Dalian, China has been a favored location for companies looking to service the Japanese market due in part to the high number of Japanese speakers in that area.  China Briefing, which covers business developments in the Chinese market, has an article discussing Dalian's move to restrict foreign workers in organizations with small capital investments.  As noted in the article, this new ruling will have little effect on manufacturing concerns as they require relatively high capital investments.  Rather, it's likely to impact IT and BPO operations that are not as capital intensive.

An excerpt from the article:

The Dalian government introduced a new policy [Effective August 1, 2010] restricting the ability of foreign investors with a registered capital of under RMB3 million to obtain work permits for their foreign staff, effectively stopping foreign employees that want to work for such companies from being able to apply for a Z visa to work in China.

This measure is likely to affect companies in the service and IT sectors more than the manufacturing sectors, as service and IT enterprises tend not to be capital intensive, relying instead on generating income to grow their operations. The policy is likely to have a particularly large negative effect on innovation and entrepreneurship in the area.

Corporations looking to locate a site in China should look at how this impacts their evaluation criteria, including the ability to use foreign workers.  You can read the full article here.