Paying safely in China: the payment structure is your strongest leverage
After payment, your influence on the supplier is exactly zero — which is why the payment structure decides your negotiating power on quality and deadlines. The common methods, their real risks, and the milestone logic proven in practice.
5 min read · For buyers and importers
T/T with milestones: the practical standard
Bank transfer (T/T) with 30 % deposit and 70 % balance is the norm — what matters is what the balance is tied to. Weak: “70 % before shipment”. Strong: “70 % after passed quality inspection, before shipment”. That one phrase turns your AQL inspection into real leverage: defects get fixed while the supplier still wants money from you — never afterwards.
For tooling projects (injection moulding, die casting) the same logic applies in stages: tooling deposit, payment after approved sampling, series payments after inspection. Never pay the next stage before the previous one is accepted.
Letters of credit & Trade Assurance: when they pay off
The letter of credit (LC) secures both sides via banks but costs fees and effort — below €50,000 order value it rarely pays, and many mid-sized factories shy away from the documentary rigour. Alibaba Trade Assurance genuinely protects platform purchases, but only within platform rules: disputes are decided by Alibaba standards, payouts take time, and complex quality defects are hard to argue via photo evidence. Good for sample purchases, too thin as the sole protection for series orders.
The fraud patterns you need to know
By far the most expensive fraud is compromised email correspondence: shortly before payment an email arrives — “our bank account has changed” — deceptively genuine, from the supplier’s real (hacked) mailbox. Iron rule: accept account changes only after verification via a second channel (phone/video with a known number), and the account name must exactly match the company in the contract. Payments to private accounts or third companies (“our Hong Kong sister”) are a deal-breaker — or a case for additional contractual safeguards.
How we structure payments
Through us you pay an EU-compliant invoice under German law — we handle the China side (verified recipients, milestone releases after inspection, RMB payments where advantageous). The supplier gets paid only once the agreed inspection is passed; you have a contract partner in Germany instead of an account in Shenzhen. This does not replace a good payment structure — it is one.
Common questions about payment security
Is the 30 % deposit negotiable?
With a growing relationship, yes: after several clean orders, 20 % or — under framework agreements — even payment after delivery (open account with credit insurance) becomes achievable. On a first order 30/70 is fair — a supplier demanding 50 % or more upfront signals either liquidity distress or lacking confidence in his own ability to deliver. Both are warning signs.
In which currency should I pay — USD or RMB?
Traditionally everything runs in USD, but RMB payments are often rewarded: the supplier carries no currency risk and many grant 1–3 % discounts because the state export rebate process is easier for them in RMB. The prerequisite is a bank that handles CNY transfers — or a partner like us offering it as standard.
What to do when nothing arrives after payment?
Realistically: for smaller amounts, legal enforcement in China is uneconomical — prevention is everything. If it happens: document immediately, escalate via the platform (if Trade Assurance), engage local contacts; sometimes a visit by a Chinese-speaking representative works wonders where emails get ignored. Our network handles such escalations — but we much prefer preventing them through payment structure and supplier vetting up front.
Related topics
Buy with an EU-compliant invoice
Milestone payments, verified recipients, release only after inspection — and an EU-compliant invoice for you. That is buying with significantly reduced payment risk.