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Blog Top 4 Alternatives to Opening an Offshore Bank Account in Hong Kong

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Top 4 Alternatives to Opening an Offshore Bank Account in Hong Kong

by Angel Ho | 10 March 2020

 

Piggy banks on an island

Considering the territorial advantages of Hong Kong, it comes as no surprise that the majority of WFOE owners choose to open a Hong Kong corporate bank account. This enables them to freely transfer money overseas, without worrying about restrictions on exchange currencies as applied in Mainland China. 

But these days, the situation is much stricter. It’s no secret that it remains difficult for foreign-invested companies to open a business bank account in Hong Kong. Due to anti-fraud measures brought in after 2012, which affected HSBC among others, Hong Kong banks have increased their due diligence to levels where companies have found it really difficult to open an account. 

It’s obviously more convenient having a bank in the same jurisdiction as your business. But is a Hong Kong bank account your only option? Not necessarily! If you are one of the many foreign companies that have either failed to obtain a business account in Hong Kong or are looking for alternative options, this is the blog post for you! 

 

Top Foreign Exchange Accounts for your business: 

These accounts are foreign exchange accounts, available to any foreign entity (including a WFOE). It's important to note that these accounts are different from a RMB account, which not every foreign entity can open. 

1. Offshore account (OSA) in Shenzhen

The first on our list is opening an offshore account in Shenzhen. Some banks in Shenzhen now offer accounts that can perform foreign currency transfers for Hong Kong companies. In theory, if you have a Hong Kong company but have not yet been able to open an account there, this account can work for you.

Why open an OSA in Shenzhen? 

  • Similar to a Hong Kong corporate account, this type of account is not controlled by SAFE (State Administration of Foreign Exchange). This means that it can be used to transfer foreign currency such as USD, EURO or GBP to other overseas accounts. 
  • There is no limit to the amount of money you can transfer, and you can even transfer unlimited amounts to mainland accounts freely. 
  • Telephone banking, fax banking and online banking services are available. 
  • There is also 24-hour phone support for the Shenzhen Bank Account Opening Service, which you can find contact information for here

What are the major drawbacks to this account?

  • It is estimated that your annual revenue should be approximately US$15 million. While this is an approximate figure, it clearly shows that opening such an account is unlikely for a small to medium enterprise. 
  • Only 4 banks in Shenzhen offer accounts that can perform foreign currency transfers for Hong Kong companies: 
    • China Merchants Bank
    • China Bank of Communication
    • Pudong Development Bank
    • Ping An Bank
  • It doesn’t deal with RMB at all.
  • Directly withdrawing money is unavailable. 

 

2. Non-resident account (NRA) in China

One of the options for opening an ‘offshore’ bank account in China is opening a non-resident account (NRA). In terms of who is eligible for an NRA account, applicants must be established as a foreign company (WFOE) as well as having office premises in China. 

Why open an NRA account? 

  • The NRA is available for foreigners in every bank based in Mainland China.
  • NRA accounts can be opened in either RMB or foreign exchange currency. 
  • Provides a simple procedure of settlement and increased efficiency.
  • To handle settlement via a RMB NRA account, your business can help customers to avoid the risk regarding exchange rates efficiently and guarantee their corporate income. 
  • Telephone banking, fax banking and online banking services are available. 

What are the major drawbacks to this account?

  • NRA is strictly regulated by China SAFE, meaning that there is more stringent government control.
  • Directly withdrawing money is unavailable.

 

3. FTN (Free Trade Non-resident) account in Hainan China

A free trade non-resident (FTN) account in Hainan can only be opened by overseas companies in financial institutions in Hainan or Shanghai free trade zone in China. 

Why open an FTN account? 

  • With this account, you can freely remit RMB to China without having a corporate entity in the country. Additionally, if you have a Chinese company, you can receive RMB without having to report to SAFE. 
  • An FTN account combines domestic and foreign currency and accommodates any special FT accounting arrangements. It offers the convenience of consolidating short-term, long-term deposit and notification deposit accounts into a single multi-currency account.
  • With this account, you can settle corporate funds while having access to market interest rates and diversified channels for financing. Businesses can then determine the best financing strategy for their needs while comparing the financing costs for both FT & non-FT accounts.
  • Telephone banking, fax banking and online banking services are available. Most banks in Hainan free trade zone offer English services, and we also provide bank account management service in Hainan.

What are the drawbacks to this account?

  • The biggest limitation is that this account can only be opened by overseas companies in financial institutions in Hainan or Shanghai free trade zone in China. 

If you wish to learn more about the necessary steps for opening an FTN account, check out our blog post which highlights everything you need to know about opening an FTN account in Hainan Free Trade Zone as a Foreign Investor

 

4. Offshore account in Singapore 

Opening an offshore bank account in Singapore is also a viable option for your WFOE. As a leading global financial centre, Singapore has some of the best offshore banks in Asia, offering top-level banking infrastructure to support international business. 

Why open an offshore account in Singapore? 

  • Singaporean banks (DBS Bank, OCBC Bank and UOB Bank) are ranked the top in Asia. It is one of the world’s largest financial centres with an incredibly stable economy.
  • Singapore has no foreign exchange controls – this enables free exchange between different currencies. 
  • Banks in Singapore do not require large initial deposits – the minimum deposit required to open an account is relatively low at about US$730). 

What are the drawbacks to this account?

  • You will be required to go there to open an account. Banking regulations do not permit the opening of accounts by mail. 

 

Which option should I choose? 

As a WFOE, you are not just limited to opening a Hong Kong corporate bank account. There are so many more options available to you! When deciding which option is best for your business, some of the critical questions you should consider is how much money you want to deposit and if you meet the requirements. 

If you are considering opening any of the above accounts for your foreign business, at Hongda, we can guide and assist you in preparing your account opening documents and filling out application forms – significantly reducing the time you spend on preparation and allowing you to focus on your business without any distractions. Contact Hongda now and get the best solution for you and your business.


Hongda consultation CTA 2016

 

Topics: Finances in China, Hong Kong Banking, Hainan

Angel Ho

Angel Ho

Helping make China companies easy for foreign investors since 2007 as lead consult.

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