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.
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.
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)