I need to wire transfer $3000 to a colleague in Pudong who does not have a bank account in China.
I was told by a Western Union agent that the fee would be $26 and the conversion rate to RMB would be 6.7.
Has anybody used Western Union in China or in the Shanghai area. Are there any hidden charges, etc.?
Somewhat related, how hard is it for a non resident (tourist visa) to open a bank account to which $US can be wired?
All info appreciated.

I have done it couple of times (although nothing close to $3k), AFAIK, there is no hidden charge, just complete the transaction on your end, give your colleague the transaction #, then he/she can withdraw the money from any Chinese Postal Office. As for the bank account, I was able to open a saving account at a ICBC branch using only passport (tourist visa), just make sure you go to a major branch.

You can open a local bank account as a non-resident. Technically, it will be similar to a passbook savings account. It needs to be set up as dual currency USD and RMB, so it can receive an incoming USD wire. Then the account holder will need to go to bank with passbook and have them convert all or part of it to RMB at that day's prevailing rate. Two separate running balances will be kept, one for each currency. This is a standard product offering for most of the major players in local banking.

The "hidden charge" is in the conversion rate--the difference from the current official rate (which you never quite achieve even under the best of circumstances) is 6.81-6.7 = 0.11 or RMB 330, which is about $48. This is a bigger spread than you find at most banks. So, added to the sending fee, your total cost is about $74. However, if you had the ability to bank wire to a theoretical local account, you would still incur an intl wire fee of $40-50 along with a better conversion rate, but the savings over WU method for this amount would only be about $10-$15. Bank wiring is most cost effective when you deal with larger amounts...like $5000-$10000+...or if you have Premier status at your bank and can get free intl wire privileges.

Having been on both the sending and receiving end of similar transactions many times, I have a bit of experience. If he has an account with BofA, Citi, or HSBC, simply depositing money into one of these is the best way to go IMO (BofA is tied to Construction Bank and the other two have branches in China). Otherwise, I've had better luck with Moneygram than Western Union (lower fees and more favorable exchange rates).