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How to Send Money to China: A Guide for Cross-Border Businesses

You’d think that making payments to businesses in China – the country with the largest amount of exports in the world – would be pretty straightforward. Well, it’s not – at all.

Though China’s economy has leaped onto the global stage during the last decade, it has retained some key features of an emerging market, the chief of which: capital controls. This means that money flows coming in and out of China are very highly regulated. 

Those regulations are complex, and have a tendency to change quite frequently. This makes it hard enough for a multinational corporation to keep on top of, let alone for a burgeoning cross-border business.

If you’re reading this now, chances are that you fall into one of these categories:

We put together a simple guide to help explain the challenges around sending money to China, and provide a summary of the most popular ways of doing it. 

Sending Money to China: The Challenge for Businesses 

Here are some common challenges entrepreneurs typically face: 

  • It can be expensive and slow. Chances are that the western bank which supports your business either doesn’t have branches in China or doesn’t have a direct relationship with Chinese banks. So when wiring money via your bank, cross-border money transfers will go through the SWIFT network, the very established but notoriously complex and expensive network of correspondent banks. Apart from making the actual money transfer happen will also help facilitate currency conversion typically at an unfavourable exchange rate.
  • There are many restrictions, regulations, and policies most people just don’t know about. Along its journey to China, your money will eventually reach a Chinese bank. A Chinese bank not only follows the strict regulations of the People’s Bank of China’s (the central bank), it often imposes policies of its own on top of that. These extra policies are typically not transparent and get updated very frequently. So, if your transfer doesn’t adhere to the specific policies of the receiving bank, your payment will be rejected.
  • It’s difficult to keep track of all the moving parts and changing landscape, for someone outside China.

Making Business Payments: 4 Ways to Send Money to China 

If your business needs to make payments to China – for example, in order to pay your suppliers – here are some popular ways you can consider. 

Send Funds Through a Bank Wire

Assuming you have a business bank account, this is the most basic method people think of when sending money. The pros are that it’s convenient to process the transfer from the same system where you manage your money (in other words, you don’t need to use another service provider or tool) and there’s no set-up/sign-up process involved. 

However, perhaps the most obvious consideration has to do with the fees. You could get charged for:

  • International transfer fees from your bank
  • SWIFT correspondent bank fees
  • Currency conversion fees 
  • Fees from the receiving bank 

The amount your recipient gets could be starkly different from what you’d sent, and it’s difficult to anticipate what will be charged.

Use a Third-Party Remittance Company

In the West, if you don’t want to deal with the complications of bank transfers, the popular  alternative is to use a remittance company such as Azimo or Western Union.

This is where China’s capital controls make things more complicated.

Though remittance companies are allowed to provide their services and compete with banks, they need to hold a special cross-border payment license. To date, only Chinese companies such as LianLian Pay have been granted such license. 

However, when you consider Chinese companies, the problem is that their focus is helping Chinese exporters remit money back into China, so they may not always be able to support Western entrepreneurs due to, for instance, language barriers.

A new wave of FinTech remittance companies are now partnering up with Chinese cross-border licensees to start filing that gap. However, due to the many restrictions on accepting funds from international sources some limitations apply e.g. the ability to only send funds to Chinese business bank accounts – not to Chinese personal bank accounts. 

Transfer from Your PayPal Account to Theirs 

While PayPal isn’t super popular in China, it’s still a viable option many opt for, especially because it feels familiar to a lot of Western entrepreneurs. 

If your recipient has a PayPal account, you can send funds straight from your account to theirs. These transfers are usually instant. So if you both have PayPal accounts, this can be a very convenient option. The downside, however, comes in the form of high fees then charged to your business counterpart. 

If your recipient wants to then withdraw funds out of their PayPal account, they’ll have to use a third-party payment service in order to remit funds into their Chinese bank account. This withdrawal step can take up to 2 days and comes with a conversion and withdrawal fees. 

Here’s a link to the PayPal website for more information. 

Open a Business Account with Neat and Transfer Funds from Hong Kong

If you’re not yet familiar, Neat is a modern alternative to banks, offering multi-currency accounts for entrepreneurs and SMEs to operate their businesses. We’re based in Hong Kong and have an office in Shenzhen. Our focus is to enable the entrepreneur economy between the West and China.

So the last method we’ll touch on to send money to China is through opening a Neat Account in Hong Kong and transferring funds from there. There are a couple significant benefits of doing it like this:

You get the most competitive rates, because Neat partners directly with Chinese banks.
By partnering directly with banks and local payment companies in China, we’re able to get you the lowest rates, and you don’t have to deal with unpredictable SWIFT fees. When you send your payment, you will be able to see exactly the amount the recipient will receive.

We have first-hand expertise on the operating environment regarding transfers to China.
Unlike the average local bank in Europe or the US, we have on-the-ground experience and know-how. With a local team in China, we’re up-to-date with knowledge on the constantly shifting regulations and compliance standards associated with accepting funds from outside of China. This is translated into how we build the product, how we choose the partners we work with, and ultimately ensures that your payment isn’t held up or rejected by the receiving Chinese bank.

It’s convenient for both you and your recipient.
All you do is log in to your Neat Business dashboard and make the transfer directly through your dashboard – the same place you manage all your other company finances. No need to create an account with a third-party software or visit a bank branch; and your recipient doesn’t have to deal with withdrawal fees when accepting those funds into their account.

You get a solution that is built with international and Chinese market specialisation.
A lot of alternative payment solutions, such as LianLian Pay, are specifically built and marketed primarily for Chinese companies. Meaning that sometimes these tools can be a little more difficult for a Western company to navigate. 

Neat has been built with both Western and Chinese businesses in mind so we remove the frictions of sending and receiving money on payments to China. What’s more, our support is available in both English & Chinese.

So what is the best way to send money to China? 

Well, at the end of the day it depends on your business and what you’re trying to do.

If you’re looking for a way to send a few one-off payments into China, PayPal might do the job, as it requires little setup. 

However, if you have a business relationship with suppliers and partners in China, and need a dependable and economical long-term solution, we would suggest opening an actual business account with Neat. 

To learn more about Neat Business, please visit Business page here.

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