Opening a China business bank account from Singapore

Starting a venture in mainland China can reap many rewards, especially if you understand local culture and keep up with the ever-changing regulations. Once your legal entity is established, you may consider opening a business bank account in China. Having a China bank account simplifies transactions like exchanging SGD to Chinese Yuan (CNY), receiving payments from local customers, or paying China-based suppliers. 

In this article, we’ll cover the benefits of having a business bank account in China, how to open one from Singapore, and reliable alternatives to Chinese banks.

Why do I need a China business bank account?

If you’re operating in mainland China or setting up an entity there, having a China business bank account will facilitate your growth. Here are its main benefits:

Transact in CNY without unnecessary conversion fees

The primary benefit of getting a China business account is receiving, holding, and sending payments in Chinese Yuan (CNY), the currency traded within mainland China. By transacting directly in CNY, you eliminate unnecessary currency conversion fees and avoid the risks associated with exchange rate fluctuations. 

Receiving payments from clients or paying suppliers in China can also be processed faster through a CNY business account versus a cross-border transaction to Singapore.

Tax and accounting purposes 

Trust is essential to your success in China. Having a CNY bank account in your business’s name can increase your credibility among Chinese suppliers, clients, and partners, as it demonstrates commitment to the local market and compliance with the banking system.

A local bank account lets you keep financial records for your China entity, which you’ll need to calculate Corporate Income Tax (CIT) and determine your tax incentives.  Another advantage is streamlined accounting. Having an immediate and accurate view of your financial standings in RMB is critical for maintaining liquidity and funding your daily operations. 

Adherence to regulations

The State Administration of Foreign Exchange (SAFE) is the Chinese government agency responsible for managing foreign exchange reserves and drafting rules that regulate the forex market. Having a local business bank account keeps you compliant with SAFE regulations on moving money in and out of China. It also simplifies the documentation processes required for your financial operations.

A China bank account opens doors to a range of financial services, including access to banking products, credit facilities, and business loans.

4 limitations of doing business in China without a China bank account

Although you can still send money to your China entity from Singapore, operating without a local business bank account limits your growth in the following ways:

Foreign exchange risk

Doing business without a China bank account invites forex risk because of the fluctuating nature of exchange rates. These fluctuations can lead to uncertainty in the exact amount of RMB received in China from Singapore, potentially impacting budgeting and financial planning for your local entity. On top of that, these transactions are subject to currency conversion fees, with banks adding their own markup to the forex rate. 

Higher transaction costs

Cross-border transfers from Singapore to China will incur high transfer fees that chip away at your margins. That’s because intermediary banks are needed to facilitate international transactions, each adding their own cost. 

There's also the inherent cost structure of cross-border payments, which includes handling charges and administrative fees to comply with international banking regulations and anti-money laundering protocols. 

These factors result in higher overall transaction costs compared to domestic transfers via a China bank account.

Delayed transactions 

The complex nature of international banking means cross-border transactions take several days. Factors like time zone differences, public holidays, and rigorous regulatory checks can further extend processing times. For businesses dependent on timely transactions, these delays can strain relationships and impact your reputation and reliability. 

Regulatory and administrative challenges

Navigating China’s complex regulatory frameworks requires meticulous attention to detail and thorough documentation, increasing the administrative burden of your Singapore team. Additionally, foreign entities in China must remain compliant with the forex controls governed by SAFE. 

Failure to comply with these regulations can result in financial penalties, legal issues, and operational disruptions, making cross-border financial transactions more challenging than domestic transactions.

China business bank account types for foreign-registered businesses

Tighter bank regulations in 2021 require foreign-owned companies to undergo a stringent Know-Your-Customer (KYC) process, which includes an in-person visit from a legal representative.  

If you are a non-resident enterprise owner (i.e. your main administrative office is in Singapore but you have an office or entity in China), you can open one of these corporate bank accounts:

• Non-Resident Account (NRA). NRAs are the most accessible business bank accounts - almost all China banks offer them.  With an NRA, you can use foreign currencies or RMB to settle payments and receive capital investments.

• Free-Trade Non-Resident Account (FTN). The FTN is similar to the NRA, with one key difference: they are only available from banks established within the Free-Trade Zones (FTZ) like Shanghai, Hainan, and Tianjin.

• Offshore Account (OSA). This is the oldest type of Chinese bank account available to non-resident foreigners, and the most restrictive. An OSA only allows foreign currency transactions and forbids RMB transactions.

You can open these accounts through the 5 state-owned banks in China:

• Bank of China (BOC)

• Agricultural Bank of China (ABoC)

• China Construction Bank (CCB)

• Industrial and Commercial Bank of China (ICBC)

• Bank of Communications

Fintech business accounts

Fintech solutions like Airwallex make it easier for Singapore businesses to transact in China. With Airwallex’s Chinese Yuan (CNY) business account, you can easily collect and make payments for your day-to-day operations in Mainland China. 

Related article: CNH vs CNY

The entire account opening process can also be done online, without an in-person visit. This seamless, digital-first approach significantly reduces the bureaucratic and logistical hurdles traditionally associated with opening a bank account in China. 

How to open a business bank account in China from Singapore

The process of opening a business account in China varies between traditional banks and fintech firms. Brick-and-mortar banks, like the ones mentioned above, takes longer, involves more paperwork, and require an in-person visit. Fintech firms, on the other hand, can process your business and identity documents entirely online. 

Opening an account in a mainland China branch from Singapore

On paper, opening a bank account in Mainland China from Singapore looks straightforward. However, the requirements, process, and timelines will vary depending on the bank, the bank account type, your company’s structure, and where your company is incorporated.

The process of opening a China bank account can take anywhere from 5 days to 4 weeks. 

Prepare and submit all required documents

Each bank will have a different list of required documents. Generally speaking, you’ll need to submit the following, in English and Chinese:

• Valid business registration documents or certificate of incorporation

• Proof of your business operations, such as company payroll records, tax documents, or invoices

• Audited financial statements for the last 2 financial years

• Certified shareholders or directors list

• Identification documents of at least 1 director or principal shareholder

• Identification documents of your legal representative and/or the agent opening the account

• Reference letter from your bank in Singapore

Appoint a legal representative or director to make a personal appearance  

Due to tighter regulations, a legal representative and/or a company director must visit the bank in person, together with their original passport and other identifying documents. A blank clerk will verify their identities as part of the process.

If your chosen bank has branches outside of mainland China, you may have the option to visit the branch closest to you.  

Prepare to submit additional documents

Apart from the standard list of documents, your bank may require additional documents or details about your business. 

Opening a China bank account from a Singapore branch

Chinese banks ICBC, OCBC, and BOC have branches in Singapore and offer RMB accounts to local businesses that trade with China. The process is similar to opening a corporate bank account in Singapore - submit your application online and gather your business registration documents. A bank representative will call you and schedule an in-person appointment, where you will submit your documents and verify your identity.

Opening a fintech business account from Singapore

If your China bank account will be used to make secure CNY transactions like paying Chinese suppliers from Singapore, you may benefit from a fintech company like Airwallex instead of a traditional bank. 

Opening an Airwallex CNY Business Account is done entirely online, and you can start sending or receiving CNY as quickly as a few hours. 

Why does opening a China business bank account require an in-person visit?

Opening a business bank account in China will always require an in-person visit from a legal representative or a corporate director.  Key factors include strict regulatory and compliance requirements, which often necessitate detailed documentation and verification processes that are difficult to replicate online. 

As you’ve read earlier, opening a China business account requires extensive documentation. In some cases, original hard copies of documents need to be submitted.

On top of verifying business licenses and identity of the company owners, banks may also visit your business’s physical location in China to obtain proof of your operations. They may also take a photo of your location or company nameplate for their internal record-keeping.  

Airwallex CNY Business Account: an effective alternative to a China bank account

Many SMEs in Singapore do not require the products and services of a China bank account.  If all you need is a secure way to make transactions in RMB, consider using a fintech firm like Airwallex instead. The account opening process is done entirely online, with no in-person visit needed. 

Airwallex has more to offer besides a simplified account setup. With the Airwallex CNY Business Account, you can enjoy market-leading exchange rates, lower transaction fees, and real-time financial services. This fintech platform is not just about ease of use; it's about empowering your business with the agility and flexibility needed to thrive in the dynamic Chinese market. 

Furthermore, Airwallex is a licensed online payment service in China and fully compliant with all China regulatory authorities. This means you can trust Airwallex to make secure and regulated transactions to Mainland China from Singapore. 

Here are additional benefits to using an Airwallex Chinese Yuan (CNY) business account:

• Receive, hold, and pay CNY without incurring unnecessary conversion fees. This simplifies your financial operations and offers a cost-effective way to manage funds for your China operations. 

• Convert to CNY at market-leading rates. Airwallex lets you convert any currency to CNY at market-leading exchange rates, so. You also have the flexibility to send CNY to accounts in any country.    

• Seamless integration with online marketplaces like Shopify, Amazon, Lazada, and Shopee, so you can easily accept payments in local currency.

• Pay via borderless cards. Easily make payments with Airwallex’s borderless cards, and enjoy 1% unlimited cashback and zero international transaction fees or FX fees.

• Expense management. Monitor your team’s expenses with Airwallex’s end-to-end expense management solution. Set limits to your employees’ corporate cards, and easily upload receipts and submit expenses through the Airwallex app.

Interested to know what else an Airwallex account can do? Simply sign up here and start receiving and making payments in CNY. Alternatively, you can also book an online demo with us today to find out more about the Airwallex account.

FAQs

Q: Can I open a bank in China as a foreigner?

A: Foreign business owners can open a corporate bank account in China if they have an office or establishment in the country. They can choose from 3 types of bank accounts: Offshore Accounts (OSA), Non-Resident Accounts (NRA), and Free-Trade Non-Resident Account (FT-NRA).

Q: Can I open a China bank account online? 

A: It is difficult to open a China bank account online, as banks require an in-person visit by a legal representative or director. However, you can open a CNY business account online through fintech companies like Airwallex.  

Q: Can I open a China bank account from Singapore? 

A: You may be able to open a China Chinese Yuan (CNY)  bank account from one of the BOC, ICBC, ABoC and CCB branches in Singapore. However, you’ll need to make a personal appearance at the branch to set up a bank account. 

Alternatively, you can also use fintech companies like Airwallex to open a Chinese Yuan (CNY) Business Account. With Airwallex’s quicker transfers, you can send payments in as quick as one business day, as well as save time on bulk transfers if you’re dealing with numerous clients in China.

Q: Do I need a China bank account in order to wire money in China?

A:  It is generally required to have a China bank account. If you don't have a China bank account, there are alternatives like international wire transfers, Alipay, WeChat or fintechs like Airwallex.

Q: Can I open a corporate account in China with a foreign corporate entity?

A: Yes. With a foreign corporate entity, you can open non-resident accounts (NRA). However, this usually restricts you from enjoying all the benefits of a China bank account as NRAs are guarded by more regulations than normal corporate bank accounts. 

Q: Do you need a Chinese bank account to do business in China?

A: Yes, it's generally necessary to have a Chinese bank account in order to do business in China. This is because most business transactions in China, such as receiving payments from customers or paying suppliers, are conducted in Chinese currency (Renminbi or RMB). In order to receive or make payments in RMB, you will need a Chinese bank account.