I am currently living in Canada, but I would like to return to China to teach English. I recently completed a certification program, and I have found a school that wants me. The only problem is that they seem pretty clueless about helping me obtain a visa.

Between 2007 and 2009 I worked in China (not teaching English) and I believe I was issued a Z visa. I don't remember having to do much besides the physical check up.

The language school I am interested in first tried to get me what they called a "specialist visa", as I had 2 years of English teaching experience in the US. Apparently it was rejected for whatever reason. So now they are trying to get me a "regular" work visa, which also requires a criminal background check.

However, now they are asking me to enter China on a tourist visa, go to some offices (get another physical checkup), leave the country, and then come back in on a Z work visa.

I really don't understand why I first need to enter on a tourist visa. It seems like a lot of extra stress and expensive for nothing. However, I have been told that this is something that "all" English teachers must do. What do you guys think?

First of all there are no shortage of 'teachers' here in China. The problem is the 'visa'. If the school can't not prove you with one, I　ｗｏｕｌｄ　ｂｅ　ｖｅｒｙ　ｃａｕｔｉｏｕｓ　ａｂｏｕｔ　ｔｈａｔ　ｓｃｈｏｏｌ．

The problem has more to do with the fact that the school has never been able to get a foreign teacher to work for them, so possibly they are not familiar with the procedure.

I can't say whether or not there is a shortage of English teachers in China (from the sounds of things, there are indeed too many in Yunnan), but this is certainly not the case for my wife's hometown in Shandong province. Last time I was there, I was told there was one foreigner living in the entire city (of 6 million).
I am pretty certain beyond a reasonable doubt that the school is legitimate and that they do actually need me. It is owned by my wife's childhood friend. A few years back I even went to the school to meet with the guy (he's been bugging me to work for him for 3 years).

My main concern is having to enter the China on a tourist Visa, apply for the work visa, leave and come back in. I just learned that this visa stupidity is possibly something unique to Shandong province. But I want to see it in writing, or at least hear back from another foreigner that that is indeed how it works there.

Visa stupidity is not just confined to Shandong. To me it sounds like the school hasn't obtained permission from the provincial education bureau to hire foreigners. Private ESL schools cover a broad spectrum of legality, from having no contact with the authorities, no authorization, no tax-paying (read: illegal) to nationwide schools allowed to set up branches anywhere and hire almost any number of foreigners they want. Most schools are somewhere in between. One thing is for certain: DON'T accept work or go there if they aren't sure they can settle things for you visa wise. They need to figure everything out beforehand and get written proof that they are allowed to hire foreigners. When they have that you can come to China on a tourist visa, get the paperwork done and make a trip to Where-ever to swop it for a work visa (thay's the most common way to do it, although you can also get everything done from Canada - biggest problem here is that the school is fairly clueless right now and probably will mess up the paperwork or at least spend an awful lot of time on it).

It seems to me the school is authorized to hire foreign teachers.

As part of the authorization, the school must post a bond and undergo training. I have been told the training is comprehensive would cover the visa process and taxation.

It is illegal to work on a tourist visa. Ultimately, you will incur the consequences of working illegally and failure to pay income taxes and any other charges arising from your employment. It school's illegal action is not your concern however, it does not protect you from Chinese law. The school screws up, it is always your fault.

Three years ago, some, in Kunming, were required to return to their home country to get a Z visa. Not sure if that is still the case. Shandong, being closer to Beijing, is going to more closely follow the central government rules.

Be very careful, without the Z visa, residence permit and authorization to work, you are exposed to a lot of pain. Check the many many sources for information on the internet. One of the better ones: middlekingdomlife.com