How SZ Cos. Smoothly Pay USD to HK Cos. A Comprehensive Analysis!

How Can a Shenzhen-Based Company Smoothly Pay USD to a Hong Kong-Based Company? A Comprehensive Guide

In the context of global economic integration, cross-border trade and investment have become increasingly frequent. As a pioneering city in China’s reform and opening-up policy, Shenzhen is not only a hub for technological innovation but also home to numerous foreign trade enterprises. Meanwhile, Hong Kong, with its status as a free port, mature financial system, and stable business environment, remains a key gateway for mainland companies engaging in international operations.

For Shenzhen-based businesses, settling transactions in U.S. dollars with Hong Kong partners has become a routine part of daily operations. However, cross-border payments involve multiple aspects such as foreign exchange control, banking procedures, and tax compliance. Even minor mistakes can lead to delayed transfers, currency exchange losses, or even regulatory risks.

So how can Shenzhen-based companies smoothly make USD payments to Hong Kong companies? This article offers a comprehensive analysis from the perspectives of regulatory background, operational procedures, and key considerations.

I. Regulatory Background Stricter Oversight with Improved Convenience

In recent years, China's foreign exchange management system has gradually improved, with stricter supervision over the flow of foreign capital. According to regulations issued by the State Administration of Foreign Exchange SAFE, domestic companies making USD payments overseas must adhere to the principle of authenticity review-meaning the transaction must be based on real trade or investment activities, supported by relevant documents such as contracts, invoices, and customs declarations.

However, with the advancement of reforms aimed at streamlining administration and improving services, the process for legal foreign exchange payments under current accounts has been significantly simplified. For example, the 2025 notice on further optimizing cross-border RMB and foreign exchange services clearly encourages banks to use digital tools to enhance cross-border payment efficiency, enabling businesses to complete international settlements more conveniently.

The continuous development of the Guangdong-Hong Kong-Macao Greater Bay Area has also introduced more institutional facilitation for fund flows between Shenzhen and Hong Kong. In areas like Qianhai in Shenzhen, pilot programs on cross-border financial innovation have enabled certain qualified enterprises to enjoy a more flexible environment for capital movement.

II. Basic Procedure From Application to Payment

A typical USD payment from a Shenzhen company to a Hong Kong company involves the following steps

1. Confirm Transaction Background and Sign Contracts

Cross-border payments must be backed by legitimate commercial relationships. The first step is to sign formal purchase/sale contracts or service agreements with the Hong Kong company, specifying the nature of the transaction, amount, currency, and payment method.

2. Prepare Required Documentation

Companies need to submit the following materials to their bank for verification

Commercial contract or agreement

Invoice or proforma invoice

Customs declaration or shipping documents if applicable

Business license copy

Recipient company’s bank account details including SWIFT/BIC code, bank name, recipient name, and address

3. Choose the Right Banking Channel

Most major Chinese banks offer USD remittance services. It is recommended that companies choose banks with strong international settlement capabilities, such as Bank of China, Industrial and Commercial Bank of China ICBC, or China Merchants Bank CMB. These banks are experienced in handling cross-border transfers and have stable systems, reducing the risk of failed or delayed transfers.

Alternatively, some companies may opt for third-party cross-border payment platforms like Airwallex or XTransfer. These platforms typically offer multi-currency accounts, real-time exchange rate tracking, and automatic reconciliation features, making them suitable for small and medium-sized export enterprises.

4. Complete and Submit the Remittance Application

Fill out the overseas remittance application form either at the bank counter or via online banking. The form should include the recipient’s information, amount, currency, and purpose of payment. Special attention must be paid to the accuracy of the SWIFT code to avoid transfer delays or returns due to incorrect data.

5. Bank Review and Transfer Execution

After receiving the application, the bank will conduct due diligence in accordance with foreign exchange regulations. Generally, if all documents are complete and no anomalies are detected, the transfer can be completed within 1-3 business days. Some banks also offer expedited services for urgent cases.

III. Common Issues and Solutions

1. Returned or Delayed Payments

Common causes include

Incorrect SWIFT code or bank details

Sanctions or restrictions in the recipient country

Unclear payment purpose or incomplete documentation

Solutions Double-check recipient information before sending; communicate with the recipient in advance to confirm account validity; keep full transaction records for smooth bank verification.

2. Currency Exchange Risk

Due to the fluctuating USD/CNY exchange rate, companies may suffer losses when converting currencies.

Solutions Use forward exchange contracts or foreign exchange options to lock in exchange rates; time payments strategically during favorable exchange periods to reduce financial costs.

3. Tax Compliance Risks

Making payments to overseas entities may trigger withholding tax obligations such as income tax or VAT.

Solutions Consult professional tax advisors to ensure compliance with local and international tax laws, avoiding penalties or interest charges.

IV. Future Trends Digitalization Will Drive Cross-Border Payments Forward

With rapid advancements in financial technology, traditional cross-border payment models are being transformed. More companies are adopting digital banking, blockchain-based payments, and other innovative tools to improve efficiency and cut costs. Since 2025, several tech firms in Shenzhen have launched smart cross-border payment solutions, enabling one-click transfers, automated reporting, and multi-currency settlements.

Meanwhile, the internationalization of the Renminbi RMB continues to progress steadily. Although USD remains the dominant currency for international settlements today, it is likely that more companies will shift toward using RMB in the future to mitigate exchange rate risks and streamline transactions.

Conclusion

Transferring USD from a Shenzhen-based company to a Hong Kong-based counterpart is a standard yet sensitive operation. With a clear transaction background, complete documentation, and proper financial arrangements, companies can ensure smooth cross-border payments.

As the regulatory environment improves and technological innovations accelerate, future cross-border fund flows will become increasingly efficient and transparent. By staying ahead of these developments and leveraging available resources wisely, companies can confidently navigate the challenges of globalization and grow sustainably.