Once obtaining a business license in China, the newly established FIE must choose a specific bank to open the bank account, without which the entity will not be able to carry out its daily operation.

What Type of Bank Accounts Do I Need in China?

When opening an Foreign-Invested Enterprise in China, there will be a need to establish at minimum two bank accounts:

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

1. RMB Basic Account

An FIE must have one (and only one) RMB basic account for daily business operations in China*. This account is the only account from which the company can withdraw RMB cash. The RMB basic account often acts as a designated account for making tax payments.

*China is piloting to remove the RMB basic account requirement in Lingang arear, Shanghai FTZ.

2. 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 SAFE.

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.

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 in China

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

Larger 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 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
  • Bank account

Practical tips about banking authorizations

When opening a bank account in China, an FIE 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 an 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.

Many bank transactions can now be done online in English, including the approval of transactions and viewing account balances from abroad. It is possible and sometimes necessary to make tax payments online in in many cities by signing a three-party agreement with an authorized Chinese bank.

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.

Requirements for Opening a Bank Account in China

Foreign investors may get the feeling that opening a bank account is not a straightforward process, and indeed this is sometimes the case. This occurs partly because banks in China are subject to high scrutiny from the People’s Bank of China ("PBOC"), resulting in the emphasis now given to the KYC (know your client) policy.

Under PBOC direction since April 2020, Chinese banks have also become stricter about opening bank accounts, especially for newly established companies – both for domestic companies and foreign invested companies.

For banks to validate the “real business” of the applicant company, banks must now perform an on-site visit procedure. This procedure includes a bank officer visiting the physical location (the office) of the applicants to verify that they have a physical location and staff. The photo of the location with the company nameplate and a business license will be taken for the bank’s internal compliance purposes.

Based on this situation, the bank will require the individual who has submitted their passport as verification documentation on behalf of the company (the legal representative, that is) to be present at the time of the account opening

Latest COVID-19 requirements

Considering the travel ban due to COVID-19, many companies and foreign individuals confronted the burden of being present in the bank to open any kind of bank account necessary for their business to be operational.

To facilitate foreign investment, some banks are advancing and improving their compliance and control policies while also complying with the official requirements established by the government. For example, some of the bank branches will allow the specific information to be provided in the scripted video made by the individual who is affected by the travel ban. This video is then validated through the bank controlling department. After the video is accepted by the compliance team, the “physical office” location visit is performed.

This policy is subject to circumstances and to changes at any time. Investors are suggested to consult with a professional services firm or representative for the most current information and options for the institutions and region that they intend to open an account in.

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