China: Restriction for setting up a wholly-foreign-owned human resource services agency is abolished

The PRC Foreign Investment Law has come into effect since 1 January 2020. The Ministry of Human Resource and Social Security, the Ministry of Commerce and the Bureau of State Administration for Market Regulation have joined in the efforts to offer the same treatment to both domestic and foreign capital, by cancelling the entry restriction for foreign capital to engage in the human resource services industry.

The original restrictions on foreign capital in the human resource services industry read as follows: (1) to establish the human resource service agency in the vehicle of a joint venture, both the foreign and domestic investors must have more than three years’ experience in the industry; (2) the proportion of capital contribution by foreign investor shall not be lower than 25% and the proportion of capital contribution by  domestic investor shall not be lower than 51%; and (3) foreign investor is restricted from establishing a wholly-foreign-owned human resource services agency.

All three of these restrictions have now been cancelled in order to attract more foreign investments and provide for foreign capital to expand their human resource services businesses in China.