Payment Terms for China Suppliers

Common Payment Methods

T/T (Telegraphic Transfer / Wire Transfer)

Most common for China trade.

Standard terms: 30% deposit, 70% before shipping

How it works:

1. You send 30% deposit to start production
2. Supplier completes production
3. You (or inspector) verify goods
4. You send remaining 70%
5. Supplier ships goods

Pros: Simple, low fees, widely accepted Cons: Funds sent directly, limited recourse if problems

Letter of Credit (L/C)

Bank-guaranteed payment for larger orders.

How it works:

1. Your bank issues L/C guaranteeing payment
2. Supplier produces goods
3. Supplier presents documents to their bank
4. If documents match L/C terms, bank pays
5. Your bank debits your account

Pros: Maximum protection, bank verification Cons: Complex, expensive, requires bank relationship

PayPal

For samples and small orders only.

Pros: Buyer protection, easy to use Cons: High fees (4-5%), sellers dislike for large amounts

Alibaba Trade Assurance

Protection for Alibaba orders.

How it works:

• Pay through Alibaba
• Escrow holds funds
• Release when satisfied

Pros: Dispute resolution, escrow protection Cons: Only on Alibaba, limited coverage

Recommended Approach by Order Size

Order Value	Recommended Payment
Under $500	PayPal, Trade Assurance
$500-$10,000	30/70 T/T
$10,000-$50,000	30/70 T/T with inspection
Over $50,000	Consider L/C or staged payments

Protecting Yourself

• Never pay 100% upfront to new suppliers
• Verify bank account matches company name
• Use inspection before final payment
• Build trust gradually with repeat orders
• Document all agreements in writing

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Need help negotiating payment terms? Contact us for supplier negotiation support.