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. 'It is a scam, it always has been, and now they are being more serious about enforcing compliance,' the general manager of one foreign representative office said. 'The issue for foreign corporations is that these agencies are not adding sufficient value to justify the high fees they take for acting as middleman,' another foreign executive said. Many others said that in most cases, agencies did little more than provide social and medical insurance coverage for the employees. In return, the agencies received as much as 65 per cent of what the foreign company paid for mainland employees. The American Chamber of Commerce in Beijing recently surveyed its membership and found that only in a few cases did employees receive 60 per cent or more of the money their employer paid to the agencies.