Supplier payments in China

Who needs this service — and who does not

If you import goods under your own company and can pay the factory with an official international payment under a foreign trade contract from your own account, you do not need this service. That is the most transparent way to settle, and we will simply advise you on drawing up the contract and invoice correctly so the payment clears without questions from the bank. We say this openly at the quotation stage instead of selling you something you do not need.

The service is needed in the other case — when you want one contractor to handle every stage together. That is how most of our clients work: a single company finds the supplier, pays them, collects the goods, ships them, clears customs and delivers to your warehouse. You approve the amount, and from there you deal with neither currency control, nor finding a payment channel, nor explanations to the bank.

The service is equally indispensable when a supplier does not accept payments from a non-resident, trades through 1688 or Taobao, or works only with Alipay and WeChat — and most suppliers on the market fall into that category.

Why paying into China is a separate task

Transferring money for goods is harder than it looks at the outset. There are usually three reasons.

• The supplier wants yuan in a Chinese account. A small factory or a seller on 1688 often has neither a foreign currency account nor an export licence, so it simply will not accept a direct transfer from Ukraine.
• The bank requires grounds. A currency payment abroad requires a contract, an invoice and correctly prepared documents. If anything in the package does not add up, the payment does not go through and production stalls.
• Timing matters. The factory queues your order only after payment. Every day the payment is delayed is a day added to your delivery.

We cover all three points: we have had our own presence in China since 2005 and pay suppliers from the Chinese side.

Why we pay only with "clean" funds

In recent years China has tightened control over bank transfers considerably. The regulator systematically targets money laundering, terrorism financing and grey currency exchange schemes — and it checks not only the sender but the recipient of the payment as well.

This has a direct consequence for the importer. If funds of questionable origin land in your supplier's account, it is their account that gets frozen, along with all the money in it. And this happens after you have already paid for the goods.

Where "cheap" rates come from. Some companies on the market offer a noticeably better rate, and the mechanics are always the same: funds of unclear origin are mixed into the payment flow. The client saves a few per cent on the rate right up until the system flags the transaction. What follows is a frozen payment, a blocked supplier account and a damaged relationship with the factory. By that point, the company that processed the payment is usually nowhere to be found.

We work differently. Every payment goes through a legal channel with confirmed origin of funds, which is why we can be accountable for it to you. Our rate is the market rate, with no artificial undercutting, and that is precisely what guarantees the money arrives and stays with the supplier.

Cost and timing

You see the full amount payable before the transfer: invoice amount, rate, fee, total. The size of the fee and the crediting time depend on the amount, the currency and the payment method — they are confirmed during the quotation and fixed before payment. After the transfer, the final amount is not recalculated.

Production usually starts once the payment is credited on the supplier's side, so we state the transfer time up front — it is part of the overall lead time for your shipment.

Payment and documents for accounting

If you import goods officially, the payment has to fit into the overall package: contract, invoice, packing list, payment confirmation. We prepare the documents so that they agree with each other and with the customs declaration.

If official import is on your agenda for the near future, see the page on official import with VAT: it sets out which document package is required and how it is put together.

When the supplier has no documents

A separate case: the factory agrees to produce the goods but has no export licence, and you do not have a full set of documents for the cargo. A direct payment and a legal shipment do not come together on their own in that situation.

We arrange the Chinese export declaration even in this case — the very situation in which most carriers refuse. In detail: export declaration in China.