A foreign company in China that wants to bring in an intern — a foreign student, a recent graduate, or a young professional gaining work experience — faces a regulatory framework that doesn’t have a clear “intern” category. The Chinese immigration and labor law framework recognizes employment, business visits, and study, but an internship that involves productive work falls into the employment category, and an intern who’s working without a work permit is an unlawfully employed foreign worker.
Here’s what’s legal, what’s not, and how to structure a legitimate internship in China.
The Legal Problem
The Chinese work permit regulations don’t have an “intern” category. A foreign national who performs productive work for a Chinese company — work that contributes to the company’s business and that would otherwise be performed by an employee — is an employee for work permit purposes, regardless of what the company calls the arrangement. A foreign student who spends the summer working in the company’s marketing department, or a recent graduate who’s doing a six-month rotation through the company’s China office, is working, and working requires a work permit.
The consequence of an unpaid intern working without a work permit is the same as the consequence of a paid employee working without a work permit — fines for the employer and the employee, deportation of the employee, and the employer’s possible loss of the right to hire foreign workers. The fact that the intern is unpaid or nominally paid doesn’t change the analysis — the work permit requirement applies to employment, and employment doesn’t require payment.
The practical result is that most internship arrangements in China that involve productive work by a foreign national are technically illegal unless the intern has a work permit. A foreign company that wants to bring a foreign intern to China should either obtain a work permit for the intern — treating the intern as an employee — or structure the internship so that the intern’s activities don’t constitute work.
The Student Intern Exception
A foreign student who is enrolled in a Chinese university and who holds a student residence permit — an X1 visa or an X2 visa converted to a residence permit — may be permitted to undertake an internship in China under certain conditions. The internship must be approved by the student’s university and by the entry-exit administration, and the internship must be related to the student’s field of study.
The approval process requires the employer and the university to sign an internship agreement, and the university submits the agreement to the entry-exit administration for approval. The entry-exit administration endorses the student’s residence permit with a notation that authorizes the internship — specifying the employer, the position, and the period. The student can work for the approved employer in the approved position for the approved period, and the work is legal.
The student intern exception is limited to students who are enrolled in Chinese universities. A foreign student who is enrolled in a university outside China and who comes to China for an internship is not covered by the exception and requires a work permit.
The Work Permit Route
A foreign national who doesn’t qualify for the student intern exception — a recent graduate, a student from a foreign university, a young professional — can do an internship in China if the employer obtains a work permit. The work permit requires the same documentation as a regular work permit — the degree certificate, the certificate of no criminal record, the health certificate, the employment contract — and the foreign national must meet the work permit qualifications.
A foreign national who has a bachelor’s degree and two years of relevant post-graduation work experience qualifies for a Category B work permit and can be employed by the Chinese company as a regular employee. The employment can be structured as a fixed-term contract — a six-month contract, a twelve-month contract — and the foreign national works for the term of the contract and then leaves or transitions to a permanent contract.
The work permit route is the legal route for a foreign national who doesn’t qualify for the student intern exception, and it’s the route that the Chinese immigration authorities recognize. The employer must pay the foreign national the minimum salary for a work permit — the salary threshold varies by city — and must comply with the employment law obligations — the social insurance, the housing fund, the individual income tax withholding.
The cost of the work permit route is higher than an informal internship, but the legal risk of the informal internship is significantly higher. A company that’s considering bringing a foreign intern to China should budget for the work permit cost — the government fees, the document authentication, the professional service fees — and should treat the intern as an employee from a legal and a compliance perspective.
What’s Not Legal
The following arrangements are not legal in China, and a company that uses them is exposing itself and the foreign national to the immigration and labor law penalties.
A foreign national who enters China on a tourist visa — an L visa — and who works for a Chinese company, paid or unpaid, is working illegally. The L visa does not authorize employment, and the foreign national cannot convert the L visa to a work permit from within China — the work permit must be obtained before entering China, with a Z visa.
A foreign national who enters China on a business visa — an M visa — and who performs more than the permitted business activities — attending meetings, visiting customers, negotiating contracts — is working illegally. The M visa authorizes business activities, not employment, and the boundary between a business visit and employment is crossed when the foreign national starts performing the regular work of the company — managing projects, supervising staff, providing ongoing services — rather than conducting discrete business meetings.
A foreign national who works for a Chinese company while being paid by a foreign company — the foreign parent company pays the salary to the foreign national’s bank account outside China, and the foreign national works in the Chinese company’s office — is working illegally in China. The work permit requirement applies to the activity — working in China — not to the payment — being paid outside China. The foreign company that’s paying the salary may also have a permanent establishment in China because of the employee’s activities, creating a Chinese corporate income tax exposure.
A foreign national who works without a work permit and who is discovered by the immigration authorities is subject to penalties. The foreign national may be fined, detained, and deported, and may be barred from re-entering China for a specified period. The employer may be fined, and the employer’s right to hire foreign workers may be suspended. The penalties are the same regardless of whether the foreign national is called an intern, a trainee, a volunteer, or a visitor.
The Compliance-First Approach
A foreign company that wants to bring a foreign intern to China should start with the compliance question, not the business question. The compliance question is: does the foreign national qualify for a work permit, or does the foreign national qualify for the student intern exception? If the answer to both questions is no, the foreign national cannot legally work in China as an intern, and the company should not bring the foreign national to China for an internship.
If the answer is yes to the work permit question, the company should apply for the work permit before the foreign national enters China, or — if the foreign national is already in China on a different visa and the city allows it — should apply for the work permit card and the residence permit from within China. The foreign national should start work only after the work permit card and the residence permit are obtained, not before.
The company should also comply with the employment law obligations — the employment contract, the social insurance, the housing fund, the individual income tax withholding — from the first day of the internship. An intern who’s legally employed is entitled to the same employment law protections as any other employee, and the employer should treat the intern as an employee for compliance purposes.
