How to Open a Bank Account in China?

One of the first decisions that will have to be made by investors is that of banking. Following the acquisition of a business license in China, the newly formed FIE must select a specific bank to open a bank account, without which the entity will be unable to carry out its daily operations.

Contributing Advisor

Viktor Rojkov

Manager, International Business Advisory

Several accounts are required, including one RMB Basic Account and one Foreign Currency Capital Contribution Account. Certain restrictions could apply to which institutions are supported, which accounts can be opened and the type of transactions each account type supports - depending on the chosen bank and their policies. 

What type of bank accounts do I need in China?

When opening a Foreign-Invested Enterprise in China, at least two bank accounts must be established:

• RMB Basic Account and
• Foreign Currency Capital Contribution Account.

RMB basic account

To conduct daily business operations in China, a Foreign-Invested Enterprise (FIE) is required to maintain a basic RMB account. This account serves as the sole channel for the company to withdraw RMB cash and is also designated for making tax payments. The bank where this account is opened must be authorized by the local tax authorities and fully integrated with the latest Golden Tax System, which is part of China's digital tax infrastructure. In most cases, foreign banks do not have this authorization.

There could be multiple RMB accounts in different banks as well.

Foreign currency capital contribution account

An FIE must also have a foreign currency capital contribution account to receive capital injections from the foreign investor. Approval to open this account can be obtained from the State Administration of Foreign Exchange (SAFE).

Most banks suggest opening an Initial basic RMB account and a foreign currency capital contribution account in the same bank to ease and streamline the process.

Additional general RMB accounts and other types of foreign currency accounts can be opened for different purposes. For foreign currency accounts, these may include a settlement account for the collection of current items in a foreign currency, foreign debt special accounts, and temporary capital accounts.

Requirements for opening a bank account

Chinese banks are very diligent when opening bank accounts, especially for newly established domestic or foreign-invested companies –due to high requrements and compliance  from the People’s Bank of China (“PBOC”), which has resulted in a greater emphasis on the KYC (know your client) policy.

Banks perform an on-site visit procedure to validate the "real business" of the applicant company. This procedure entails a bank officer visiting the applicants' physical location (the office) to confirm that they have a physical location and staff. The bank will photograph the location with the company nameplate and a business license for internal compliance purposes. Some banks could conduct a short interview with the legal representative of the company to check basic information regarding the business operations and plans.

In this case, the bank will require the person who has submitted their passport as verification documentation on behalf of the company (the legal representative) to be present at the time of account opening.

Requisite Documents

The documents required to open a business bank account depend on the bank and the company structure. The following are some general documents that you would be required to submit:

• Proof of your company's proper registration, such as a valid Business License, Tax Registration Certificates and Articles of Association;
• Names of directors and a company chop (stamp);
• Proof of identification for the company’s legal representatives, including responsible officers, directors, and principal shareholders;
• Details of the company structure and ownership; and
• In the case of a foreign registered company or joint venture, proof of state approval of your business venture may be required.

Timeline

The entire account opening process takes three to five working days with a Chinese bank and three to four weeks with an international bank.

International and Chinese banking institutions

Foreign investors can establish the above accounts in China through international banks with a local presence, or through a local Chinese banking institution.

Common international banks

• Bank of East Asia,
• Citibank,
• DBS Bank,
• Hang Seng Bank,
• HSBC, and
• Standard Chartered.

Major Chinese banking institutions

• Industrial and Commercial Bank of China,
• Bank of China,
• China Construction Bank,
• Agricultural Bank of China, and
• Bank of Communications.

Which to choose?

Foreign investors in China often prefer to establish an account with an international bank because of an existing business relationship. However, establishing accounts with a Chinese bank has a number of advantages, namely:

• The application process for opening a bank account with an international bank in China could be more document-intensive and tends to take longer compared to opening such an account at a Chinese bank;
• There are substantially more Chinese commercial banks than foreign bank branches, which allows for more convenient and faster RMB remittance;
• Most Chinese companies have local bank accounts - conducting transactions with them will be easier and faster if done from a Chinese bank instead of an international bank; and
• Bank account security
• Further, some international banks are not able to contribute social insurance and housing funds to FIEs’ local employees, as they are not integrated with China’s internal systems. 

Practical tips about banking authorizations

Company signature/ chop

An FIE must specify what will serve as the company's "signature" when opening a bank account in China. Usually, the financial chop (seal) of the company is required, along with the legal representative's chop (or chief representative's chop for a RO) and a handwritten signature. Banks generally prefer using the legal representative’s chop instead of a handwritten signature, as the latter is easier to forge and harder to verify.

E-banking security

For an entity’s RMB basic account, it is possible to apply for different levels of e-banking access and multiple security keys (in the form of a key ring/USB dongle) – one with access rights and another with approval rights. Another common security measure is a device that generates a new password for every new bank transaction.