How to pay Chinese suppliers by T/T payment (bank transfer) - QualityInspection.org (2023)

Here are two big don'ts:

• You should never prepay 100% of the order before production begins. We have seen buyers make this mistake and deeply regret it. Once this is done, what drives the factory to work so hard to deliver good products to you on time? You will be his last priority...
• You should never send the deposit before making sure the factory knows what you want from them. Smart buyers place orders, get a sample and confirm what they want (after mass production), then submit payment in advance. In some cases, you may need

could be true if it happens If possible, get all the information about this supplier, price of the product, etc.

In this case, it is usually possible to negotiate the amount to be paid at the time of purchase. Not necessarily 100%, but often. And make sure how much you will have to pay later for deposit (before production).

Your provider will at least send you their proforma invoice and ask you to confirm it. Of course, they come with their own terms, so we recommend placing your own purchase orders.

However, an order is not a contract. It is difficult to sue a dishonest Chinese supplier based on an order. What you need is a sales or manufacturing contract (and make sure it's enforceable in China).

If you buy products from a Chinese company, do what most other buyers do: buy under Incoterm FOB ("Load On Board"). This means that you name the carrier (or directly the shipping company) that will be in charge of international transport.

As we suggested above, you don't want the supplier to ship the products before a final quality check. If you are purchasing FOB, shipping can only take place after your carrier has authorized the "Shipping Order" to your supplier.

More information on this topic can be found atThis post about negotiations.

Generally, a deposit will not be transferred as T/T payment (or open L/C) until the samples are approved.
If the vendor asks for payment up front to do a "feasibility study" or "prototyping" job, that might make sense. However, keep it separate from the warehouse and let the supplier commit to the agreed performance.

If your bank charges $40 or more and transfers take 4-5 business days to complete, you're working with a traditional bank that follows an outdated system (SWIFT was developed in the 1970s). That should change in the next few years with cryptocurrencies like XRP, but other solutions currently exist.
Some of our clients have used alternative solutions and seem satisfied with these services. Depending on your situation, they may be able to offer you a better deal than your traditional bank. Here are some examples:

# When making payments from your country

• Wise.com: Founded to compete head-to-head with traditional banks on T/T payments. It became quite popular. In early 2020, they added the ability to send money to an Alipay account (but I strongly discourage payments to personal accounts).
• Contador- very useful for raising money on marketplaces like Amazon. Sending money to another company that has its own Payoneer account is fast and cheap.
• Revolution– so far seems more aimed at European consumers and businesses. Fantastic value for specific use.

# If you can make payments from Hong Kong
The previous options are still valid, but also:

• GoRemit— a good option if you have a business in Hong Kong and want to send money in local currency to providers in China or Southeast Asia. Very easy to use. It can also be used to top up a Wechat or Alipay account!
• If your Chinese suppliers accept payments in Hong Kong, you can open a merchant account there and make local transfers (instant and cheap).Saubermay help if you want to set this up.

[Note: We do NOT receive affiliate fees or commissions of any kind from the companies listed on this page.]

how we write"How do I pay a service provider based in Hong Kong or China?", there are different possibilities.
If the amount is small, more Paypal is used.
For amounts above 300-400 USD, bank transfers (T/T) start to make more sense.

I have never heard of a transaction being lost forever (i.e. never arriving, even after honest investigation), but I have heard of many transactions "disappearing" for a while. The whole SWIFT system is a bit clunky. It would happen like this:

1. The debtor's bank processes the payment request
2. The beneficiary's bank does not record the money received
3. Beneficiary asks the bank itself to investigate and finds no information
4. The payee asks the payer to ask their own bank to investigate and finds a problem that prevented the transfer

Depending on the responsiveness of the two banks, the resolution of such a situation can take up to 2 months!

This happens often. Here are the typical steps behind it for a hypothetical sum of $5,000:

1. The payer's bank is instructed to transfer $5,000 and charges a fee of $25. The payer has lost $5,025.
2. The payer's bank chooses to work with an intermediary bank that has a direct “channel” to send the money to the payee's bank. This intermediary charges $25.
3. The beneficiary's bank receives $4,975 and the beneficiary's bank charges $10, which means that the beneficiary ends up receiving $4,965.
4. The total cost of the payment (for both parties) is $60, which is 1.2% of $5,000.

(Note that $25 fees generally range from $20 to $40, but there are no hard and fast rules here. Check with your bank's business department beforehand.)

Request an invoice requesting payment to the company's account. If you are transferring money to a personal account, it is much more difficult to take action against them if they later fail you.

If they insist on paying to a personal account, there may be several reasons:

• The purchase amount is very small (eg 1000 USD) and it doesn't make sense for them to do all the paperwork of converting your USD to RMB etc.
• You don't want to declare it to avoid tax. This is not comforting, but it is still very common in China. Don't expect this company to become a perfect provider over time.

Not necessarily. Once again, there could be several reasons. You could hire a Hong Kong company to avoid declaring (and paying tax) the sale in China, they may not haveexport license, and/or it may be much more convenient for you to receive payments and carry out all export procedures under another company.

As I wrote above, it is more difficult for you to sue your provider because you cannot show any trace of payment from their company to yours.

What can you do? At a minimum, it requires both companies (your supplier - "A" and the one receiving the payments - "B") to jointly sign and seal a statement stating that B is collecting payments on behalf of A and that A is the sole supplier of your company.

For three reasons:

• They know it's a "standard" and suspect that you, the buyer, will have a hard time finding a better deal.
• They need money to pay their suppliers, most of whom do not offer credit.
• You've heard many stories of buyers who gambled away and managed to pay less for their production, or even canceled after the production ended without paying anything, for good reasons (poor quality) or bad reasons (disappointing sales, low liquidity, etc.). )

If the supplier finds your project interesting in the medium to long term and the manufacturer has enough cash to order and pay for the components, yes, this is usually negotiable.

If your production is highly customized and (in the unfortunate event of order cancellation) difficult to sell to another customer, it will be difficult to negotiate a lower deposit. It is a risk prevention measure.

It depends on the industry, the business relationship, your market power, etc.:

• Some always do.
• Some do it when they lack confidence, but give credit (usually 10-30 days or enough time for the assembler to complete production and ship the products) when they feel the risk is limited.

I have heard of companies in the US or Europe that have been able to negotiate such deals. Here is your situation:

• They buy in relatively large quantities and are not very strict about prices (i.e. they are attractive to suppliers)
• Buy standard products for which there is strong competition.
• They ask between 50 and 200 potential suppliers if they would be open to this type of business; they keep talking to the 5% who say they might be interested; do business with 1 or 2 of them

Have questions about transfers to foreign providers that we haven't covered here? Any experience you can share with the community? Let us know in the comments below!

Do you have any questions about T/T payments?

Have questions about transfers to foreign providers that we haven't covered here? Any experience you can share with the community? Let us know in the comments below!