.

  • http://www.puddingandchopsticks.com Homer

    I’m currently extending my residence permit. It’s actual not that hard if you work with a proper company, i.e., a legal and partly owned foreign company.
    I would agree that the easier it is to comply the more people actually do so. Unfortunately it seems that some of the times it’s hard to do just that. Perhaps the big cities make it easy. Shanghai has an online residence permit renewal system or something to that effect. But the small cities, it’s all done in person and not often if at all. Maybe it’s a matter of local govs not caring or letting things slide, and Beijing coming in and cracking down.
    I don’t know if really it’s an issue of taking work away from locals. I think it has something to do with something else. Of what, I personally don’t know without making some generalizations and guesses.

  • Dean

    You are spot on. This is happening right now and this happens whenever China starts to worry about its economy (which it is doing right now). Two of my friends were fined and then deported just this month. Both in Shanghai.

  • Alberto

    Just voted. Don’t ordinarily participate in these things, but I feel like I owe it to you for all that you have done on this blog over the years. Thanks.

  • http://www.summitchina.ca Marius Schutz

    I don’t know much about Visa Law but I don’t think it is “nice-law-abiding-people”- friendly anywhere these days.
    Or as some would say, any country’s visa system is the finest “money-can-buy” if you get my point – with excuses to some Lord in Britain who commented at one time about his country’s legal system along this line of thinking.
    The more I learn about China, the more it seems to be deja vue.
    For what it is worth, the following link seems to lead to a good description of the process in China:
    http://www.echinacities.com/expat-corner/no-agencies-how-to-handle-your-own-f-or-z-visa.html#ccomm
    Marius

  • http://www.seeingredinchina.com Tom

    A few weeks ago I wrote a guide for people looking to work as English teachers in China. In it I said that it was foolish to accept any position from a school that wants you to work on anything but a residence permit. With that came a flood of comments talking about how nobody enforces the rules, and that it is just fine to work illegally. It’s crazy for westerners, who are easily identified outside of China’s biggest cities, to think that law enforcement isn’t going to notice that they haven’t registered.

  • Oliver

    On Bloomberg today: China Reviews Rules to Curb Illegal Entry of Foreign Workers, Xinhua Says
    http://www.bloomberg.com/news/2011-12-28/china-plans-rules-to-stop-illegal-foreign-workers-from-taking-local-jobs.html

  • Mi Fu

    The problem are not the few English teachers working illegally with a tourist visum, but the much higher number of unqualified workers from neighbouring countries.
    Guangzhou for example needs workers from Vietnam during economic peaks, but in general it does not. A situation difficult to handle. It seems that some local authorities (like in the southern US) tend to look into the other direction if illegal immigration seems to be favourable for their province.
    For qualified and legally employed foreigners, the situation is gradually improving.
    A new regulations allows to get a residence permit for people over 60, if you have bought an apartment.
    In combination with the new social security regulations that include foreigners, it has become feasable to retire in China, even without a Chinese spouse.

  • anon this time

    This is happening in Beijing too. The police are going around Chaoyang and asking to see passports like never before. i am also getting a stronger sense from my Chinese friends and co-workers that “the Chinese view” is one where they are just getting tired of us.

  • http://cornponepapers.blogspot.com Robert Luedeman

    I just finished reading an interesting book entitled Stealth of Nations which concerned itself with the underground/informal economy in places like West Africa. A lot of the people profiled are going to have problems if your cautions bear fruit, Dano. Parenthetically the author was interviewed on the radio and he opined that the underground economy in the US is about 9 per cent of the GNP. I laughed out loud-everyone I know (except me, of course-I am Simon Pure and have the law license to prove it) has got some kind of hustle going on that the economic forces that hold sway in the country have forced upon most of us who are lacking steady paychecks that don’t bounce.
    There are a couple of angles to this. First of all, as the old man used to say the greatest proof of human intelligence is greed. Crackdowns are doomed to failure as the objects of them get smarter and cagier and work their hustles farther underground. Individuals may be punished but the mass will survive. Second, the Chinese themselves are providing the merch that people come there to buy, and anyone who thinks that Chinese factory owners with bills to pay are going to stop selling off the loading dock for ready cash to all comers is kind of foolish.
    A long time ago a guy I worked for was importing BMW and Mercedes Benz parts from Germany by the containerload and selling them to MB and BMW dealers at about 50 per cent of the price MB and BMW charged their dealers. Same stuff, same factories. So one day a container’s out at the dock and I start unloading MB exhaust systems from Lange-and the crates are all marked for Thailand. So I say “Carl? Aren’t these in the wrong country?” He says “Oh no, that’s how the Germans get around Daimler Benz-they package it for Thailand and then change the routing information. If this stuff was really going to Thailand everyone there would own four mufflers and a hundred oil filters.”

  • SUNIL THAMPY

    Recent incidence in Yiwu might not be out of context.
    Regards,
    Sunil Thampy
    Yiwu (Zhejiang), Jan. 4:
    The two Indian traders who have been holed up in a hotel in this southern Chinese trading town and facing threats to their lives were released on Wednesday evening, after more than two weeks of forced detention following a bitter trade dispute with local Chinese businessmen.
    The ending of the two-day siege of the Yiwu hotel, where they were in hiding, came after Chinese officials in Beijing decided to intervene in the case and told local authorities to enable their release, sources told The Hindu. Officials from the Indian Consulate in Shanghai escorted the two Indians, Deepak Raheja and Shyamsunder Agrewal, away from the hotel amid heavy police security, taking them to Shanghai, which is 250 km away from this city.
    The two traders surrendered their documents and promised to abide by a court order preventing them from leaving the country. Throughout the day on Wednesday, groups of Chinese businessmen and hired plainclothes toughs stood watch over the entrance to the Korgan Hotel, preventing Indians, including this correspondent, from entering the hotel.
    The hotel is located right next to a local police station in Yiwu. However, no policemen were in sight, even though three black cars, belonging to local businessmen and carrying six thick-set men, stood parked right in front of the hotel. Two other burly men, dressed in black, watched over its entrance, standing less than 100 yards from the Changwai police station that sits on a busy downtown Yiwu street.
    The Chinese Foreign Ministry said in Beijing on Wednesday “local police have taken measures to ensure their security.”
    “Public Security officials of Yiwu have adopted criminal enforcement measures against five suspects who were involved in illegal detention, and the relevant case is due for investigation,” spokesperson Mr Hong Lei said at a briefing. But even on Wednesday morning, the men in plainclothes broke into the Indian traders’ room and tried to kidnap them, Mr Raheja told The Hindu in a telephone interview.
    Mr Raheja, along with Mr Agrewal, was taken captive by Chinese businessmen on December 14, after the owner of the company they worked for, thought to be from Yemen, fled Yiwu, owing Chinese businessmen more than 10 million RMB (US$1.58 million). They were denied food and drink and assaulted during their captivity, and taken into police protection following a court hearing on December 31.
    They have since been kept in the Korgan Hotel, a modest five-storey building. While two police officers had been assigned to guard their room, they appeared to often vacate their posts, leaving the Indians fearful for their safety over two traumatic days. “We are getting desperate,” Mr Raheja said over telephone on Wednesday afternoon, speaking from his room on the third floor. “We cannot stay here another day. Tomorrow, I am willing to jump from the window if I have to.”
    Local authorities had earlier appeared unwilling to release the traders and incur the anger of influential local businessmen thought to be involved in the case. “Good sense finally prevailed after Beijing stepped in,” an Indian official said. “We simply cannot tolerate a situation where kidnapping becomes a way to handle trade disputes.”