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Opening a Bank Account in China


BANK ACCOUNT TYPES

To operate in China, FIE need at least two bank accounts: a RMB basic account and a foreign currency capital account:
 

  • A RMB basic account is required for daily business operations. This is the only account from which the company can withdraw cash in RMB. In addition, this RMB account is also commonly designated for tax payments.
 
  • A foreign currency capital account is first needed for collecting the equity contributions from the foreign investor(s). It can also be used for the collection of specific items in a foreign currency or the management of foreign debts. Its opening requires the approval of the State Administration of Foreign Exchange (“SAFE”).
 
CHOOSING A BANK IN CHINA
 
Foreign investors can either chose to open the above described bank accounts with a Chinese bank or with an international bank established in China. Major Chinese banks include: the Industrial and Commercial Bank of China, Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of Communications; while major international banks with a local presence in China include: Bank of East Asia, DBS Bank, Hang Seng Bank, HSBC and Standard Chartered.
 
Foreign investors often tend to prefer opening bank accounts with an international bank because of existing relationships in their own country. However, it is not necessarily simpler and opening bank accounts with a Chinese bank can offer some strategic advantages: (i) less documentation is required, so the process is faster, (ii) transfers with Chinese companies are simplified, as most of them only have Chinese bank accounts, and (iii) more ATM facilities are available (foreign banks do not have as many branches as Chinese banks and therefore provide less ATM machines).
 
When opening a bank account, an FIE shall indicate which tool will act as signature of the company. More often, banks require a handwritten signature, as well as the company’s financial chop and legal representative chop. In China, company’s chops are given a higher legal status than handwritten signatures (because the latter are easier to falsify). Therefore, a handwritten signature alone will not be considered as binding, whereas the use of the company’s chops without any handwritten signature will bind the company.

October 2015

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