The Blog:

How to Get Your Money Into China 1/3/2011

So you have decided you want to invest in China and play your hand in one of the biggest economies in the world. What next? Setting up a business in China is a long process that requires meticulous record keeping, persistence and ingenuity. But don’t worry; it is possible! And if you are in the right spot at the right time, very profitable.

China’s protective nature of the RMB makes getting money in and out of the country somewhat of an art. But if you have the right plan of attack in place, you will not be baffled.

Once you know what location is right for you, based on your customer and/or your supplier base, you have to conquer the task of getting your money into the country to start up the business. After all it takes money to make money right?

First, make sure you know what type of business you will need to set up: a WFOE, Rep Office, Joint Venture or Partnership Enterprise. Our firm decided on a WFOE because of the flexibility, the ability to conduct profit-making activity and the protection granted by the government (equal to that of Chinese businesses). Each business is different however, and a rep office might be the right place to start for your company. Check out our partner company’s resource on Incorporating a Business in China for a nice start.

You need to know that there are limits on the amount of capital each business can invest in the country. The amount you plan to invest and the industry that you play in determines what regulatory agency must approve your investment and for how much. Once your investment gets approved then you will be issued a business license. Then you must gain approval to convert your investment into RMB by China’s State Administration of Foreign Exchange. This however can throw a stick in your spoke if you are not prepared.

Here is the catch: you can only get approved to convert your investment after you open a local bank account. But you can’t get a local bank account until you have approval to invest. The good news? There are multiple ways to get around this.

If you have someone that you trust in China, it may be a good idea to leverage their connections (and bank account) to get started. Or, you can also open what is called a pre-investment bank account, where companies are allowed to spend up to $100,000 to set up their business and gain investment approval. This money can also be applied toward your approved investment capital needed to open the doors. Whatever your decision, make sure your money is safe and if you have any doubts, there are professionals that can help you through every step of the process.

Resources:
Great New York Times Article

RMB Currency Converter

Tags: , , , , .
No Comments. Join the Discussion.