Differences, Features, Tips, Pitfalls, and Best Chinese Banks for Russian Companies

With a majority of Russian banks being currently disconnected from the SWIFT system, transfers to and from the EU and the US becoming difficult or impossible. US and EU sanctions further impede business transactions between companies of these regions and Russia. How to secure operational cash flows and simply do business with partners outside of Russia and Belarus? How to successfully minimize the sanction risks? Opening a bank account in a neutral jurisdiction could be the solution! Asia is not only a short time fix for securing bank transactions, but a very attractive market to consider.

We prepared a series of interviews with our Asian partners and we hope these articles will clarify some of your concerns. Find out in our first interview with Wilson Zhao, Managing Partner at Upcom how to open a bank account in China and what the benefits are.

1) What is the standard procedure for opening a bank account in China?

• Provide the company name to bank
• Bank will go to the company’s office to verify the documents and working location
• Bank will give the company the relevant materials
• Then the company should go to the bank, provide all necessary materials, then open the account

2) What documents are required? Who can open an account, is the presence of the General Director of the Russian company personally needed or can it be via power of attorney?

Documents:

• Business License
• Company chop
• Legal person chop
• Finance chop
• Legal person’s ID card (if the legal person is a foreigner, the bank needs the passport)
• Chinese Trustee’s ID card

Please see the footnotes with explanation of some of these terms.

No need for the presence of General Director of the Russian company — it can be handled via power of attorney.

3) Does the company have to open a local entity (LLC/RO) and/or have a local General Director in order to open an account?

You need to open a local entity in order to open an account. No need to have a local General Director. The LLC needs a legal address, which can be provided for additional fee.

You can find the main differences between LLC and representative office in the footnotes to this article.

4) How long does it take to open an account?

After the bank goes to the company’s office and verifies the documents and the company’s location/office, one can go to the bank and open the account one day later.

5) Is it possible to transfer money from China to Russia or is there a risk that these transfers will be blocked because of the sanctions?

It is possible to transfer money from China to Russia through the business of cross-border RMB. It cannot be handled through the business of foreign currency because of the sanction. As per cross-border RMB, there is no risk to be blocked.  

6) Are there currently any sanctions in force against Russia, Russian companies or individuals limiting them to open bank accounts?

There is a sanction list. The bank needs to verify it case by case.

7) Is it possible to Issue a virtual corporate card for making online payments (for example to pay for Adobe Photoshop and other online services)?

Yes, it is possible to issue a virtual corporate card for making online payments.

8) Do you need a local mobile SIM card for approving bank operations (signing bank payments)?

No need

9) What banks would you recommend for opening accounts for Russian companies and individuals? 

(Note: based on which ones provide more favorable conditions for Russian/international businesses, less paper work, but with a high reliability level etc.)

• Bank of China boc.cn
• Bank of Communications bankcomm.com
• Industrial Bank cib.com.cn
• Pingan Bank pingan.com
• Bank of Wenzhou wzcb.com.cn
• Zhejiang Tailong Commercial Bank zjtlcb.com

Bank account can be opened in USD, EUR and CNY but not RUB (no additional fee), USD and EUR account would be opened separately.

10) Is it possible to open an account as individual person (not a company) and can you assist with this as well?

If an individual person has a work permit in China and has a Chinese SIM card, he/she can open personal bank account. Upcom can assist with this as well.

11) How can Russian individuals/companies manage their accounts in China from abroad? Are there options for online banking provided with all banks?

Some banks provide an online banking system, this needs to be checked with the selected bank.

12) Could you describe in a sample case how the process works, including timelines etc.?

Based on our experience:

• Setting up a JV/company takes around 2-3 months.
• Then all necessary documents should be prepared which takes around 1 week.
• The opening of the bank account then when all documents are in place will take 1-2 days.

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Read also:

Awara Guide on opening a bank account in UAE

Awara Guide on opening a bank account in Serbia

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Together with our reliable and professional partner in Asia (Upcom) we’ll find the best way to support your company, to ensure smooth operations and reduce the sanction risk! Contact us for questions or a quote.

Our Contacts

info@awaragroup.com

+7 495 225-30-38 Moscow
+7 812 244-75-49 Saint Petersburg
+7 495 225-30-38 Tver

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Footnotes

Here is an explanation of several terms that you might find in the article.

Business License

In order to register in Mainland China, companies are required to apply to the relevant authorities for a business license. This application is usually made at the company’s local Administration for Industry and Commerce (AIC). If and when the company is issued a business license, they will receive their business license in the form of a certificate.  All companies in Mainland China should be registered and have such a certificate.

Click here to download an example of the Business License.

The information in such a business license includes:

• Social Credit Code: This is the 18 digital unified social credit code of the company.
• Registration number：This is the official registration number of the company in SAMR (State Administration for Market Regulation).
• Official company name: This is the registered company’s name in Simplified Chinese Language according to the China Company law.
• Type of Enterprise: This is the type of corporation in which the company is incorporated. (WFOE, LLC, JV, RO, LTD, etc.)
• Legal person/Legal representative: The legal representative is the only person who is entitled to sign legally binding documents for the company and is responsible for any action of the company.
• Business Scope: This is the list of business activities that the corporation will be able to carry out in China.
• Registered Capital: The registered capital is divided into pay-in capital and subscribed capital. It has to be paid within a certain time limit (20-30 years).
• Date of establishment: This is the date the business license was issued.
• Expiry Date: This is the information about the company’s expiry date.
• Registered Address: Every company requires a real address as the registered address. Once the lease contract expired without renewal, the company will be blacklisted in the SMAR.
• QR Code: This is the company’s QR code linked to National Enterprise Credit Information Publicity System.

Company chop

The company chop is mandatory, and functions as the company’s official signature. Businesses use the company chop for all legal documents as it can cover almost all the functions of other chops, except for the customs chop and the invoice chop. The company chop is required when any important document is signed, and can provide legal authority when opening a bank account or altering the name or business scope of the company.

Foreign-invested enterprises must produce the company chop when registering with the Administration of Industry and Commerce (AIC).

The company chop contains the full registered name of the company in Chinese, and must be approved by the Public Security Bureau (PSB).  The chop must be recorded by the AIC, PSB, and the company’s bank.

Click here to download an example of the company chop.

Finance chop

The finance chop is used for opening a bank account, issuing checks, authenticating financial documents such as tax filings and compliance documents, and for most bank related transactions. It is a mandatory chop, though the company chop can often be used in its place.

Companies often keep their finance and company chops separate to avoid exposure to misuse.

The chop must be recorded with the AIC, PSB, and the company’s bank.

Legal representative chop

The legal representative chop is a personal chop owned by the company’s legal representative.  The legal representative is the main principal of the company identified on the business license, and has the authority to enter into binding obligations on behalf of the company.  A company can only have one legal representative.

The legal representative chop can be used in place of a signature, or alongside one.

Upon registration, it must be recorded with the AIC, PSB, and the company’s bank

Difference between representative office and LLC in China

Differences in registration

• The establishment of the representative office (RO) is first be applied online and can be handled after being accepted by the Administration for Industry and commerce. The establishment of a representative office takes roughly one month.
• A wholly foreign-owned enterprise(WOFE) must first obtain the approval of the Foreign Economic Commission, and then apply for a business license. On average it takes 1 to 2 months for a standard wholly foreign-owned  enterprise to be established. If you need to apply for general taxpayer or import and export qualification, you need an additional month.

Differences in business scope

• A WFOE may engage in consulting services, import & export, production or product sales, and may operate specific businesses. 
• A representative office cannot engage in profit making business operations, but can engage in marketing, customer support and research.

Differences in registered capital

• The registration of a WFOE must meet the minimum registered capital requirements whereas the registered capital of the representative office is not required for registration.
• WFOEs need to submit the registered capital amount to confirm the investment scale while no capital is required for the establishment of RO.

Different legal status

• A wholly foreign owned enterprise is a legal enterprise invested and registered by foreign investors in China and has the status of an independent legal person;
• The representative office is only a representative office established by a foreign country in China and does not have the status of a legal person.

Differences in Tax Policies

• A WFOE may issue invoices independently, pay value-added tax or business tax according to the actual invoices, and pay income tax according to the income payable.
• A representative office cannot issue invoices and must instead convert the expenses into income for tax payment, that is to say paying taxes on expenses.

Difference in the handling of bank accounts

• WFOEs are allowed to open bank accounts of various types and they can also enjoy extensive financing services through different financial institutes. 
• On the contrary, ROs are not allowed to open L/C accounts. Neither are they allowed to use the financing services. Although RO can open a bank account and even accept payments in foreign currency, these funds can ONLY be utilized to pay the Office’s operating expenses (Salary, rental, etc.)

Differences in recruitment authority

• Foreign funded companies can recruit employees themselves, while the representative office can only entrust foreign-related personnel agencies to recruit employees and pay insurance.
• WFOE organizations are authorized to employ their staff and pay their salaries, while ROs cannot directly hire their staff and need to go through a third party agency to employ staff for them.