Avoiding The "Deemed Export" Dilemma in China

Recently, US franchise companies have run into problems hiring foreign Chinese nationals for their overseas supply and distribution facilities. It seems the "deemed export" licensing regulations have morphed into "deemed reexport" licenses according to industry representatives. Traditionally, the BIS regulation applied to the transfer of controlled technology to foreign nationals from controlled countries residing in the US. Apparently, US companies are now being advised to get export licenses for foreign nationals from controlled countries outside the US borders as well.

This new policy will soon have a chilling effect on US franchisors' hiring practices both in the US and in their overseas facilities. Many highly skilled foreign nationals from controlled countries will not be able to compete for positions in US international franchise companies, which could cause a dilution in service quality if those jobs go unfilled.

As the BIS sorts through the stacks and piles of deemed export applications the process can takes months to process the information and that is only the first filter for an export program. Then comes the implementation of "silos" for the employee from restricted data outside the license. US franchise companies don't need anymore "toll booths" on their way to global fast track.