Payment Methods While Importing from China

Kristian Leroy Avatar

Are you about to pay a Chinese manufacturer? How you pay your provider and when you pay them has a significant impact on the outcome. Your preferred payment method can lessen the danger of fraud, delays, and poor quality if properly managed.

We will try to explain what importers need to know in this article about the following method of payment while buying any custom products made in China:

  • Letter of credit
  • Supplier credit
  • Bank transfer
  • Trade financing
  • Escrow.

Letters of credit

The Unified Customs and Practices code controls letters of credit in China, which has been an International Chamber of Commerce member since 1995.

Most Chinese commercial banks are authorised to issue L/C (letters of credit) for both imports as well as exports, as shown below. Letters of credit can also be issued by foreign banks with a branch or representative office in China.

  • Agricultural Bank of China 
  • Bank of China
  • Bank of Communication
  • China Construction Bank
  • China Merchants Bank
  • CITIC Bank
  • Industrial and Commercial Bank of China 

Supplier Credit

Consider ordering things from a vendor and then paying them one to three months later. Supplier credit is prevalent in several countries, but it is quite rare for any Chinese manufacturing and trading company to grant any kind of credit or postpone payment.

The reason for this is because Chinese providers cannot compel foreign customers to pay. If a cash-strapped factory buyer disappears or comes up with an excuse not to pay them (part or in full) then there is little a cash-strapped business can do.

Bank Transfer/Telegraphic Transfer

Any telegraphic transfer can be a normal bank transaction that can be made online or in any local bank branch. All Chinese manufacturers having a bank account accept this payment option. That is, almost everything. Despite its popularity, it provides little protection on its own, unlike a Letter of Credit.

Paying timely payment of the correct amount is the secret of success here.

The normal payment period is a 30% deposit before manufacture and the remaining balance after completion, but before delivery.

It is critical to consider when and under what circumstances you will make this second and last payment.

It is all about incentivizing the provider to meet your specifications. You remove that motivation by paying the provider in full before any regulatory compliance and also quality has been verified. As a result, the remaining payment must be delayed until the batch is approved by any quality inspector and the lab test results have been received.

While this payment method does not protect the first deposit payment, the provider still stands to lose a lot even if the deposit payment is secured.

Chinese manufacturers frequently operate for any custom products made in China on razor-thin profit margin. If they were to ignore even the demand of buyers and try to domestically sell the batch, they would almost certainly lose money. The supplier stands to lose a lot if the transaction is not completed.

Trade Financing Companies

Importers buying custom products made in China from China and other nations can get credit from many international trade financing organisations. This implies the trade financing firm will pay your supplier first, and you will pay later the trade financing company.

These businesses usually charge a fixed fee and an interest rate.

Some trade financing firms will cover the entire sum, while others will merely cover the remainder (e.g. up to 70%). Some businesses allow you to pay in installments.


Escrow is a fantastic idea, and for a small buyer, it is probably the equal of a letter of credit. Escrow is not typically used for large transactions, just as LCs are not usually used for minor transactions. 

Alipay/Aliexpress The most common escrow service for importers purchasing from China is Escrow. 

Refunds and even responses from any dispute resolution service can be difficult to come by. There have also been countless instances where buyers have received defective items, but have been compensated due to “evidence of shipment” of the goods.

Note that, in most circumstances, a supplier who has a long-term account with an escrow provider is a bigger customer than a one-time customer. Is this going to have an impact on their dispute settlement process? It is entirely up to you.

Escrow Acceptance by Suppliers: Escrow acceptance within China is actually fairly strong, however, it is still low for overseas transactions. When compared to, for instance, a Chinese escrow service, and acceptance of any foreign escrow services e.g. is quite low.

The answer to a few general questions regarding payment methods

  • What are the payment terms while importing from China?

The majority of providers ask for a 30% deposit, with the balance 70% paid before to dispatch. While you are putting your deposit at risk, you retain control over the remaining balance that should be paid only after QC and lab testing.

  • Can we pay our supplier after the arrival of goods?

No, you must make a payment before receiving the custom products made in China. Your supplier may agree to accept your payment upon delivery of the bill of landing at best, but that is about it.

If the provider accepted payment after delivery, the supplier would be completely vulnerable to fraudulent consumers, and also all buyers who would fake quality faults and find any excuse not to pay.

  • Can we obtain credit from our supplier?

Large purchasers, such as Wal-Mart, can obtain huge lone of credit from their suppliers, allowing them to pay even after 90 days of delivery, for example. Small buyers, on the other hand, are not given the same opportunity.

  • What is the safest way of making payments while importing products?

This is largely dependent on the transaction type and how it is handled. Wire transfers, for example, are risky because there is no way to get your money back.

However, if you correctly manage the payment process, you will have complete control over the process while also making it reasonably simple to confirm that you are paying the correct provider.

Letters of Credit, on the other hand, provide an extra layer of protection, but they can also be problematic if the terms are specified by someone who lacks necessary experience.


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