Banking and Good banks in the PRC Discussion
 

I am going to start visiting Mainland China often for business reasons and would like to open a deposit a/c there for the sake of convenience. I would like to be able to withdraw RMB from an RMB account at no charge... preferably at ANY banks ATM or at least the one with the largest network (more ATM terminals) throughout major cities like Shenzhen, Shanghai, and Guangzhou.

I find that I can open a RMB based account with major banks in HKG but that I would not be able to withdraw funds from it using the ATM. I can obviously withdraw RMB in Mainland China but the funds would be debited from a HKD a/c at whatever exchange rate + a fee. I want to hold RMB and be able to withdraw it while in China whenever necessary.

During my research, I found that I can open an account with ICBC (Asia) in HK and at the same time, the bank can actually open a RMB savings account for me with one of their local branches in China. They claim that I can move RMB from my HK based account to my one in China and withdraw it from any of their ATMs while in the Mainland at no charge. Other banks ATM would incur a charge.

Are there other banks I should consider? I notice there are smaller, local community banks in different parts of China. I am also interested in knowing if any PRC banks would issue non-Chinese citizens a China issued credit card? I am a HK resident but not sure if that would make any difference.

ICBC and other banks offer dual currency credit cards but it’s not very appealing as the RMB balance must be paid off in HKD.

BEA offers the same product but it gives you two statement totals, one in RMB and one in HKD… and they allow you to settle HKD a/c using HKD and RMB a/c using RMB. Seems convenient enough for making purchases in the Mainland wherever Union Pay is accepted.

AMEX has China issued cards in partnership with various Chinese banks such as China Merchants and others but all the sites are in Chinese. I don’t know if it would be possible to get one through Global transfer and if that would allow one to actually build some credit history in China.

Any thoughts would be appreciated. Thanks in advance.

Sounds like you need to enter into the PRC with a wad of cash, and open an account with a bank and deposit funds. If you bring in non-RMB, have it changed and hold the account in RMB. Once opened up, you should be able to transfer money in from HKG to the PRC, either in RMB or in HKD to be converted.

Of the major PRC banks, Bank of China and ICBC have the largest presence and network country-wide. They are also the biggest pains in the arse to deal with. Merchants Bank is one of the best of the next tier with good service and decent presence--you might check online (best if you read Chinese) to see their network and whether it suits you. They have expanded a lot in the past 5 years. I dumped my BOC account a few years ago, and now keep a local one at Merchants in RMB only (and another one at HSBC--a "foreign" bank--for multicurrency savings, inward wires, etc). Some people also like Minsheng which is private, but they also have less coverage than the Big Four.

Regardless, it is common practice at many (if not most) PRC banks to give you fee-free access to your cash via ATM only in the city where the account is based--if you withdraw outside that city, even at the same nameplated bank in another city, there will usually be a small flat fee or 1% of the withdrawal. So check before you sign up. It's best to think of Chinese banks as a family of independent fiefdoms, even though they share the same name over the door. Also, different account types have different privileges--if you specifically want ATM capability, make sure that is mentioned as the priority. Many multicurrency savings-type accounts don't allow ATM withdrawals.

Chinese use ATM/debit cards frequently. Make sure you get something on the Union Pay system. Credit cards...not so much except maybe at higher end shopping and accommodation/dining/entertainment establishments. Normally, getting a PRC credit card is not easy or worth the trouble for the casual visitor. If you have strong banking connections in HKG already, try leveraging off of that, maybe you can get some kind of letter of recommendation/reference that will allow you to go to the PRC and get a low-limit card. Maybe go to a PRC bank branch in HKG and ask. But really, I think a local PRC-based credit card is not a necessity--I've lived here for a decade without one and haven't missed a thing.

Thank you for the very informative and detailed reply.

I wonder if by now it would be allowed to open up a RMB account as HSBC in Hong Kong and use it in China. Last time I checked, you had to be a HK resident to do this, but it sure would be a lot more convenient, especially if your trips were mostly to Shanghai.

HSBC is notorious for hit its own members with forex fees on ATM transactions, and their coverage isn't all that stellar, so I'd steer clear of them (or at least not make them a primary option).

I would advise anyone with in the OP's situation to open a Schwab checking account, or an account at any bank that reimburses all ATM fees.

Second, get a BofA checking account, which allows fee free withdrawals at all Construction Bank ATMs (in China and HK). Since Construction Bank is the largest in China, this move alone will get you pretty far.

Then, since you already have Construction Bank covered, open an account at Communications Bank, the third largest. The reason I skipped over Bank of China is that those guys hit you up with fees for ATM withdrawals outside of your home city, which isn't very cool.

I really like Schwab because the checking account can be tied to your credit card (hope you are lucky enough to have one) and your brokerage account, which means you can earn nice interest (by holding securities) most of the time, and free up cash as you need it during your China trips (by selling securities). I try to use my Schwab CC whenever possible as a primary strategy because I like the 2% cash back, but beware of dynamic currency conversion.

I asked about this when I was in HKG last October--still not possible to open an RMB account without a HK ID or residency permit. This was at HSBC Hong Kong, but I think rules are similar at most of the major banks in HKG. It's more a PRC-govt currency control thing driving the regulations rather than the banks themselves.

I would not advocate the periodic traveller to open an HSBC account as the primary local account in the PRC, as it is classified as "foreign" and regulations and retail products offered are different. And their ATM coverage is limited to major cities in the PRC only, and in sporadic locations. Also, many of their account types do not permit ATM access. If the OP is going to be in the PRC frequently and for periods of time exceeding 2-3 weeks at a time, he ought to just open an account directly with one of the Chinese banks, and then have both options of depositing cash directly or wiring funds in (another currency then exchange to RMB). Note to OP: if you ever want to close a PRC account, you usually have to go in person to the place where the account was set up. Some people get around this by not officially closing an account, just withdrawing everything but a tiny amount and leaving.

(PS to Moondog--I use my HSBC USA account to withdraw cash from at ATM's here in China, with no fee and no sandbagging on the official exchange rate, but it is a Premier account which frees one up from a lot of the pesky fees. Also good for fee-free international in-out wires to my other linked HSBC accounts. :D But for local payments like utility bills, debits, additional ATM, etc, it's definitely the local Merchant's Bank RMB account.)

jiejie's post is spot on. If spending extensive time in China requiring lots of banking transactions (e.g ATM's) I'd go for the big four (ICBC, BOC, Agricultural, or China Construction). They are all state sponsored and the best to go with. Each has their own advantages and disadvantages so you'd have to give more criteria to pick between them.

If you are going to be traveling all over Asia, HSBC might be a good alternative. But if mainly focused in China, then go with one of the big 4.

As for Schwab, it's great but they no longer accept applications for the Invest First Visa (2% cash back) but you still might be able to open a checking account with no ATM fees (Invest First Checking).

As jiejie said, remember that there are ATM fees for using the same banks ATMs in different cities (deposit or withdrawal - I previously didn't know why but now do). It's typically only a few RMB, but can add up quick.

From the OP's post, I suggest going with one of the big 4.

Skip the Chinese CC, it's a real hassle to get one and maybe look at a Cap One Card (or HSBC) if that really suits your needs.

It is usually 1% which really adds up. I am with HSBC Shenzhen, and since I hold a premier account there, the fees are waived for all Guangdong ATMs (including non HSBC ones).

try PING AN bank. they are a brand new bank that is trying to get customers thru the NO/LOW fees method. they have a deal for free ATM fees from any other bank and no fees to transfer money to any other bank. VerY attractive

they are also an insurance company which is how they plan to make their money by since you are probably a laowei then u can't buy and they cant sell anyways..

I used CCB (Chinese Construction Bank) in conjunction with my B of A debit card. Their ATMs were easy to find in the city, but there are none at the airport (PVG). I paid no transaction fees or any other add-on fee. I understand they are ubiquitous throughout China. B of A reportedly owns 9% of them.

If you have a Premier home account in the US, you also have the option of opening up a local account on the Mainland. I got offered this during my recent visit to Shanghai and will probably take up the offer next visit.

This thread is now relevant to me because I'm being paid in USD (physical greenbacks) at present, but I charge most of my expenses to US based credit cards.

I visited Citi, HSBC, and Heng Seng today to inquire about USD accounts that permitted online payments to foreign entities. Much to my surprise, I learned: 1) online payments can't go overseas; 2) the minimum balances are really large... $10k for the worst Citi account and $100k for the entry level Heng Seng account.

Based on this lesson, I'm inclined to adhere to the following strategy:

1) stick with my Schwab credit card whenever possible
2) pay it off with Western Union monthly ($10 surcharge)
3) get as much money as possible into my BofA account because of the Construction Bank relationship
4) open a USD/RMB account at one of the Chinese banks (haven't picked one yet)

You will need to be careful what kind of local account you set up, as some types do not have ATM privileges. Get clarification when you are filling out the application.

Actually, I started with a local Beijing HSBC multicurrency account and RMB account here on the mainland, back when HSBC and other foreign banks could offer only limited products here. My US Premier account came several years later, at which time they could link the two (mainland regulations now permitting). I also have linkage with a Premier account in a different Asian country that I find useful. The critical thing for me is free international wire privileges between all accounts with my name on them. And I can do it online. In foreign currency, of course (RMB out is a no-no without special permission and paperwork). And an overseas-based HSBC account pulling money out of an HSBC ATM here (or anywhere else in the world I've found), incurs no fees for a Premier account holder.

I presume you mean being paid in China with physical greenbacks. Yes, one of the peculiarities of China that a lot of readers may not understand for foreign currency is the separation of a "notes" account (physical currency can get deposited and withdrawn from this) and an "exchange" account (which may also go by other terminologies). The exchange account is intended for sending money in and out by electronic/wire means--foreign currency. You can't wire outbound from the notes account though, but you can cash and withdraw currency from the exchange account. You can't deposit physical notes into the exchange account. Confused yet? All this is part of the PRC's grand currency control scheme.

Without some paperwork, contract, tax record data and other mafan, there's not a lot you can do through the official banking system when taking in cash USD and sending it out of China in wire form--especially not in do-it-yourself and cheap online. I don't think you're going to find this any different at the Chinese banks. There's always the old tried-and-true Hong Kong Suitcase Strategy, cart your USD wad down in a suitcase, open an account there, deposit and wire back to US. But this gets unwieldy if you need to make a special trip down there more than once every 3-4 months or if the amounts are not large enough to justify the trip. Or the Friends Network--if you have a trusted US friend with US bank accounts, give him hard cash and you get a check or wire or ACH (US bank to US bank) from his account to yours in the USA.

You also might consider getting on the Cash bandwagon--convert part of the USD to RMB and pay for all expenses with that, even buying air tickets back to USA with RMB, hotel bills, restaurant, everything. Less charged on the credit card keeps the amount of USD needed for repayment down. Over the years, I've almost never used my US credit cards for anything in the PRC and just used the cash payment strategy.

If you have an HSBC Premier account, they'll put your foreign currency notes into an exchange account (one that can be wired out) for free. You can then wire that to your linked overseas HSBC account. The daily limit if you set it up beforehand is up to a value equal to RMB200000.

BTW, even at a non-HSBC bank you should be able to wire out foreign bank notes, with a fee. The usual surcharge for wiring physical currency is about 3% on top of what you would normally pay for wiring money overseas.

There is still the problem of actually depositing cash at a Chinese bank branch, including the HSBC. According to regulations, you're limited to depositing US$5000 or equivalent in foreign currency notes per day, unless you can show the source of the bank notes. This is presumably to stymie the foreign exchange black market.

If whoever is paying you happens to be withdrawing the cash from a local bank branch, then as long as you can get the withdrawl slip from them you can deposit the cash with no daily limit. This is why black market operators (huangniu) usually do the transaction with you at a bank branch. That way they can simply withdraw the foreign currency notes directly from the bank with a slip in hand.

Pending confirmation from moondog, but if you are getting paid in USD you must still have a US bank. Why not use your US bank to pay off your Schwab card (you can do it online) and avoid the WU fee?

Schwab rocks in China (or other non-US countries as long as):

1. Visa is accepted
2. The CC machines don't convert to USD for you where you get ripped off with bad CC rates

You have to be careful about #2 above. And also, insist on #1 above as many times the CC machines need a special button to be pushed to accept foreign CC's.

Interesting. I was explicitly told that this could not be done--depositing the notes into the exchange account. As a response to my direct question on the matter. Yes, it is a Premier account. My account has a Beijing registration which in previous years has had more restrictive requirements than HSBC mainland accounts set up in other places like Shanghai or Shenzhen. However, I haven't asked in the last year, so I'll put this re-inquiry on the to-do list.

While it is entirely possible that your HSBC branch in Beijing may have more restrictive conditions (TIC), this particular feature is documented:

http://www.hsbc.com.cn/1/2/personal-banking/hsbcpremier

All branches should be able to accept the majors, and some (like Hong Kong Square in Shanghai) may even accept AUD.

Time to call your relationship manager :)

I think the problem here is that moondog is getting paid in physical USD in China, and the challenge is to virtualise them and send them overseas without leaving the country (as opposed to carrying the notes into the US and depositing there).

In the past I've had USD wired to my BofA account, which is a sweet arrangement because:

-their online banking is quite good
-if you withdraw cash from Construction Bank ATMs, there are no fees at all and the exchange rate is always within 20 basis points of the spot rate (venture outside the network and you're looking at about $12 in fees)

But, now that I'm confronted with a growing stack of Benjamins sitting my safe (not anywhere close to enough to qualify for a Citi or HSBC account here; their minimums shock me), I'm at a bit of a loss.

If it's less than $5000 then you can just carry them across the border. If it's more than $5000 then you'd need to get a permit or risk being dinged for smuggling.

There is another way. If you are actually spending that money here in China, you can just visit your local Bank of China branch and talk to the resident black market operator and exchange the USD for RMB without paying the usual 3% surcharge.

Got it, getting paid USD in China. I guess I'm lucky since I can do everything via online banking. I'm just struggling watching my USD drop via the RMB (which is what apparently the US Gov wants...)

What 3% surcharge?!?

If you look at the forex rates at a Chinese bank, like this one:

http://www.boc.cn/sourcedb/whpj/enindex.html

You'll notice that they have two different rates for converting foreign currency into RMB, a buying rate and a cash buying rate. The spread between these two is the premium you pay for converting physical bank notes to RMB (as opposed to wires).

OK it isn't as bad as 3% for USD, more like 1% with the rates above. But for most other currencies (including JPY/EUR) it's about 3% or more. This is on top of the buy/sell spread that the bank is already charging you.

So if you're exchanging a large amount of physical notes, including USD, then it pays to avoid this surcharge, e.g., by using your HSBC Premier account features :D

A couple of quick questions...which are only partially relevant to this thread, so apologies if OT.

1. Is there a limit to what a foreigner can exchange RMB to e.g. USD. I was under the impression that one could only change back what was initially converted, and had to produce e.g. a forex slip as proof of the exchange.

The reason that I ask is that on a recent trip to BJ, the admin assistant tried to reimburse me for my flight with RMB in cash. I refused, since it would be much more than my remaining expenses, and I was concerned about being able to change the cash into USD (and the rate I would get). I asked that the sum be wired into my USD account -- which upset her no end. Was I right?

2. I was also under the impression that BoA customers, although they don't get dinged with a $5 charge for using CCB ATMs, still paid a 3% fee, according to these FAQs. That meant that I did charge some things to my CC (which charges sl. less in forex fees). Again, did I make a mistake?

I may well be travelling more to China, and want to be prepared for similar situations.

thanks,

tb

1. Your impression is generally correct, you need the forex exchange slip to be able to convert back. ATM slips don't count. There are additional ways but they involve more official paperwork and apply more to expats on residence permits being paid in RMB than to casual visitors or sporadic-visit businessmen.

As to reimbursement, no you weren't wrong. If your flight was originally paid for in USD either by cash or credit card, you were absolutely correct in standing your ground and insisting that they come up with either USD cash or wire into your account. However, for many Chinese offices, they can't easily wire foreign currency internationally outbound either because they have no facility to do so, or because it involves a lot of red tape (and fees to them). I'm sure the admin assistant had to deal with finance/accounting and other people to actually make this happen, rather than be able to do it herself. But her getting upset about it is her problem.

That said, there is always a way for any admin assistant worth her salt to be able to--through "the network"--be able to find a way to at least get you USD cash--the main danger here being potential to get counterfeit bills. If they have a US affiliate that can deal with the reimbursement entirely in the USA, in USD, that is also an option. Another option might be to set up a USD/multicurrency account in the Chinese city you most frequent, then have the company transfer USD their account to USD your account but inside China, which is quite a bit less hassle. You would then have to be able to wire USD to USD from your account here to your account in USA. Or cash out into USD currency notes and physically take them back. If the account requires fee payment for wires--esp the international ones--then you should get upfront agreement for them to pay. If you set up an account with a foreign bank (HSBC, Citi, Standard Chartered, etc.) you may be able to also set up the ability to initiate transfers online rather than have to physically go to a bank branch to wire out.

In the future, you should get the reimbursement issue straight and currency issues in writing if contracts of any sort are involved.

The idea of "converting back" shocks me. Consider your extra "red money" an investment in future trips; you'll be able to buy mojitos at Mint for only $14 in 2012, as opposed to $22 (which, is in the cards).

1. All foreign nationals, and HK/Taiwan/Macau residents, may exchange RMB for up to US$500 or equivalent in foreign currency per day with no paper work ^

I know because I did that for days on end before I got my work permit sorted out, thankfully before the bank kicked me out for making their lives miserable ;)

In fact, before the end of October, thanks to the World Expo (they did the same thing during the Olympics), you may exchange up to US$50000 with no paper work. The only catch is that once you reach $50000 that's it, you're back to $500 a day.

Otherwise yes you'll need to provide paper work, lots of it if you happen to be earning a salary here :o

2. No idea about BoA, but if you have a US HSBC Premier debit card, you can withdraw RMB from any ATM in China for no fee (apart from whatever Mastercard builds into its exchange rate spread).

Can I just bring a wad of RMB to my local ICBC and ask for USD?

You can try, but don't be surprised if you get a No without a conversion strip. Bring your passport along. If what Tauphi is saying is true, try a couple of other banks also to see if you get some joy. Unlike Tauphi, I've never seen this work in real life, at least not in Beijing, without the conversion slip. Even for under $500. My last data points on this are at least 2-3 years' old, though.

The USD $50,000-to RMB conversion limit has been around for at least 4-5 years and is not tied to the Expo. The rule for individuals is $10,000 maximum can be converted in any given month, $50,000 limit per year. Without paperwork, just your passport. USD $50,000 can be done all or part in other foreign currencies, in equivalent value. Over that limit requires quite a bit more paperwork.

Thanks for the info, although I'm now more confused.

If the $50k thing has been around for years, and doesn't require paperwork, if I want to change less than $50k (or $10k), does that mean I could have e.g. gotten $2k-$3k changed at a bank or airport counter without a forex transaction slip?

The $500 thing sounds like a hassle, since it would involved (at best) visits to banks for several days in a row, and at worst, running around trying to find banks that play ball.

I didn't realise that wire transfers were so tricky -- is that even for institutions (this is a university that I'm dealing with)?

tb

I'm not sure what you are asking. What is probably confusing is that this thread contains simultaneous references to four different situations:
1) Changing USD (or other forex) INTO RMB. This is what the $50K/$10K limitation is referring to.
2) Changing RMB into USD (or other forex).
3) Changing RMB BACK into USD (or other forex), where there is documentation that it originally came in as forex.
4) Changing USD physical currency into electronic format so it can be sent out of the country.

When we are saying "no paperwork" we are referring to not having to show things like official permission letters, tax receipts, etc.--in other words, only a passport needs to be presented.

What exactly are you trying to do? For any teller window transaction that converts Forex into RMB, whether at the airport or elsewhere, there will be a physical piece of paper documenting the transaction, of which you receive a chopped copy. Always. This is Situation #1. That piece of paper is good for converting the resulting amount of RMB (or less) back into Forex, normally within 6 months assuming you are a non-account holding visitor. That is Situation #3.

Situations #2 and #4 is where things get stickiest, and require creativity and/or a useful network.

To avoid banks that don't know what they're doing, I suggest that you do this at the Bank of China. The only problems I've had there over the last three years have been with trainee tellers, but as long as you stick to your guns, their supervisors will set them straight.

As for the $500 per day amount, you can refer to the SAFE website:

http://fj.safe.gov.cn/110000/110000e0263021.html

So the next time some bank turns you down for doing an exchange from RMB worth US$500 or less, point them to the SAFE website.

While I was browsing the SAFE website, I noticed that they've extended the $50000 exchange period through to the end of December due to the Asian games. So if you have a large wad of RMB that you're trying to get rid of, now is the time to head to your nearest BoC branch.

No the $50k thing is only temporary. It's been in place since April due to the World Expo. However, I just found out that it's been extended til the end of December thanks to the Asian Games.

So if you head to any BoC branch, you should be able to buy up to US$50000 worth of foreign currency with RMB.

If you wait until 2011 then you will probably have to do the $500 thing or use the black market, unless you have a work permit.

And no wire transfers aren't tricky at all. What is tricky is buying/selling foreign currency using RMB. This is because the RMB is not freely convertible, in case you haven't noticed ;)

I haven't been to an ICBC branch in three years so my memory is rusty :D

IIRC, as long as you stick to your guns and get them to ask a supervisor they will follow the rules as set out by SAFE. However, I've found BoC to be much more reliable when it comes to foreign exchange than the ICBC, plus the BoC's fees for transactions such as wires are often lower than the ICBC.

But it doesn't hurt to try if the ICBC branch is more convenient for you. After all, the regulation is on your side ;)

OK, this is helpful...I thought that the $50k thing was for converting RMB into forex (which is what other posts imply...see a couple further down from yours). Anyway, I'm out of China now, so can't physically convert cash. I'll just have to chase a bank transfer from the university to my account.

thanks,

tb

BofA works really well... no fees at all and the exchange rate is pretty close to WSJ.

That's interesting, since their own blurb suggests that they will essentially incorporate a 3% spread (although no fee). Is 'pretty close' less than 3% differential?

tb

CCB BEIJING ATM WITHDRWL 10-06
-$29.92

(200)

CCB BEIJING ATM WITHDRWL 10-05
-$74.80

(500)

CCB BEIJING ATM WITHDRWL 10-04
-$44.88

(300)

CCB BEIJING ATM WITHDRWL 10-02
-$44.88

(300)

Using one of the 44.88 transactions, the exchange rate was 6.68. xe.com is showing 6.64 today (yikes!) so I think BofA is pretty good.

It should be easy to find out. Just do a balance query and do the maths.