Choosing your banking partner in China

Whether your latest investment in China is a Representative Office

(RO), a Wholly-Foreign Owned Enterprise (WFOE), a Foreign Invested

Commercial Enterprise (FICE) or Joint Venture (JV), a key

consideration for your business will be choosing the right bank. 

Foreign investors can establish accounts in China with:

  • International banks with a local presence, the major banks being
    Bank of East Asia, Citibank, DBS Bank, Hang Seng Bank, HSBC, and
    Standard Chartered; or through

  • a Chinese bank, the largest being Industrial and Commercial Bank
    of China, Bank of China, China Construction Bank, Agricultural Bank
    of China, and Bank of Communications.


Here are some key recommendations when choosing your bank of choice in China:

  • First, you should always consider the nature of your business transactions. If your business is primarily focused on the Chinese domestic market, then a local Chinese bank would be the best choice for you. If the bulk of your business takes place within China, you are unlikely to have many international remittances. With a local Chinese bank, you will find an established bank with a strong network, convenient services, and easy access for both your vendors and your customers.

  • If your business in China is solely a cost-center, then the international bank that services your international headquarters should be your first choice. An international bank is also a sound choice for businesses offering a production function and exporting products back to their overseas clients or an overseas subsidiary. An international bank that already does business with your company’s headquarters will generally allow your Chinese entity to share the same policy, reducing potential bank charges.

  • If you expect that your business will require a significant loan, then your best choice is to choose a large, prominent, and well-established Chinese bank. If you do decide to use a smaller bank, be sure to convey the demands of your business to a banker before making the decision to open an account.

  • Try to choose a bank close to your company but recognize that the closest bank may not always be the most convenient for you. Trading companies in large office buildings will often find the banks in their immediate proximity to be overcrowded and subject to long waits. If this is the case at your workplace, a bank not too far from you may be your choice.

  • To avoid complications, be sure to ask if any employees at your local banking location can communicate in your native-tongue. Having someone at your bank whom you can easily communicate with is in the best interest of your business.


What is the tendency for Foreign Investors in China?

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 many advantages, namely:

  • The application process for opening a bank account with an international bank in China will be more document-intensive and 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

  • Chinese banks generally offer greater bank account security.


Bank Signatories

When opening a bank account in China, a foreign investor will need to specify what will act as the “signature” of the company. Usually the company’s financial chop (seal) is required to do so, along with either the legal representative’s chop (or chief representative’s chop for a representative office) 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.

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 check that is written.

Many bank transactions can now be done online in English, including the approval of transactions and viewing account balances from abroad although the beneficiary name needs to be written in Chinese characters when handling online remittances. It is possible and sometimes necessary to make tax payments online in certain areas (including Shanghai and Beijing) by signing a three-party agreement with an authorized Chinese bank.

Types of Accounts to be opened

Foreign-invested entities (FIEs) in China need to establish a minimum of three bank accounts: a Renminbi (RMB) basic account, a foreign currency capital contribution account and a tax account.

Renminbi (RMB) accounts 

There are several types of RMB accounts: the primary ones are the Basic Account and the General Account. The main differences between the two types of accounts are: 


  • Cash can only be withdrawn from the basic account 

  • Salary and bonus payments can only be affected from the basic account

  • Only one basic account can be opened by each company, irrespective of how many banks are used. Multiple general accounts can be opened.

Tax account
This is a RMB account, which is used to settle all tax payments to the tax bureau. The tax amount to be settled each month must be transferred from the RMB Basic Account to the Tax Account. Once the tax declaration is made, the tax bureau will deduct the tax amount automatically by a certain date.

Foreign Currency accounts
There are various regulatory requirements applicable to the opening and operation of foreign currency accounts. Different types of foreign currency accounts are opened for different purposes, and the operation of these accounts is subject to regulatory restrictions in relation to these specific purposes. There are many foreign currency account types available to foreign invested enterprises registered in China, but it must be verified with each bank separately whether these types of accounts are on offer.


Who is the State Administration of Foreign Exchange (SAFE)?

The SAFE is an administrative agency responsible for managing foreign exchange activities in China, setting relevant regulations and administering China’s foreign exchange reserves. SAFE approval or record-filing is required for a range of transactions involving inbound and outbound forex payments.

SAFE approval is not required to open Foreign Currency settlement accounts, and foreign invested enterprises can open these directly with banks. Similarly, Foreign Currency Loan Accounts and Repayment Accounts do not need prior approval from SAFE. The opening of other types of foreign currency accounts in China requires prior approval from the local SAFE office. 

Approval for opening settlement accounts is accompanied by a ceiling limit - these limits are determined by SAFE according to the amount of income and payment of last year under current items. The limit is reviewed annually by SAFE. The limit is set at company level, rather than at an account level. Funds received by settlement accounts more than this limit must be paid out or converted into RMB within a specified number of calendar days (currently 90).  Depending on overseas transaction levels, SAFE may be required to approve, either before or after a remittance. 


After careful consideration, be sure to sit down with a banker at the institution of your choice in China. Openly discuss with them the demands that your China business will require, and make sure that you have a clear understanding of their financial capabilities within China. Most banks will provide you with a good quality experience but understanding which is best for your business is a vital building block of your lasting success.

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DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.


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