Opening an Overseas Multi-Currency Corporate Account in China
By Jonathan Xu
Director of Business Operations and Marketing
SHANGHAI (THE BENELUX CHAMBER OF COMMERCE) - Receiving corporate transactions from abroad can be quite a challenge: every international and local entrepreneur in China knows the stories of spending hours at the bank, receiving foreign currencies from overseas AR.
Having to be there in person, bringing endless pages of paperwork and agreements between the payee and receiver and spending a couple of hours at the bank, we’ve all been there.
Opening an international corporate bank account would therefore be interesting for any foreign-invested enterprise in China with international clients, yet many international banks abroad have a complicated application system which can take several months.
Below, I will share my own, personal experience using an international digital bank for managing international AR and AP.
Even though this had been a great solution for my own business, it's still important to do enough research and make sure to be compliant with China's laws and regulations.
How do corporate transfers work in China?
Having had my own startup in 2018, we often had to deal with invoicing international customers. Each time a customer paid a bill, we had to go to the bank (not just a branch, but the exact branch where we opened our corporate account) and show a stamped agreement between us and the client abroad. This process would usually take about 1,5 hours and the foreign currency wouldn’t be available until the bank approved the transfer (after reviewing all the documents). This was the process for all transactions from 0,01 EUR all the way to X amount of EUR.
A digital solution?
In early 2018, I started using Wise Ltd.: a digital, Ireland-based bank which allows you to set up an international, corporate bank account with various currencies (all registered in the company’s name, not just some digital ‘vaults’).
Wise currently accepts China-based entities to open EUR, USD, GBP and NZD bank accounts, all from abroad. In order to get started, one has to prepare the business license and the legal representative’s passport/ID card. Within 24h, they’ll approve (or disapprove) the application and one can get started receiving payments from clients. Make sure to inform your local accountant, so he/she can do the necessary to file all payments and transfer money to the Chinese corporate account in due time with all the right documentation.
Advantages
Clients can then pay in their own currency (given that they are based in Europe, the US, the UK or New Zealand) and don’t have to deal with changing currencies and/or applying for an international transfer. Speaking from my own experience, payments made in the same currency to my corporate Wise account usually arrive within 1 hour. It is important to note that this could save you a lot of time and could ease payment processes for your customers:
- You only need to go to the local bank once in a while (e.g. after you’ve saved up a certain sum and you need some cash in China) in stead of going there for every little transaction;
- International customers can pay in their own currencies and aren’t requested to fill out a form for an international transaction (your accountant should take over this part when transferring assets to the main corporate bank account in China);
- Paying other bills in foreign currencies from the Wise-wallet becomes much easier, since a part of your assets will be in foreign currency (paid by foreign AR);
- Easy to set up as you don’t even have to go there in person.
Disadvantages
Is it safe? This is the first question that pops up in everyone’s mind. I must say that I currently also still use Wise as a personal member (which isn’t very different from the corporate functions) and I have never encountered problems. They’ve got a great customer service, are quick to reply and charge a very low fee for exchanging currencies. The app is very user-friendly as well as the website interface. Whether it’s up to me to say it’s 100% safe, I’m unsure.
But with having done more than 200.000,00 EUR worth of smooth corporate transactions between Europe and China by using Wise, I can tell that I’ve not felt any difference as when using a ‘normal’ bank provider. I also know of several other foreign-invested and local enterprises using Wise to ease their cross-border transactions.
Conclusion
Having experienced the difficulties of receiving cash from international AR, Wise helps out a lot of smaller, foreign-invested enterprises by simplifying payment processes for international clients an China-based providers. This doesn’t only count for international AR, but also for international AP. I’m sure it’s worth a try when dealing with international transactions from time to time as it saves time, eases international payment processes and is in fact and extra service to your customers based abroad. Always make sure to do enough research to see whether this could be a right solution for your business and make sure to be in accordance with Chinese laws and regulations.
Hungry for more information? Don’t hesitate to reach out to our Finance-savvy Benelux member companies to inquire for more details on this matter!
All information on Wise can be found on their website: https://wise.com/gb/business/