FAQ of Import and Export Agency solution

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International trade in China should be received the government permit as the priority.

Zhishuo Group provides global importing and exporting solutions as an expert.

Companies that provide import and export solutions face the everyday legal provocations of dealing with the laws and rules that govern this industry. Since each country worldwide has its unique laws that regulate outsourcing export solutions and import solutions, the legality surrounding how a private company deals with these laws can be confusing and overwhelming.

Not being familiar with the laws of a country that you would like to conduct business with often results in imports and exports being held in customs for an indefinite amount of time. Export-import logistics management offers the benefits of having a knowledgeable import-export solution provider handle these challenging aspects of your business.

Importing solutions and exporting solutions for industrial markets requires extensive knowledge of international laws that govern trade. Before making any final decisions regarding import and export business objectives, speaking with an established expert with experience in the international laws surrounding trade is vitally important. We provide the following global import and export solutions:

● Knowledge of international trade laws.

● Understanding tariffs & currency exchange.

● Global market expertise.

● International shipping.

● Letters of credit.

● Legal documentation.

● Export & import management solutions.

● Supply sourcing.

● Logistics establishment.

● Material allocation.

● Procuring Quality engineering solutions.

● Kitting & packaging solutions.

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The chinese banking system is famously complex. Here, francesca scortichini of hawksford, explains the main types of bank accounts available to companies and the latest banking requirements in 2021.

The banking system in China has experienced a profound transformation over the years. Most recently it has been the focus of a campaign aimed at modernising its traditionally closed system and preventing illegal practices.

Its many peculiarities affect the daily operations of foreign-invested companies when dealing with payments and especially when processing or receiving international remittances. Newly established companies that are not familiar with the system may encounter several challenges, whether that’ s the seemingly straightforward act of opening a bank account, or choosing the right account for their specific needs.

China’s banking structure

The financial industry in China is supervised by the People’s Bank of China (PBoC) which is China’s central bank. It is also in charge of formulating and implementing monetary policies and monitoring lending and foreign exchange transactions between banks as well as the national payment and settlement system.

The pillars of the banking system consist of the biggest national banks, including the Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), Bank of China (BoC), Bank of Communications (BoCom) and Agricultural Bank of China (ABC), which together form a developed financial network in China with extensive geographical reach and assets. There are also several other banks specifically targeting rural areas as well as branches of foreign banks, although with limitations in their business scope they are able to offer.

The State Administration of Foreign Exchange (SAFE) also plays an important role in the management of the Chinese banking system. In brief, its major responsibilities are to regulate and supervise foreign exchanges and monitor cross-border capital flows.

Therefore, through its policies and regulations, the SAFE greatly influences the daily operations of foreign-invested companies in China as well as Chinese companies involved in international business.

Types of bank accounts

A company may open different types of bank accounts suitable for different needs and purposes. For the time being, foreign companies are typically required to open at least two bank accounts, namely a capital account and a CNY basic account, which have the following characteristics:

Capital accounts: These have the purpose of receiving capital injections from shareholders. Their usage should strictly follow SAFE [Hui Zong Fa 2020-89] regulations. For example, a limit of US$200,000 of the injected funds in the capital account may be transferred to the company’s CNY account each month. The funds need to be completely used up before transferring additional capital into the CNY account.

Alternatively, it is possible to make direct payments to suppliers without limitations by providing supporting documents such as contracts and official invoices for every payment made from the account. Capital accounts can be in any currency in accordance with the company’s Articles of Association and business license.

CNY basic accounts: These accounts are the main CNY accounts for the company, used to collect payments from Chinese clients and pay Chinese suppliers, rent, taxes, salaries etc. These accounts can also directly receive and process international payments following the relevant SAFE regulations.

In certain Free Trade Zones in Shanghai, such as the Lingang New Area, foreign-invested companies are no longer required to open a capital account if they open a basic bank account that uses CNY as its currency.

Other Accounts: Usually, companies engaged in international trading may find it useful to open a ‘general account’ to receive and make international payments in a foreign currency. This account can also be in CNY, in addition to the CNY basic account.

Moreover, a company can open a foreign exchange settlement account in different currencies to receive funds from overseas clients and temporarily keep them in this account to control the currency exchange risk and avoid the losses incurred by an adverse currency exchange at a particular time. One limitation is that the funds in the foreign settlement account cannot be transferred freely to make payments to other Chinese companies; that can only be done via a CNY basic or general account.

There are also other types of bank account that can be opened for a specific purpose, such as for tax or social contribution deductions.

All the bank accounts described above are used for common business operations, yet they cannot be used for financing purposes, for which companies are required to open a dedicated inter-company loan account or a bank loan account. Inter-company loan accounts are opened on the basis of a loan agreement between a Chinese company and a foreign-related party and are subject to SAFE regulations. The borrowed amount cannot exceed the foreign loan quota, which is equal to the difference between total investment and established capital, or is proportionally calculated if the established capital has not been fully paid up.

The usage of a loan account is similar to a capital account, requiring the submission of supporting documents for each payment.

For bank loans, there are no specific limitations besides the commercial terms negotiated and stated in the loan contract. However, for a newly established company, it may be difficult to obtain a bank loan unless the shareholder has a privileged relationship with the bank and is able to offer a guarantee to cover the financial risk.

Lastly, foreign companies are allowed to open bank accounts in China to settle payments in advance, such as by using a pre-expense account, or they can open a non-resident account (NRA) in a free trade zone without the needing to have a legal entity established in China.

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To open a bank account, companies need to submit several documents to the bank, typically including the business license and the original passport of the legal representative along with other documentation depending on the specific bank’s internal requirements. Although there may be different practices and procedures from bank to bank, in general, the requirements are becoming stricter in a common push to prevent fraud, money laundering and any other illegal activity. In particular, for newly established companies looking to open a bank account, the bank may:

● Require an onsite inspection of the company’s premises. This means that companies need to have an identifiable physical office with a company sign or logo.

● Ask to see the business’s lease contract, rent invoice and latest utility bills as proof of real business substance.

● Check the number of companies under the company legal representative’s name.

● Investigate the direct shareholder(s), the ultimate beneficiary and any politically exposed person (PEP).

● Request the original ID or passport of the company’s legal representative and, in most cases, their physical presence at the bank.

● Request a Chinese telephone number to reach the legal representative.

● Apply a minimum amount for deposits into the bank account.

In many cases, it may be impossible to open a bank account if the legal representative does not reside in China, cannot provide a Chinese telephone number or proof of substance for the business.

Moreover, since June 2020, the People’s Bank of China and the SAFE have been conducting special inspections targeting abnormal accounts in the banking system, which may have a series of impacts on the activities of foreign-invested enterprises and their daily banking operations. For example, banks may freeze accounts if legal representatives fail to answer phone calls from the banks or if accounts have not been used for over six months.

Accounts can also be blocked if companies fail or forget to update their information in a timely manner following a change in management, or if the bank discovers any other indication of company abnormality.

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Chinese payroll typically includes salary, taxes, and social contributions. In China, social contributions differ from city to city. For the employer’s part, the rate of social contribution is also based on the city where it is established. Moreover, the tax authorities calculate the individual income tax based on an annual accumulative basis. This makes it difficult to come up with an estimate. Therefore, it is best to get a professional solution with local expertise.

The annual leaves and holidays are part of the basic monthly salary in the payroll. Chinese workers are entitled to 5 to 15 annual leave days per year. They also get a full wage payment for national or public holidays. Furthermore, an employee with less than 10 years of cumulative work experience gets a minimum of three months of sick leave.

For more details about paid annual leaves for employees in China, please refer to the Regulation on Paid Annual Leave of the Employees by the State Council.

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1) It saves time and resources.

With a payroll solution provider, your HR managers can focus on other valued and business-related matters. You will also save the cost for an internal payroll process where you have to pay employees to do it. Often, small companies have many people handling various parts of the payroll process. Having an outsourced provider can help handle all the responsibilities involving payroll management as well as employee inquiries regarding their salaries.

2) It ensures compliance and avoids penalties.

Without a doubt, hiring a professional payroll solution provider can help businesses avoid risks and penalties. An employee can face an overdue tax payment of 0.05 percent per day based on outstanding taxes. It is not only applied to Individual Income Tax (IIT) but also to Value-added Tax (VAT), Corporate Income Tax (CIT), and others.

3) It is stress-free.

You can expect your company to focus on other core functions once you know how to manage complicated processes involved in payroll. Your management can free itself from this aspect of financial stress as long as it can count on a trustworthy and efficient payroll solution provider.

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The Chinese “Green Card” is China’s permanent resident ID card, which allows foreigners to have a prolonged residence period compared to work visas.

In February 2020, the Chinese government released an Exposure Draft, containing several updates for the eligibility for applying for the green card. The new draft isn’t considerably different than the old regulations, but it does expand the eligibility prerequisites in order to ease the application process that is already pretty tiresome and strict.

According to the new draft, foreigners applying for permanent residence in China must be in good health, have no criminal record, and meet at least one of the following requirements:

Investment: Be a direct investor in China and have invested at least $500,000 in western or poor regions of China, $1 million in central China, or $2 million in other areas, and have been investing for at least three consecutive years.

Educational and occupational experience: a Ph.D. holder or an alumnus of an honored academic institution with a 3-year work experience in China; Have 3 years experience working in key industries or fields that receive state support; Having worked in China for four/eight years with an annual income that is no less than four/six times than the average local salary respectively.

Level of talent and need: International talents who can make a great contribution to China’s economic and social development, or possess a skill especially needed by China.

Family relationship: Come to China to be with their family, married for at least five years or dependents of Chinese citizens.

Recognized achievements: Foreign business professionals with internationally recognized contributions.

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The main benefit is the length of validity. Foreigners residing or doing business in China without a Chinese green card must renew their residence permit yearly. Additionally, the green card saves time and hassle, allows easy entry and exit into the country and can also be used separately as a legal certificate to stay in Beijing. Moreover, people with a Chinese green card are to work freely and be treated according to all Chinese labor laws. Green Card holders have the same rights and responsibilities as Chinese citizens of the city they live in, regarding areas such as investment, buying housing, and education. The cards can also be used as a form of identification when buying a train ticket or booking a hotel room. However, Chinese Green Cards are not the equivalent of Chinese nationality. Holders of the Chinese Green Card do not have the right to vote, run for election, or serve in the military.

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The provincial Public Security Authority handles the application for permanent residency in China. The applicant or, if the applicant is unmarried and under the age of 18, the parent of the applicant can apply for permanent residency in person or entrust a third party to submit the application on their behalf. In the case of a third-party application for permanent residency, the third party must hold power of attorney for the applicant. Applicants living abroad may file the initial application at the Chinese embassy in their country of origin and submit the full application upon arrival to China. During the application process, the applicant may be required to present various documents such as passports, marriage certificates, tax bills, and foreign investment certificates.

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The Public Security Authority should decide on the status of the application within a six-month period of receiving the application. If approved, adults will be given a green card valid for 10 years, and minors will be given a green card valid for 5 years.

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I. Filling out the COVA form. Complete the online application form at the China Online Visa Application (COVA) website. Please refer to the consular jurisdiction of the Chinese Embassy and Consulate General in the United States and select corresponding Embassy/Consulate-General when you submit the form online. Attention: Once the application form is submitted, it cannot be modified. Please make sure that the information is true, accurate, and complete.

II. Preparing documents. Prepare the required documents by referring to the Requirements and Procedures for Chinese Visa Application. The application documents for each visa type consist of two parts: basic documents and general documents. Please read the instructions carefully.

III. Submitting the physical documents. Print out the full set of paper application form and required documents. Submit them in person or by an agent within office hours of the corresponding Embassy or Consulate-General. The Visa Section of the Embassy locates at: 2201 Wisconsin Avenue NW, Suite 110, Washington, D.C. 20007. Office hours: 9:30-14:30 (Monday to Friday, closed on weekends and holidays).  The staff will review the documents and schedule the time for pickup. Usually, it will take 4 working days if the application meets all the requirements.

If there is an urgent need for travel, the applicant may apply for expedited processing by presenting the supporting documents. The processing time will be 3 working days (additional fee will be charged).

In some cases, it may take longer-than-usual-time, please be patient and wait for pickup notice.

IV. Pickup. Please use credit card (Master or Visa), Money Order or Cashier's Check for payment. More details.

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No. Please renew the passport first.

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Please check whether there is any change of Name, Gender, Date of Birth and Nationality between the new and expired passports. If the information above has not changed and the purpose of your upcoming trip to China is consistent with the visa type, a new visa is not required. Please travel to China with both passports. If your personal information has changed or the purpose of your trip to China is different from the type of current visa, please apply for a new visa.

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China visa consists of 16 major types, which are respectively marked with Chinese phonetic letters L, M, F, Z, X1, X2, S1, S2, Q1, Q2, C, J-1, J-2, G, D, and R. Diplomatic visa and Service visa must be obtained through government channel, which is not covered on this page.

Tourist Visa (L)

Issued to those who intend to go to China for touring and sightseeing. Proof of travel such as flight confirmation and hotel reservation are required. Single-entry, double-entry or multiple-entry are all available for tourists. The duration of stay (each visit) normally is 30-60 days. Multiple-entry up to 10 years is issued to US passport holder.

Business Visa (M)

Business M visa is issued to those who intend to go to China for commercial and trade activities. M Visa is usually issued for single-entry, double-entry or multiple-entry. M visa can be issued up to 10 years. The duration of stay (each visit) is normally 30-60 days based on particular Chinese Consulate.

Non-Commerce Visa (F)

F visa had been used as business visa before M visa was introduced. F visa is now changed for noncommercial visit. F visa is issued to those who intend to go to China for research, lecture, scientific, cultural exchange and study tour. F visa (for non-trade or non-commerce) is normally issued for single or double entry only. The duration of stay (each visit) is normally 30-90 days.

Work Visa (Z)

Issued to those who have obtained employment to work in China. A government issued working permit or employment license is required. Z visa is issued for single-entry only. Holders of Z Visa shall, within 30 days from the date of entry, establish and apply for the residence permit in Public Security Bureau (police station). Residence permit is good for multiple entry. Z visa is also issued to people conducting commercial performance in China.

Study Visa (X1/X2)

Issued to those who have been admitted by a Chinese college. Student Visa is sub-divided into X1 and X2. X1 is issued to foreign students who come to China for study for more than 6 months. X2 is issued to those who come to China with same purpose but for a period of less than 6 months. X2 visa is issued for single-entry only. X1 visa can be issued for multiple entry with validity up to 5 years.

Private Visa (S1, Long Term)

Issued to those who intend to go to China to live with the immediate family member working or studying in China, or to those who intend to go to China for other private affairs. The intended duration of stay in China exceeds 180 days. "Immediate family members" refers to spouses, parents, sons or daughters under the age of 18 or parents-in-law. Original proof of kinship is required. S1 visa is issued for single-entry only. Holders of S1 visa shall, within 30 days from the date of entry, establish and apply for the residence permit in Public Security Bureau (police station). Residence permit is good for multiple entry.

Private Visa (S2, Short Term)

Issued to those who intend to visit their family members who are foreigners working or studying in China, or to those who intend to go to China for other private matters such as visiting friends, divorce, inheritance, adoption, marriage or medical care. The intended duration of stay in China is normally granted as 30 - 90 days per visit. Proof of kinship is required for visiting family members. S2 visa is usually issued for multiple-entry. Multiple-entry up to 10 years is only issued to US passport holder.

Family Visa (Q1, Long Term)

Q1 visa is designed for Chinese descendants or foreigners who are spouses of Chinese citizens. Issued to those who are family members of Chinese citizens or of foreigners with Chinese permanent residence and intend to go to China for family reunion, or to those who intend to go to China for the purpose of foster care. The intended duration of stay in China exceeds 180 days. "Family members" refers to spouses, parents, sons, daughters, spouses of sons or daughters, brothers, sisters, grandparents, grandsons, granddaughters and parents-in-law. Original proof of kinship is required. Interview may be required. Q1 visa is issued for single-entry only. Holders of Q1 Visa shall, within 30 days from the date of entry, establish and apply for the residence permit in Public Security Bureau (police station). Residence permit is good for multiple entry.

Family Visa (Q2, Short Term)

Q2 visa is designed for Chinese descendants or foreigners who are spouses of Chinese citizens. Issued to those with the intention of visiting their relatives who are Chinese citizens residing in China or foreigners with permanent residence status in China. The intended duration of stay in China is normally granted up to 120 days per visit. Q2 visa is usually issued for multiple-entry. Multiple-entry up to 10 years is only issued to US passport holder.

Crew Visa (C)

Issued to foreign crew members utilizing means of international transportation including: aircraft, trains, ships, and motor vehicle drivers engaged in cross-border transport activities. Also issued to accompanying family members of crew members. Multiple-entry up to 5 years is only issued to US passport holder.

Group Visa

Group Visa is a particular type of visa that issued to a tourist group which comprises at least five (5) members who must travel together in China. Group Visa is issued as a separate sheet instead of on the individual passport. One Official Visa Notification Letter from any head office of the China Travel Service (CTS), China International Travel Service (CITS), or China Youth Travel Service (CYTS), or Chinese National Tourism Bureau is required.