What bank accounts do you need for making investments in China ?

What bank accounts do you need for doing business in China ? When entering the Chinese business environment, foreign companies should plan ahead, even for basic things such as opening bank accounts.

1. Foreign companies not registered in China

If your company is a non-resident entity in the mainland, you may open a foreign currency account only with a foreign bank, but not a renminbi(“RMB”) account.

‧Temporary capital account

This is used to hold capital and funds for the payment of expenses incurred before the establishment of a foreign invested entity. The account requires approval of the State Administration of Foreign Exchange(the “SAFE”) before being opened.

‧Foreign direct investment account

This is used to hold funds for payment related to a company's direct investment, including mergers and acquisitions, in China. The account requires SAFE approval before being opened.

‧Other account

This is set up for receiving foreign currency funds only and the funds can not be converted into RMB. Opening this type of account does not require SAFE approval.

2. Foreign invested entities registered in China

If your company is a foreign invested entity registered in China, you can open foreign currency accounts or RMB accounts with a foreign bank provided the bank has a foreign currency service license or a RMB service license.

‧Foreign currency accounts

A number of foreign currency accounts are available to foreign invested enterprises registered in the mainland, including capital accounts for receiving capital injections, settlement accounts for collecting and paying current items in foreign currency, foreign debt special accounts for receiving loan proceeds from overseas, foreign debt special loan repayment accounts and foreign currency loan accounts. Foreign invested enterprises can open foreign currency settlement account, foreign currency loan accounts and repayment accounts directly with banks without prior approval from SAFE, but SAFE approval is required for opening of other types of foreign currency accounts. Approval for opening settlement accounts is accompanied by a ceiling set for the company, which is determined and annually reviewed by SAFE. Funds received by settlement accounts in excess of the present limit must be paid out or converted into RMB within 90 calendar days.

‧RMB accounts

The primary types of RMB accounts are the basic account and general account. No matter how many banks you are banking with, a company can open only one basic account in China. You can open as many general accounts as you like for RMB collection and payments, but cash can only be withdrawn from the basic account, salary and bonus payments can solely be taken from the basic account as well.
(Note: the aforesaid article is taken from the South China Morning Post dated 26th January 2008, written by Shenglin Ben as head of commercial banking, HSBC China, with minor adjustments)


Hong Kong Judge hit for prejudice in retrial ruling, worth learning by the Mainland Chinese judges

(This article is extracted from the Hong Kong newspaper of The Standard on 22th January 2008, by Patsy Moy, with minor adjustments)
The Court of Appeal in Hong Kong yesterday ordered a retrial for three men who had been jailed for allegedly stealing Buddhist pines and accused the deputy district judge who found them guilty of prejudice, arrogance and using sarcastic and insulting remarks.

The three Chinese mainlanders – Chan Wah, Cheung Yanyau and Ko Kwan – had been sentenced to jail terms ranging from four years to 56 months after being convicted by Deputy District Judge Symon Wong Yu-wing on charges of illegal stay and conspiracy to remove and steal the Buddhist pines from a country park. They appealed to the High Court last month.

In allowing their appeal, Judge Peter Cheung Chak-yau said the conduct of the trial judge and his remarks may have given the public an impression he had not taken a neutral and unbiased stand.

“I have been reading numerous judgments during my 30 years in the legal sector. I have never come across any judgment by current judges that contained remarks as biased, sarcastic and insulting as this one,” Cheung said in his ruling, which was written in Chinese.

“Such words should not have appeared in an advanced and open legal system like Hong Kong.

“I believe the wording used by Mr. Wong failed to comply with the requirement for judges who need to analyze the facts of the case in a rational manner. So it (the judgment) is unacceptable,” Cheung said.

In the judgment, Wong was quoted as describing one of the defendants as “smart” after he chose not to testify.
Wong had also wished the defendants “good luck” after announcing their jail terms.

The other two judges on the panel, Maria Candace Yuen Ka-ning and Wally Yeung Chunkuen, shared Cheung's views. Yeung said the audio recording of the trial showed Wong to be arrogant when reading out the judgment, giving the impression he despised the defendants.

“Judges have a solemn and important duty to fulfill when they are in any trial because their rulings wold impact on the personal freedom (of defendants),” Yeung said.

“So judges should be cautious about their conduct and their remarks and any ambiguity or improper manner should not be allowed. Not only has justice to be done, it has to be seen to be done”.

The alleged offenses happened in November 2005. The defendants were arrested during an anti-illegal immigrant operation in Sai Kung during which police found 10 Buddhist pines, a saw, two blankets and some clothes.

The trio were unable to produce any travel documents when arrested.

Comments: the aforesaid Hong Kong judge report may never happen in Mainland China, for the Chinese court judgment will not be retried for such “improper attitude or stance of trial judges”, but simply by the rigid conditions as prescribed by the Chinese civil procedural law and relevant judiciary interpretations. In additions, credits or faiths of the plaintiff or defendant are also not taken into accounts while the Chinese judges try civil cases, but may widely be considered by common law Hong Kong court. That is why people sometimes say that it is easy to be a Chinese judge who just need to look at the filed evidences and written laws. Hopefully, the Chinese judges may still learn something from the Hong Kong judges via this particular case of how to maintain the fair judiciary system.



Police in the Lithuanian city of Klaipeda were baffled to discover that a woman arrested for shoplifting last weekend had been registered as dead a month earlier.

The woman's parents had mistakenly identified a body found in a forest as that of their 27-year-old daughter, Natalya Pavlova, who disappeared in November, police said.

It emerged that Pavlova was alive and well and living with her boyfriend in the same town.
“Her parents identified the corpse as their daughter. What could we do ?” deputy police chief Petras Mikalauskis said.

Comments: by the Chinese civil procedural law, court evidences are classified as 7 kinds as indicated in my blog dated 12th of January 2008, among which testimony of witness is one of them, but deemed less persuasive, and the Chinese judges normally require plaintiff to present more objective evidences concerned. The careless parental case as mentioned above could prove to much extent that the Chinese courts are correct.
(Notes: the aforesaid story is extracted from the South China Moring Post dated 20 January 2008, having been previously reported by Reuters.)



“After making this court report, I will be retired, and my consideration of issues will be limited. Today, however, I want to fire a canon of statement ! Right now, there are a great number of law school students that can not do the court work, and they have to be trained from the very beginning !”, said the Guandong Provincial Higher Court President LU, Botao, out of his personal feelings and experiences, at the Guangdong provincial people's congress yesterday afternoon, as reported by the Canton Daily of 18 January 2008.

“That the governments develop economics can not simply look at the GDP, and to train talents are also not simply to look at the gross school admission rates. Academic certificates do not represent capabilities, academic certificates do not represent personal morals, academic certificates do not represent characters, this is vitally important.”

“The more legal knowledge a judge masters, the worse he will be if he is not good at morals, because he is more aware of how to avoid the blank areas of law. I believe this is true of the other professions. Therefore, please do keep in mind that we shall never simply reply on the academic certificates.”

“Take the governmental purchases by public auction for example, it is very good ! We heads all want to support that, for we can be more relieved and feel no worries. The realistic fact, however, is that it is still not effective enough, and the purchased things are also not the cheapest and best !”, LU, Botao said at last, making emphasis that how to maintain high efficiencies during the course of administrations by law is obviously a test of the governmental work.

Comments: Probably it is good news to learn that LU, Botao as Guandong provincial higher court president is to be retired soon or as earlier as possible, for what he recently states aforesaid is obviously misleading to much extents. Should the court judges not have academic certificates of LL.B, LL.M and J.D., how can the judges be selected objectively in China today ? This is vitally important, especially when you come to know the realistic facts that there are few senior Chinese lawyers who want to become judges of any levels, and also when you have to admit that Mainland China is still a strong connection society today. Should the Chinese court presidents or governmental heads of various levels always select or hire the persons they believe “qualified”, how can the outstanding talents with excellent academic certificates without social connections become judges or governmental staff ? What LU said may be true to some extents, but it could be much worse than the current situations if his retiring free remarks become realistic. How could a person be capable of the court work without necesssary legal academic certificates of LL.B, LL.M or J.D. ? No one says the academic certificates may soly be replied upon. What LU emphasises, however, is truly not appropriate and could be misleading, for fresh law graduates are still the mainstreams for recruiting would-be / new Chinese judges in the short and middle terms, and it is quite understandable that the new law graduates with good academic certificates require a few years to be qualified for being judges, this is true of lawyers and other professons as well. According to LU, the Chinese courts shall probably recruit most of its judges in the futures from every walks of life, regardless of their legal adacemic certificates ? Probably LU has forgotten how he becomes a senior judge or court head.



(The report is extracted from South China Morning Post dated 15 January 2008, having originally been released by Agence France-Press in Colombo, Sri Lanka)

A Sri Lankan man has been released after spending 50 years in prison without ever having been charged, his lawyer said yesterday.

D.P. James, now 80, was arrested in August 1958 for attacking and wounding his father with a knife.

He was sent to jail, then moved to a psychiatric hospital, and then sent back to jail – where he was forgotten about.

Lawyer Dharmavijaya Seneviratne said James, who was never put on trial, was a victim of prison bureaucracy.

“James went to jail when he was 30. He has been robbed of his youth and is now a grey-haired man of 80 with failing eyesight,” Mr. Seneviratne said.

The prison’s situation was only noticed last month after he fell ill and was admitted to hospital in Colombo, forcing prison authorities to go through his paperwork.

The lawyer said James, originally from a small village, did not complain about his long-running detention because he was ignorant of law.

A local court released him last week on bail, and apologized for the “rare, pathetic incident”, a court official said.

“We are preparing the papers to file a case seeking compensation for 1.5 million rupees(HK$108,300) and use the money to pay for his medical and other welfare bills,” Mr. Seneviratne said.

The sum amounts to HK$2,165 for each year spent behind bar.
Comments: Should the oridinary persons' various rights be not actually enforced and forcefully protected either in Sri Lanka or in Mainland China, by means of law and public medias, the responsible staff in charge be not heavily fined and pay out of their own pockets, and be further served for years behind bars by law, the power-abusing incidents will still happen sooner or later.



(The article is taken from the HK Magazine of 11 January 2008 with minor adjustments, for reference only)

A 45-year-old Hong Kong man has recently been ordered by a Shenzhen court to pay HK$1,500,000 as compensation to his legal wife after he was found guilty of living with a concubine. He is also facing a jail sentence of up to two years. In the Mainland China, it is illegal for a married man to live with “another woman”. Pundits worry that this case may trigger more Hong Kong wives to report their husbands to the Mainland Chinese police.
Comments: By the Chinese Civil Procedural Law(Article 63), litigation evidence shall be classified as 7 kinds as follows: (1)documentary evidence; (2)material evidence; (3)audio-visual reference material;(4)testimony of witness; (5)statements of the parties; (6)expert conclusions; and (7)records of inquests. Any of the above-mentioned evidence must be questioned, cross-examined and verified before it can ultimately be accepted as a basis for ascertaining a fact.

In this particular case, the legal wife has successfully obtained all or some of the aforesaid evidences, convincing the court to order that the husband is illegally “living” with another woman like husband and wife, having broke the Chinese Marriage Law of one-husband-one-wife compulsory provision.

To gather favorable evidences in such cases, private detectives are sometimes hired by legal wife, apart from obtaining evidences on their own. This is true of the other commercial disputes cases. In order to win a civil litigation case for the favorable judgment at the Chinese court, the plaintiff has to consider before filing a case not only statute of limitations, but also the aforesaid 7 kinds of evidences, managing to gather evidences as many as possible.



(This Article is taken from the South China Morning Post written by Chloe Lai dated 11 January 2008, for reference only)

G2000 Group, a company owned by Michael Tien Puk-sun, former chairman of the Kowloon-Cantoon Railway Corporation, has been ordered by a Hangzhou court to stop manufacturing and selling fashion accessories such as stockings, ties and belts under the G2000 brand on the mainland.

The court also ordered the company to pay 20 million yuan to Hangzhou businessman Zhou Hua for infringing the latter’s registered trade mark, 2000.

Chen Qun, spokeswoman of the Hangzhou Intermediate People’s Court, said yesterday that G2000 had filed an appeal so the court had yet to execute the ruling. Describing the case as a battle between an ant and an elephant, she said the compensation G2000 had to pay was the largest the court had ever ordered.

“It is why we decided to publicize the case now. We want the public to know the court is determined to safeguard copyright,” Ms Chen said. She said the Hangzhou businessman selling fashion accessories registered the 2000 trademark in 1997 for 25 types of merchandise.

So when G2000 registered its trademark on the mainland, the Hong Kong company was only allowed to use G2000 brand for its clothes and bags. For accessories, G2000 was ordered to use the G2 brand.

G2000 declined to comment on the case yesterday.

(1)Given that the individual plaintiff has recently won the said case at the Hangzhou intermediate people's court, primarily because he has legally owned a trademark in China of "2000", applicable to fashion accessories of stockings, ties and belts; he has obtained earlier other administrative decision from the Beijing Based China Patent Office; he has obtained favourable judgment earlier from the Beijing Higher People's Court; in additions, given the realistic fact that the Hangzhou court should/might have practically consulted opinions, before its judgment was issued, with the higher court in Zhejiang province, even though it is not appropriate but is said practiced constantly or at intervals among the Chinese courts for various reasons, therefore, G2000 company as defendant has to make ways now to obtain an independent "Experts' Opinion" to be issued by the top/leading Chinese IP mastermen, stating with convincing/authorative reasons therein that G2000 and 2000 brands are not the same in the particular case, no speaking of infringements and compensation amounts ! The mastermen's opinions could certainly or to much extent influence the higher court judges' appeal judement.
(2)the defendant of G2000 company may not win its appeal case if it simply insists that the individual plaintiff with his 2000 brand have no reputions at all in Mainland China, while G2000 is widely known in there, for the plaintiff regardless of individual or a corporate person also has equal rights to have his duly registered trademark of 2000 be legally protected if his 2000 brand maintains valid, even though it might practically be regarded that it is the 2000 brand owner of the individual plaintiff who has been riding on the corporate G2000 brands in the past years, not the opposite.
(3)Suppose that the Zhejiang higher court upholds the judgment of 1st instance, the compensation amounts of RMB20,000,000 should also be greatly reduced, for there are no apparent evidences from the individual plaintiff to support those amounts, which are simply calculated out by the first court juges based on their analysis. According to the Chinese evidence judicial interpreations, the individual plaintiff has obligations and liabilities to deliver such evidences to the court or ask the court to collect those evidences before official trials, or else, the court can not support the plaintiff's demand in the regard. It is obviously unusual and seemingly unfair that the judges of 1st instance has served not only as independant judges, but also as participants in favour of plaintiff, which may easily lead the defendant of G2000 and outsiders to come to conclusions that the Hangzhou court judges have not issued an absolutely fair judgment.



According to a news report by Hong Kong Headline of 9th January 2008, a law professor with Beijing University of Political Science & Law, feeling upset by constant absence of class by his students, angrily scolded his students in the classroom recently by saying “bullshit”, “son of bitch”, “son of animals”, and also had conflict with one girl student. The incident has aroused hot debates among teachers and students, who consider the professor’s act defame the law school.

It is said that in the evening last Friday, Professor Yang, Fan of Business School with the Beijing University of Political Science & Law was scheduled to lecture on his last class. Since there was a compulsory course that all students had to participate in for its examination the next day, therefore, quite a number of students were absent for its preparation. Seeing that just a few students were present for class, Professor Yang started to lock the classroom and counted the present students, warning that the absent students were all deemed to have punishment as “violation of examination rules”. Professor Yang also warned that the present students could not send signals to those absent ones, or they would deemed to bear the same punishments.

It was not very long, however, that about 30 absent students turned up, expecting to secretly walk into the classroom. One boy student was so angry that he could not stop kicking on the main door. Professor Yang then fell into rages, started to shout at and scold the outside students “bastards”, “son of animals”, “son of bitch”, “dare to kick but no dare to admit”. The angry curses lasted for 10 minutes.

A girl student intended to leave the classroom, but was shouted stopping by Professor Yang. The girl student pointed out to him: Don’t you feel senseless to talk about all those things in class ?” Professor Yang then rushed out of the classroom, grabbing the girl student’s arms in order to send her to the school securities, during which they had conflicts, the girl student kicked twice at the professor.

The incident aroused arguments among teachers and students, feeling Professor Yang’s behaviors defame the law school.

Professor Yang states, however, that he does not feel regretful to his acts, insisting school punish the relevant students. The school has now started investigations into the incident.

(Comments: Being a once law school lecturer for 5 five years in earlier 90’s in Beijing, I feel shameful for Professor Yang’ behaviors. Should students not appear in class to listen to courses, the students might have some mistakes, the professor, however, should think more why they do that. It is greatly because the professor is always repeating boringly his years-old textbook or teaching guidelines without teaching techniques and lively examples. In fact, it is the professor, rather than the students, who should properly be reeducated or criticized. We can see from the incident as well that professors in Beijing are not always all rounded good persons, they may have in-depth knowledge in their academic fields or maybe not, they also need improving themselves in terms of spiritual minds, morals, patience and etc, or how to become a normal person in all circumstances)
(Notes: to compare the aforesaid article with my blogs dated 7th January 2008)




According to the Headline Daily of 8th January 2008, Mr. Justice WONG, Shiying of the Hong Kong High Court has earlier been sued at the minor monetary court by an upset newspaper peddler for having not paid for subscription fees of HK$6,900. Both parties have ultimately agreed to make outside court settlements. Mr. Justice WONG insists that he has not made mistakes, but agrees to pay the newspaper peddler HK$5,010.

The newspaper stand owner of Mr. LI, Yaojia states that Mr. WONG, Shiying, 64, subscribed a sort of financial newspaper via his stand during the period of January 2002 to October 2005, involving subscription fees of HK$6,978. The stand owner demanded him many times but failed, therefore, he had to resort to the court for claims.

Mr. WONG, Shiying appeared at the court yesterday, arguing that the newspaper peddler had never mailed him any bills. Later on, when demanded for the outstanding fees, Mr. WONG, Shiying mailed out a check of HK$1,440, but failed to reach the stand owner.

(Comments: Hong Kong is a common law society, different from Mainland China. The Judges in Hong Kong have good social status, highly respected and expensively paid in order to maintain their independent positions to issue fair judges and reasonable decisions pursuant to common laws on good faith. The current story, however, tells us another side of a Hong Kong judge, who may be treated too well, always living in no financial troubles and does not need concerning about the grassroots or ordinary persons’ daily life things, so that they do not even know they should pay or offer to pay their outstanding bills at intervals, unless billed or demanded years later. Mr. Justice Wong’s arguments obviously can not convince ordinary people or media readers. Presume that his agreements were legally supported, the normal living orders would have to be altered or amended. Once a person receives due services in ordinary life, he has to offer to pay for that, rather to simply wait for bills or demands, no speaking of waiting for three years, this is common sense. Ordinary persons all know about that, let along a highly respected judge with higher moral standards living in the developed society of Hong Kong, who should know right and wrong much better than others. In the developing country of Mainland China, should a taxpayer fail to pay taxes for excuses of not receiving any tax bills, he may be deemed as "evasions of tax responsibility” and may bear heavily-imposed liabilities)



According to a news report by the People's Court Daily last month, Dalian Intermediate People's Court(“the Dalian court”) has made great ways to successfully settle a sino-hong kong joint venture conflict via mediation approach, satisfying both parties.

In June 2002, a Hong Kong catering company(thereafter referred to as “the foreign partner”) executed an equity joint venture contract with a commercial company in Dalian city of the Northeastern Chinese Liaoning province(thereafter referred to as “the Chinese partner”) in order to establish a joint venture catering company. The foreign partner invested RMB3,200,000 and the Chinese partner invested RMB2,800,000; in additions, both partners further agreed the foreign partner was responsible for the joint venture construction investments of RMB3,000,000 while the Chinese partner should lease out a plot of its land to the joint venture. In September 2002, the joint venture was officially issued with business license. As the joint venture was in operations for some years, however, both parties constantly had different opinions and their arguments later on became so heated that they had to settle their conflicts with the Dalian court.

The judges carefully studied the case, summed up the core points of conflict, organized four times of evidences exchange and cross-examinations, and also held three times of trials, during which both parties via their lawyers/agents had heated arguments upon legal facts and application of law.

The judges reckoned, after several rounds of hot debates, that there were possibilities of mediating the case, therefore, the judges were determined to use the mediation method to settle the conflict, they also brought up with a mediation option of “to terminate the joint venture contract, liquidate the joint venture enterprise and each partner to take back the money they have previously invested into the catering company”.

At the earlier stages of mediation, both partners still insisted on different opinions and no progress was made. The judges had to actively help them make analysis of advantages and disadvantages, pointed out the liabilities that both partners had to bear for their cooperation, and also let both sides know that if they continued the lawsuit, both of them should not only invest more manpower and money, increase litigation cost, but also the aforesaid losses would definitely be further expanded.

In order to persuade both parties to come to a mediation settlement agreement, the judges additionally invited management staff of the foreign partner, via its lawyer/agent, to come to Dalian for direct meeting with the Chinese partner counterpart. They were both deeply moved by the judges' actual feelings, sincerities, good faith and minding-no-troubles mediations.

In earlier December 2007, both parties ultimately agreed to a mediation settlement option and reached the mediation agreement.

(Comments: The lawsuit parties at issue are so lucky to have the kind-hearted / Marathon-style Dalian judges in China. Please bear in mind, however, that in Mainland China you can not expect to encounter such kind of mediation judges constantly, even though most of the Chinese civil litigation judges prefer to try and close their cases via mediations for immediate or earlier settlements)




(The article is taken from South China Morning Post dated 29th December 2007 with minor adjustments, for reference only)

Luminent Mortgage Capital, the home-loan investment company that lost about 90 per cent of its market value in 2007, sued Merill Lynch, saying the firm misrepresented the risk of mortgage-backed securities it sold.

Luminent invested in the securities in 2005 believing the mortgages were made to creditworthy borrowers and backed by “prime quality” collateral, the investment firm said at the end of 2007.

The default rate had been “extraordinarily high”, Luminent said.

Merrill denied the allegations, spokesman Bill Halldin said.

Sean O'Shea, a partner at the O'Shea Partners law firm said: “Merrill sold us subprime but packaged it as A-rated.

We do not think there is any way that they could not have known what they were selling us was defective.

Meanwhile, CNBC reported that Merrill Lynch planned to announce about 1,600 layoffs, less than 3 percent of its workforce, after disclosing forth-quarter write-downs.

The layoffs were likely to be in trading positions and related areas and were not likely to include the investment banking or private client groups, CNBC's Charlie Gasparino said.

Luminent said a lender was seeking US$8 million from Luminent, mostly in connection with transaction involving Merrill, the third-largest United States securities firm.

Luminent did not believe it was in default, the company said.

Luminent, however, did not name the lender.

Merrill “properly and accurately disclosed the overall quality of the loan pool”, Mr. Halldin said. “Luminent is a sophisticated institutional investor and we satisfied all their information requests before and at the time of their purchase.”

(Comments: Who can you believe in this money-driven world ? Even smart and tough American lawyers via investment institutions are said to be misrepresented when they are having non-legal/investment transactions with the world leading investment banks. Both of them are talking about different stories when the investment transactions fail. It seems from the story that the conference recording of decision-making things are of great necessities, for it can recall and tell the true stories of earlier stages; in additions, in the Untied States, recording may at least serve as persuasive evidence to convince judges to much extents, while in Mainland China, original recording via legal channels may constitute favorable legal evidence)


According to an updated news report in Beijing Youth Daily, several international music companies has sued the Mainland China's leading search engine company of Baidu for its providing of illegal music download links which shall constitute infringement.

Beijing Higher People's Court has now made rules, however, that Baidu has not constituted infringement, even though Baidu provides relevant searching links.

EMI, BMG and other international music companies have earlier filed with a Beijing court, suing Baidu for its unlicensed links, leading the illegal downloads much easier, and therefore have requested Baidu to make apologies, stop further providing with the links, and to make compensations of RMB1,670,000.

Baidu insists that what its company provides with in terms of search engines has no difference with others for links to searches, news and pictures.

(Notes: This ruling seems contradictory to the “BEIJING COURT RULES AGAINST YAHOO CHINA”, a similar copyright infringement case, also recently ruled by Beijing Higher People's Court(see my blog dated 22nd December 2007. Should you expect to know why the similar infringement cases have opposite rulings, you have to carefully look at and compare the two valid judgments to be possibly obtained either from the Beijing courts or from the parties or via their lawyers)