Regulators in Beijing have completed a survey of foreign companies in the capital which shows that most comply with new regulations on the hiring of mainland employees.
Regulations issued in May say Chinese nationals working for foreign representative offices may not be hired directly, but must be recruited through one of five government-approved agencies.
An inspection conducted between July and the end of last week found only 57 of 521 foreign offices were employing locals illegally, the China Daily reported.
Inspectors found that 3,800 new employees had been registered in accordance with the regulation, and that 129 Beijing residents were working illegally.
Officials at Beijing's municipal department of industry and commerce said the rules were meant both to protect Chinese citizens from unfair treatment by foreign bosses, and to protect foreign firms from dishonest or unsuitable employees.
Foreign executives have long charged that the real reasons for the rules have more to do with the lucrative commissions the authorised agencies earn by acting as intermediaries.