More on the the costs of setting up a Rep Office in China – Banking in China.
Like most other aspects of setting up a business in China, banking can be troublesome to say the least. All the hidden costs combine to make a powerful barrier to entry for new businesses.
Rep Offices (and SMEs in general) are being hit with increased bank account setup & maintenance fees, when compared to larger corporate clients. In order to open an RMB account, companies are required to pay
- set up charges (US$200)
- online banking fees – varies
- monthly maintenance fees – varies
- account permits (about US$30)
- electronic payment security (about US$80)
Setup fees vary between different banks. ODM shopped around for a full day choosing a bank with low set up fees – we could have paid over US$300 whereas we finally found a bank charging just US$ 50 to set up. Online banking fees are even higher so we do not really use our Chinese bank accounts.
In addition, banks have tightened the documentation requirements of a newly opened RMB account. Many now require the submission of the legal representative’s original passport, as well as a physical examination of the office location. These policies changes can hinder a foreign invested SME’s market entry if the newly established company’s legal representative is not based in China. If the Chief Rep is in China they will have a very high tax bill, taxed on their Global Salary for each day they spend in China.
Our Solution – all banking transfers & payments are done from Hong Kong (ODM Group Headquarters) where setting up and maintaining a business is relatively easy and straightforward. Hong Kong has lower taxes, is transparent with low set up costs. To keep our costs in China lower we share costs with partners..
Your Solution – Form a Partnership with a Buying Office or Buying Agent like ODM. Share the costs and gain economies to scale for the office/staff – not to mention strength in Procurement as a group.. ODM offer solutions with Dedicated Staff working for you exclusively. Then you do not need to go through the headache, costs and time consuming process of setting up a stand alone entity.