Year by year, trade with China gets increasingly appealing. Despite complex relations with the USA and stringent state regulations, the People’s Republic of China has cultivated an effective economy. Doing business with Chinese companies holds immense potential that is impossible to overlook. Nevertheless, to capitalize on this, you need an appropriate financial tool to handle the yuan.
For companies about to operate in the PRC, a local bank account is a logical first step. While it may seem like the simplest solution, it makes perfect sense to weigh whether the decision to establish one is the optimal strategy in light of all potential circumstances and risks.
Opening an account with a Chinese bank is often prudent. It may be your optimal choice under various circumstances. Still, it’s not a one-size-fits-all solution. Companies that make transactions involving the yuan, whose business is intertwined with China, must exercise due diligence when selecting the right bank.
Alternative financial solutions
China’s strong economy, financial power, and political influence have made its relationship with the United States quite complicated. Although the U.S. doesn’t control who China decides to partner with strategically, it certainly considers China’s friendships when making decisions.
A case in point is President Joe Biden’s December decree, which introduced secondary sanctions on banks working with Russia. This recent development has had significant repercussions, prompting banks in neutral countries to cease servicing Russian corporate clients.
In light of the above, businesses dealing with the PRC should consider alternative financial services that are transparent both in practice and under the law. Here, we are referring to accounts set up with reliable international payment systems.
Companies that conduct business in China may certainly open a single account. Still, it’s advisable to operate at least two of them, namely your existing one and an additional new account. This strategy will become your safety net, allowing you to secure a backup corporate account to shield you from banking service disruptions. At the same time, you will know that your business remains within legal boundaries.
The strategy is particularly beneficial for companies with direct ties to China. Today, establishing a corporate account with a payment system is a viable alternative to traditional banking accounts, with only marginal differences in functionality. Basically, it is a practical financial option for most companies.
Shift from traditional banking: payment solutions for global businesses
By 2024, corporate accounts with global payment systems have become indispensable for businesses in the global marketplace. The domain of global payments has undergone significant transformations. Nowadays, rapid transactions, enhanced security, and smooth cross-border integration are our reality. Businesses are free to choose from diverse payment platforms that come with instant transaction processing, support for multiple currencies, and advanced mechanisms to prevent fraud.
The arrival of generative AI in payment systems has transformed financial management for businesses. With AI-powered analytics, companies gain profound insights into expenditure trends. They can optimize their cash flows and make precise financial forecasts. ISO 20022, which is a universal standard for financial data exchange, has improved transactional efficiency and communication clarity. This resulted in the transfer of more organized and comprehensive data with each transaction.
It is due to their speed and ease of use that digital wallets and instant payment services are gaining traction in the business world. These platforms allow for immediate fund transfers. They improve business liquidity by minimizing clearance times. What is more, the said instruments provide strong security measures, including biometric authentication and end-to-end encryption, which makes it possible to safeguard corporate funds from unauthorized access.
Overall, the way we handle payments is now changing. Regular bank services are splitting away from payment processing. This transformation lets businesses pick from a wider range of financial service companies, leading to more competition and new ideas in the industry. As a result, businesses find payment options that match their needs to a tee, whether it’s for trading internationally, managing salaries, or dealing with business-to-business payments.
Overcoming payment challenges as a non-resident company
In 2024, things may still be a bit tricky for non-residents who aim to establish accounts with international payment systems. They are likely to encounter certain obstacles that could hinder the process. A significant barrier is the rigorous due diligence and screening procedures that financial institutions may have. These procedures aim to ascertain the authenticity of the involved stakeholders. They may include looking closely at information that anyone can find about the company’s reputation, like what’s in the news and on social media.
Another big issue here is how long it takes to set up an account. This could be because of missing or incorrect documents, slow responses to inquiries from the bank, changes in the bank’s rules or laws, or just too many applications for the bank to deal with at once.
Non-resident businesses may also face hurdles due to compliance measures that necessitate detailed background data and documentation. Traditional banks usually want you to visit them in person, which might not be possible for foreigners. Also, these financial institutions tend to work slowly, which may be frustrating for businesses that need to move fast in the world market.
To deal with these issues, non-residents should have all their paperwork complete and correct and be prepared to answer any bank’s questions without any delays.
The specific requirements, documentation, and conditions vary based on the payment system, your country of residence, business type, preferences, and other factors. A standard set of documents is generally required, but your particular circumstances may call for additional paperwork.
Here’s what essential documents for establishing a corporate account with a payment system generally include:
- Articles of Association
- Memorandum of Association
- Certificate of State Registration
- Certificate of Good Financial Standing
- Corporate Structure Overview
- Business Activity Description
- Identification Documents for the director, beneficiary, and all signatories authorized to access the account.
Note that all documents must be translated into English and officially notarized. To give you the right advice, our experts need to look at your particular case. Broad tips aren’t much use when picking a payment system. So, visit International Wealth Info for more information or simply arrange for a one-on-one meeting with our consultants to help you pick the payment system that will be a proper match for your needs.
