How you pay a Chinese supplier decides how much you can lose if something goes wrong. The right terms depend on the order size, the product, and how well you know the supplier. This guide compares the common payment methods and terms, explains how to check the bank account before you send money, and suggests a structure for a first order with a new supplier.
This is practical guidance from the buyer's side, not legal or financial advice. For large contracts, talk to your bank and, where needed, a lawyer.
The common payment terms
Deposit and balance by bank transfer (T/T). The most common structure: a deposit before production, often 30%, and the balance before shipment or against copies of the shipping documents. Simple and cheap, but you carry the risk on the deposit, and on the balance if you pay before inspection.
Balance against the bill of lading copy. You pay the balance after the goods are shipped and you receive the shipping document copy. Better for you than paying before loading, but you still need an inspection before shipment to know what was loaded.
Letter of credit (L/C). Your bank pays the supplier when the supplier presents documents that match the credit terms. Useful for large orders, but it has bank costs, it is strict on documents, and it protects documents, not quality. If you want quality protection, make an inspection certificate one of the required documents.
Platform payment with order protection. Paying through a platform's own system, such as Alibaba Trade Assurance, can give you a dispute process if the order terms are not met. It only applies when you pay through the platform and follow its rules. See what Alibaba badges really mean.
Card or online payment services. Useful for samples and small orders because of the dispute process, but fees are high and many suppliers do not accept them for bulk orders.
Full prepayment. Common for very small orders and some commodity products. For a new supplier and a meaningful order, avoid it.
Check the bank account before you pay
Most payment losses with Chinese suppliers are not caused by the payment method. They are caused by paying the wrong account.
Account name. The account holder should be the company named in your contract, and on the business license. A personal account, or a company with a different name, needs a clear explanation in writing.
Hong Kong and overseas accounts. Many mainland suppliers use a Hong Kong company account for export payments. This is common and often legitimate. Find out which company it is, how it is related to the supplier, and whether it is named in the contract.
Changes. Treat any change of bank details as a possible fraud until you confirm it by phone using a number you already had. See common China supplier scams.
Consistency. The proforma invoice, contract, license and bank account should all name the same company.
Match the payment to the evidence
A good rule is that each payment should follow a piece of evidence that the supplier is doing what it promised:
| Stage | Evidence before paying | Typical payment |
|---|---|---|
| Before the deposit | Registration and court records checked; live video walk-through; signed contract with specifications | Deposit, often 30% |
| During production | Production photos or a mid-production check for long or large orders | Sometimes a second installment |
| Before the balance | Pre-shipment inspection against the approved sample and specifications | Balance, before shipment or against the B/L copy |
A structure for a first order with a new supplier
Verify the supplier: registration, insured headcount, court records and a live walk-through.
Agree on a contract with specifications, approved sample, delivery date, inspection right and the bank account.
Pay a deposit sized to the risk, to the company account named in the contract.
Ask for production updates, and check production for larger orders.
Inspect the finished goods before you pay the balance.
Pay the balance only when the inspection is acceptable, or when agreed corrections are confirmed.
For a long-standing supplier with a good record you can relax some steps. For a new supplier, the few days the checks take are usually the cheapest protection you can buy.
When to ask me to check
Ask me before the first deposit to a new supplier, when the bank account name does not match the company, when a supplier asks for full prepayment for a large order, or before the balance payment, when an inspection tells you what you are actually paying for.
Get a Quote on WhatsApp See Services and Pricing
LocalAuditChina is an independent verification service, not a bank, law firm or certification body. This guide is general information, not legal or financial advice.
Add comment
Add comment: