US-to-China business RMB transfers?

[mikelove]

Hello,

We're trying to make a license deal with a publisher in China that doesn't have / isn't particularly disposed to get a bank account that can accept foreign currency, and since we're based in the US and don't have an actual office in China this means that we need to rig up some way to pay this publisher in RMB.

Searching the internet I found that this seems to have finally become possible with the latest round of RMB liberalization in 2010, and I even found a few press releases from US banks proudly proclaiming that they'd completed their first RMB transaction settlements, but I'm not sure how we'd actually go about doing this ourselves - there are a bunch of banks offering RMB remittance services for individuals, and there are also a lot of banks advertising RMB transaction services to large companies / other banks, but nobody seems to be offering this to small businesses yet.

So does anyone know how a small, US-registered corporation might go about sending a payment to a Chinese company in RMB? Is there any way we could get an RMB account at a Chinese bank in spite of not being registered in China? Or could we do this through HK / Macau / Taiwan somehow?

Thanks,

[gato]

It'll be much easier for them to receive foreign currency than for you to get RMB offshore. They might even be able to do it with their current bank account.

I suspect that they are just raising because the RMB might appreciate up to 30% against the USD in the next five years, and they want to peg your license fee to the RMB. If you are willing to do that, then this issue might go away.

[mikelove]

We already offered that and it didn't help, unfortunately - they seem quite insistent about wanting the actual transfer to be in RMB.

[gato]

If you have to go down this route, your best bet would be call HSBC or Standard Chartered Bank to see what they can do for you. See the links below.

http://www.commercial.hsbc.com.hk/1/2/commercial/international-business/greater-china/rmb-services

RMB Trade Settlement

http://wholesalebanking.standardchartered.com/en/capabilities/transactionbanking/Pages/rmb.aspx

RMB Settlement

Offshore converion from foreign to RMB is still very limited at this point. In the worst case, you might need to open up a personal account with a bank in mainland China to convert the foreign currency to RMB onshore. Individuals can exchange up to US$50,000 to RMB a year without special government approval. With local banks, you still have to do this in person unfortunately (not online). The bank will ask you sign a government form every time you make such a conversion. I don't know how it is with international banks.

[mikelove]

Thanks - HSBC's probably a better bet for us since we already have an account with them, their US branch has been completely useless on the matter but since it seems like a foreign company can open up an account in HK without too much difficulty perhaps we'll have more luck there. The amounts involved aren't that big, well within what one can get at a travel currency exchange place outside of China, so I'm not too worried about that aspect of it, it's just sending the wire transfer in a fully legal way that concerns me.

[PengHaoShi]

Mike, it won't work. To open a bank account in Hong Kong, you have to go there personally. I have an account in Hang Seng (=HSBC) and CitiBank Hongkong, these accounts are multi-currency, which means US $, Euro and HGK $, not RMB.

I asked my wife about RMB transfer, she is Head of Accounting in a big multinational in Beijing. Since last year, SAFE (State Administration of Foreign Currency) has started a project, allowing big corporations, to have off-shore RMB accounts. Up to now, this is only open for nominated big corporations. So, if you are not IBM, Siemens or Huawei, you can't use this way. I am running my own business in Shanghai and I am using CitiBank and SPDB. Foreign banks are very inflexible in China and are following the SAFE rules to 110%. You won't have any chance with them. I don't know, but might be the Chinese banks in US are more flexible; I suggest to check e.g. with ICBC or Bank of China.

Otherwise, you only have the chance to go to China and open a personal account. However, they will also ask you for evidence for your residency in China, which means the last 3 telephone or electricity bills with your name and your address on. As company, not registered in China, you cannot open a bank account.

The only way is to pay in US $ or ask a friend in China to pay on your behalf. As a happy Pleco user, I'm also open to help you change $ in RMB; if needed, let me know. However, I strongly recommend, that the Chinese company accepts US $ as this is international business and international business is never made in RMB. The effort for them is a piece of cake, they only have to get their licence, etc., go to the bank and change their account into a multi-currency account. When the money arrives, they can change without any bureaucrazy (the red tape is only for money flowing out of the country, not into).

Roland

[mikelove]

Thanks for the detailed reply!

Mike, it won't work. To open a bank account in Hong Kong, you have to go there personally. I have an account in Hang Seng (=HSBC) and CitiBank Hongkong, these accounts are multi-currency, which means US $, Euro and HGK $, not RMB.

That's actually not a major problem - I was there a few months ago and will likely be there again within the next few months - but my understanding from HSBC's and Standard Chartered's websites was that HK bank accounts could also send RMB payments, is that not the case?

The only way is to pay in US $ or ask a friend in China to pay on your behalf. As a happy Pleco user, I'm also open to help you change $ in RMB; if needed, let me know. However, I strongly recommend, that the Chinese company accepts US $ as this is international business and international business is never made in RMB. The effort for them is a piece of cake, they only have to get their licence, etc., go to the bank and change their account into a multi-currency account. When the money arrives, they can change without any bureaucrazy (the red tape is only for money flowing out of the country, not into).

That's an incredibly generous offer - thanks! - but unfortunately it won't work since they're sticklers about invoices; the payment has to come through us. If that wasn't the case, I'd go to their office and hand-deliver a big stack of RMB notes and that would be the end of it :-)

Sounds like the gist of what both of you are saying is that I really just need to lean on them more aggressively about taking USD transfers - I'll keep at it on that front. If there were any other dictionary available to license of the same type as this one I'd forget the whole thing and go after that, but we really need this particular dictionary and it seems we have to jump through quite a lot of hoops to et it...

[gato]

These government-owned publishers probably don't have too much of a profit motive to get these deals done. If they won't budge, you might need to treat your contact there to a nice dinner to get them on your good side. ;)

[PengHaoShi]

Mike,

I didn't go into the details about HK bank accounts so far, but when I opened the accounts for my HK company, they didn't offer me an RMB account and CitiBank China told me, that we should use US $ or Euro, when we transfer money from our HK company to our Shanghai company.

But the main point is, that the RMB is not a convertible currency and Chinese government forces everybody to do international business in foreign currency, not in RMB.

Good luck.

Roland

[mikelove]

Some helpful people at the China Sourcing Information Center turned me onto a company called Custom House (now owned by Western Union) that can apparently handle this by doing the conversion and making a payment on our behalf from a domestic account in China - anyone had any experience with this sort of arrangement?