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Why choosing the right bank matters when growing your business in China

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When setting up your WFOE in China, you must have an RMB basic account and a foreign currency capital contribution account, both of which are used for different purposes. An RMB basic account is needed for the WFOE’s daily business activities within China and is the only account from which the WFOE can withdraw RMB cash. It is also the default designated account used for tax payments. Opening a foreign currency capital contribution account requires approval from the SAFE (State Administration of Foreign Exchange) and is necessary to receive capital from overseas.

In addition, whilst it is not a requirement to set up a WFOE, you may also need a general deposit account if you’re in need of a loan or to satisfy other settlement requirements. These accounts can make it easier for your company to keep track of its business flow while in China. It’s therefore important to find the right bank that can help you open these accounts and provide the services you need. 

Chinese or international bank?

To help you run your business in China, you should choose the right bank. There are many local and international banks present throughout China. A WFOE can open bank accounts with both Chinese and international banks. You may consider opening your accounts with an international bank because of your existing business relationship with the bank in the first place, but if you create your accounts with a local Chinese bank it will be easier for you to do business with your Chinese suppliers. It will also provide you with more efficiency, convenience, and security for your business in China. 

Large or small bank?

When choosing a bank, size matters. To facilitate your business, try opting for larger banks with more branches and resources. Larger banks are able to offer a wider variety of credit options and often have attractive introductory offers for opening new accounts. That being said, smaller banks can also be useful in some cases. If your business is relatively small and your credit is low, you may encounter difficulties securing loans from larger banks, whilst smaller banks may be more willing to lend you money with a better rate to win your business. Nevertheless, a larger bank is always recommended. 

What about banking fees?

There are many large Chinese banks for you to choose from, and most of them will offer all the services you need for your business. However, these banks may offer different financial products and services, with varied fees, charges, lending options, and perks. Before you open your business bank account, it’s essential to read the terms and conditions carefully, especially the sections relating to banking fees. It’s a good idea to compare fees between banks to find the right one that can provide the products and services you need with a lower overall cost. 

What perks can a bank offer?

In a bid to attract customers, many banks send gift cards to new customers while some offer a cash bonus for opening a new account. Others may offer business customers payroll services or hotel and travel discounts, etc. You can take such perks into account if you’re torn between which banks to do your business with.

Choosing the right bank can be a challenge as there are so many factors to consider, especially when you’re new to the Chinese market and are unfamiliar with its banking system and WFOE regulations. With our experience and expertise in WFOE consulting, INS Global will analyse your needs and help you find the right bank to give your business a boost in the Chinese market.

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