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 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 an 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, Euros, 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.
OSA has a variety of different functions such as deposits, loans, settlements, and financing. Telephone banking, fax banking, and online banking services are available.
There is also 24-hour phone support for the Shenzhen Bank Account Opening service for any questions you may have.
What Are the Major Drawbacks to This Account?
- Opening an OSA account requires annual revenue of approximately $15 million. While this is an estimate, it is unlikely to be the right choice for a small to medium enterprise.
- Only 4 banks in Shenzhen offer accounts that can perform foreign currency transfers for Hong Kong companies:
- They don’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 have office premises in China and be established as a foreign company (WFOE).
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 an 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.
OSA vs NRA
One of the most common questions we get is 'what separates the OSA and NRA from each other?'. Both accounts do share a wide range of similarities, so what makes them different?
Firstly, an NRA is available for foreigners in every single bank based in Mainland China, whether it is domestic or foreign. Whereas an OSA can only be approved by the following four banks that have been authorized to do so:
- China Merchants Bank
- China Bank of Communication
- Pudong Development Bank
- Ping’an Bank
Also, the NRA is strictly regulated by China SAFE, meaning that there is more stringent government control. On the other hand, OSA is administered by the China Banking Regulatory Commission and is less strict in terms of exchange and government controls.
Below is a table highlighting some of the main differences of an OSA and NRA:
| NRA | OSA | |
| Eligibility | A bank account opened in China by an institution legally registered abroad (including Hong Kong, Macao and Taiwan). | A bank account opened outside of the depositor resident country. |
| Banks | Available for foreigners in every bank based in Mainland China. | Available to the 4 listed banks:
|
| Regulated By: |
State Administration of Foreign Exchange (SAFE) |
China Banking Regulatory Commission |
| Core Benefits |
RMB account is available, and its benefits are:
|
OSA has following advantages:
|
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. Making use of the unique financial infrastructure of the Hainan Free Trade Zone, the account gives you access to more convenient investing and currency exchange making the global financial markets more accessible.
Why Open an FTN Account?
- You do not have to apply in person - Shareholders and Directors are not required to be at the bank in person to open this account. With video authentication, your account will be ready in 10 working days. Telephone banking, fax banking and online banking services are also available. Most banks in Hainan free trade zone offer English services, and we also provide bank account management service in Hainan.
- Free Flow of Capital - 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.
- RMB Auto-Settlement - With FT account, you can transfer in foreign currency to the companies in China and they will receive payments in RMB automatically. You also don’t need an entity in China.
- Multi-currency account - An FTN account combines domestic and foreign currency and accommodates any special FT accounting arrangements. While RMB serves as the main currency for the account, various foreign currencies can be managed through sub-accounts. Therefore, your company saves time, money and the trouble of opening multiple accounts for different currencies.
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 and documents required 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.
A summary of the information discussed in the blog can be found in our table below.
| Account | Opening Company | Regulating Department | Function | Banks that can provide the services |
| Non-Resident Account (NRA) | Non-resident Enterprise/ Offshore Company | State Administration of Foreign Exchange (SAFE) | No Foreign Exchange Control | Most of the banks |
| Offshore Account (OFA) | Non-resident Enterprise/ Offshore Company | China Banking Regulatory Commission (CBRC) | No Foreign Exchange Control | China Merchants Bank, Shanghai Pudong Development Bank, Bank of Communications and Ping An Bank |
| FTN, FTA | Offshore/ Domestic Company | State Administration of Foreign Exchange (SAFE) | RMB settlement | Banks in Shanghai and Hainan |
| Basic Account | Resident Enterprise/ Domestic Company |
China Banking Regulatory Commission (CBRC) |
Settlement and Withdrawal |
Most of the banks |
| Capital Account | Resident Enterprise/ Domestic Company |
China Banking Regulatory Commission (CBRC) |
Limited to inward remittance of capital |
Most of the banks |
| Foreign Exchange Settlement Account | Resident Enterprise/ Domestic Company |
China Banking Regulatory Commission (CBRC) |
No withdrawal |
Most of the banks |
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 today and get the best solution for you and your business.
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