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China Trading Group

Chinese Payment Terms

How do I pay my Chinese Supplier?

Money is easily transferred by your bank to a foreign account, usually this includes some sort of a transaction fee. This applies to any transaction that you will make to your selected Chinese supplier(s). Before you transfer everything to the factory, you should make sure that payment terms have been established with your supplier and that these are mutually beneficial.

What are payment terms? Simply put, it is an agreement between you and the seller determining how much the seller is going to be paid at which stage of the production. The most common payment terms are 50% before production and 50% before shipping. It should be highlighted, that these terms are very important to Chinese suppliers, and if you negotiate these accordingly, these can be very helpful for you as well. With a strong local team, like with CTG, you can rest assured that favorable payment terms will always be aimed for.

How can payment terms help my production?

You may be asking yourself what favorable payment terms could be? Ideally, you would want to have leverage over your supplier. This leverage is best created by paying less than half of the total production volume before the production starts, e.g. 30% before production and 70 % before shipping. With these terms, you can push the supplier to amend certain potential issues that may arise after your quality inspection. At CTG, we always highly recommend all of our clients to schedule a QC inspection and to review products before shipping accordingly. Once the supplier has received the total amount and the goods have left, in most cases, the supplier will not agree to change or correct goods if these have defects.

Of course, negotiating with your selected supplier may seem difficult and could even lead to a lack of trust to wanting a different supplier. At CTG, we make sure that our clients and their suppliers build a healthy and long-lasting business relationship, on which both parties can rely and build upon.