Setting up accounts

Can a non-resident entity, e.g. a company not registered in China , open a Renminbi ("RMB") account with a bank outside of China ?

No - RMB is not a fully-convertible, international currency. Corporate RMB accounts can be opened by onshore entities only.

 

Can a non-resident entity open an account with HSBC in mainland China?

Companies that are HSBC customers but that are not resident in China are permitted to open foreign currency ("FCY") accounts with HSBC in China , but RMB accounts can not be opened.

To open an offshore FCY account, account opening documents need to be presented that fully satisfy regulatory requirements, and that confirm that the purpose of account opening is justified by genuine business needs.

Some of the main types of non-resident FCY accounts include: temporary capital accounts, foreign direct investment accounts and other accounts.

• Temporary capital accounts
are FCY accounts that may be used by non-resident entities to hold capital and funds for the payment of expenses incurred prior to the subsequent establishment of a foreign-invested entity ("FIE"). The account requires the approval of the State Administration of Foreign Exchange ("SAFE") before being opened. Once the FIE has been established, the funds in the temporary capital account can be transferred into the FIE's capital account. Where the funds in the temporary capital account need to be converted into RMB or transferred, SAFE approval is required for each transaction.

• Foreign direct investment accounts
accounts are FCY accounts to be opened and used by non-resident entities to hold funds for payment related to their direct investment (including mergers and acquisitions) in China . The account requires the SAFE approval before being opened. The funds therein shall be used for the designated purpose and SAFE approval is required for each transaction.

• Other accounts
are for the receipt of FCY funds only, and the FCY funds in this account cannot be converted into RMB. The funds must be paid either to suppliers in China in FCY, or paid to suppliers outside of China in FCY. Opening this type of account does not require SAFE approval

 

What type of accounts would a foreign-invested entity ("FIE") registered in China need?

• Foreign Currency
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 a number of foreign currency account types available to foreign- invested enterprises registered in China :

Foreign currency account types	Inflow	Outflows	Comments
Capital account	To receive capital injections and capital increases	Payments for current items and approved capital-items	In principal only one account can be opened with a bank located in the same region as the company
Settlement account	Collections for current item foreign currency	As above
Foreign debt special accounts	To receive loan proceeds from overseas	As specified in the loan agreement, but can't be reused to repay RMB loans	Foreign Debt registration required
Foreign debt special loan repayment account	Transferred from other foreign currency accounts, or exchanged from RMB	Repayment of the foreign currency loan principal and interest	Not necessary, as foreign debt can be repaid through a foreign debt special account
Foreign currency loan account (including loan account and repayment account)	To receive the loan proceeds from onshore foreign currency loans by banks or through Entrusted Loans	To repay the principal and interest of onshore foreign currency loans from banks or though Entrusted Loans	Exchange to RMB not allowed
Temporary capital accounts	To temporarily receive funds related to direct China investment	Payment of expenses associated with direct investment in China	One account only

State Administration of Foreign Exchange (SAFE) approval is not required to open FCY settlement accounts, and foreign invested enterprises can open these directly with banks. Similarly, Foreign Currency Loan Account 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 account level. Funds received by settlement accounts in excess of this limit must be paid out or converted into RMB within a specified number of calendar days (currently 90).

Interest rates for deposits (including current account and time deposits) below USD3 million or equivalent are regulated by the Central Bank, except for time deposits of two years for USD, HKD, EURO and JPY.

• 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 effected 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

 

What are the special regulations for Representative Office accounts?

Due to their legal structure, representative offices are not permitted to engage in direct profit-making activities i.e. they are not permitted to issue invoices for sales, accept payment for goods or contract for sales in the name of the home office.

Representative offices can hold both basic and general RMB accounts. Representative offices can hold FCY accounts for office expenses.

 

I need accounts for new businesses in three different cities: do I need to contact each branch separately?

Provided that the cities in question are within our RMB catchment area, you do not need to contact the three branches separately. You can choose one branch as your primary contact (normally where your head office and decision makers are located) to co -ordinate your banking needs in various HSBC branches.