A Complete Guideline How to Transfer Money Out of China

Getting money out of China can be quite tough. For those legitimately employed in China and paying their taxes, this will not be a problem. However, many foreign companies or individuals sometimes by design or default, fall into grey areas of Chinese law where they couldn’t manage to get their hard-earned money out of this country. While China’s attempts at capital controls are the most substantial of any in the world and a significant barrier to companies attempting to do international business in and out of China there is a valid reason for their existence.

However, there are many ways you can take money out of China and the best possible way to navigate this complex field of extracting money is to seek help from the expert China lawyers. These are the things you need to consider while taking money out of China.

  • The nature of the transaction. Real estate purchases tend to be the worst of all because Chinese citizens must
  • expressly state that they are not asking to send money out of China to purchase real estate.
  • The parties on both sides.
  • The relationship and the history between the parties.
  • The location of the parties.
  • The nationalities and even the ethnicities of the parties (especially the receiving party).

China is especially targeting so-called “asset transfers,” or purchases of foreign assets with little to no potential economic returns. Such purchases, regulators believe, are purely used to shift or launder funds abroad. Chinese citizens are allowed to convert the equivalent of only $50,000 of yuan per year to other currencies. When they travel abroad, including to Hong Kong, many of their transactions using China’s UnionPay credit and debit cards aren’t subject to the limit. It is important to keep in mind that WFOE owned by a Western company that cannot get its money out of China.

You aren’t allowed to send RMB out of China, you must buy a currency that the bank is able to sell to you and send that money out. It’s this money exchange that’s the difficult part. To convince your authorized branch to sell you an approved currency you must present the following documents-

  • Your Passport
  • Your working permit
  • A filled-out application
  • Your work contract with your company
  • A statement from your company providing your salary information
  • A statement from your company proving how much tax you’ve paid up until this point to the Chinese government.

Chen Long, a China economist at Gavekal Dragonomics, said: “China still saw net yuan outflow in recent months, although the size abated from that of late 2016, based on figures released by the foreign exchange authority. Future policies will depend on how capital flow changes over time.”

Chinese regulators introduced stricter restrictions to limit capital outflow. Some examples of such outflow controls are strict limits on the amount of money that can be transferred to overseas accounts; higher scrutiny of Chinese companies that wish to acquire assets overseas etc. Outflow control measures are introduced to ensure that capital flows are either balanced or that more capital flows into the country than leaves it.

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The Provisions that you Must Skip in your China Employment Contract

China lawyers always suggest U.S. and European business owners to sign out a China-centric contract while doing business in the mainland China or with China. This approach is highly important especially in case of the employment contracts with the Chinese employees because the entire agreement is highly local in nature.

There are two things that foreign business owners must have if they have someone in China other than a company performing services for them-

  • Foreign company’s own entity in China
  • A China-specific written employment contract

It has been noted by the professional China lawyers that even translating the entire existing employment agreement into Chinese couldn’t manage to reduce the risk. The executives of the American and Australian companies have been seen asking for assistance from the China lawyers regarding the employment agreement that is translated into Chinese.

We’ve set out to put together a solid list of examples that will clarify the differences in employment law in China with the foreign countries (especially U.S.)

In the United States and other countries, employees are hired on an at-will basis that signifies that the employee can be sacked either for good reason or for bad reason or for no reason at all. But it will not work in China. Putting this type of provision in your employment contract in China will be treated as a wrongful termination claim. China lawyer firms suggest their clients not to put this sort of provision in their employment contract.

The provision of making your employee to work whenever required to complete the job is not entirely invalid if certain conditions have been properly met. But the major issue is that, if you are sued by your Chinese employee(s), this provision may go against you in the court. So diligently skip this provision.

There is a misconception among the American companies that making a provision in a contract with a China employee that United States law will apply and all disputes must be resolved in the U.S. territory is a safe approach. This notion is totally wrong and the success of this provision in a contract is almost zero.

In China, if foreign companies wish one of their employees to be bound by a non-compete provision, they must pay them consideration for their not competing during the entire term of the post-termination non-compete period. A non-compete that comes into force after termination of employment and the consideration for this non-compete is the promise of employment works in the USA but not in China.

By removing the above-mentioned provisions from your China employment contract will help you to gain strong position in case you are sued by your employees. The judges will not doubt about your intention and will offer you upper-hand during the entire legal battle.

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