How importers pay Chinese suppliers
Most importers pay Chinese suppliers by T/T (telegraphic transfer, an international bank wire), usually as a deposit before production and a balance before or at shipment. The alternatives are a letter of credit, in which the buyer's bank undertakes to pay against shipping documents, and payment through a marketplace's escrow or order-protection program.
Each method answers the same question differently: at what moment does the buyer lose the ability to withhold money? The comparison below sets out the structure. Costs, fees and exchange margins vary by bank and platform and are not given here.
| Method | When the supplier is paid | What protects the buyer | Main weakness |
|---|---|---|---|
| T/T deposit and balance | Deposit before production; balance before shipment or against a bill of lading copy | Timing of the balance and the buyer's inspection rights | Money sent by wire is hard to recover; exposed to bank-detail fraud |
| Letter of credit | When complying documents are presented to the bank | The documents the credit requires | Banks check documents, not goods; quality is protected only if an inspection certificate is required |
| Platform escrow / order protection | After the buyer confirms receipt, under platform rules | The platform's dispute process | Rules are set and changed by the platform; protection is lost if payment moves off-platform |
T/T: deposit and balance
The common T/T structure is a deposit when the order is placed, to fund materials, and the balance either before shipment or against a copy of the bill of lading (B/L, the carrier's receipt for the goods and the document of title for ocean freight). The percentages are negotiated. A 30% deposit and 70% balance is often quoted, but no official source sets that split; it is practice, not a rule.
The timing of the balance determines the buyer's position. Paying the balance before the pre-shipment inspection report arrives removes the buyer's ability to withhold payment for defects. Paying against a B/L copy shifts more risk to the supplier, which has shipped before being fully paid, though the supplier can still hold the original documents until the money arrives. For a first order with an unverified supplier, paying 100% up front puts the buyer's entire exposure on the supplier's honesty.
A T/T is fast and cheap to arrange, which is why it dominates. Its drawback is that a completed international wire is difficult to reverse. Everything that protects a T/T buyer — inspection before the balance, the right beneficiary, a verified account — has to happen before the money moves.
Letter of credit under UCP 600
A letter of credit (L/C, also called a documentary credit) is a bank's undertaking to pay the seller when the seller presents documents that comply with the terms of the credit — typically a commercial invoice, a bill of lading and, if the buyer requires it, an inspection certificate. Most commercial letters of credit are issued subject to UCP 600, the International Chamber of Commerce's Uniform Customs and Practice for Documentary Credits (ICC Publication No. 600), which is generally reported to have applied since 1 July 2007; that date was not re-checked for this guide.
The central rule is that banks deal in documents, not goods. If the documents comply, the bank pays, whatever is in the container. If they contain a discrepancy, payment can be blocked even when the goods are perfect. That cuts both ways for the buyer:
- Quality protection exists only through the documents. An L/C protects quality only if it requires an inspection certificate from an inspector the buyer controls.
- Document discipline is demanding. Both parties must prepare and check documents precisely, and costs are higher than for a wire.
- The supplier gains a bank's promise. That can make an L/C acceptable to a supplier that would otherwise insist on a larger deposit.
An L/C whose required documents the buyer cannot influence — no inspection certificate, or one issued by the supplier's own nominee — gives payment certainty to the seller and very little to the buyer. No official statistic on the use of letters of credit versus T/T in China trade was found.
Escrow and platform payment protection
Marketplaces offer programs that hold or route payment under platform rules and provide a dispute process. Alibaba.com's Trade Assurance is one example with a published guide. Its Trade Assurance Guide (footer dated 2023) states that it protects orders "placed and paid through Alibaba.com," that payment is released to the supplier after the buyer confirms receipt, and it warns buyers to "never pay outside the platform." The 2023 guide is the latest primary document available for this guide; current claim windows and coverage limits could not be confirmed, so buyers should read the terms in force at checkout.
Two structural points apply to any platform program. First, a dispute is resolved under the platform's own rules, against the order specification, by mediation rather than by a court; a vague specification weakens the claim. Second, protection ends where the platform's payment channel ends. A supplier's request to move payment to a direct bank transfer for "a better price" or "faster processing" asks the buyer to give up the protection the platform was providing.
Paying the right beneficiary
The single most effective payment control costs nothing: pay only the legal entity named in the contract, identified by its full registered Chinese name and its Unified Social Credit Code (USCC), the 18-character identifier on every Chinese business license. That entity can be checked on China's National Enterprise Credit Information Publicity System (gsxt.gov.cn). Under State Council Order No. 784, in force since 1 July 2024, changes to a company's subscribed or paid-in capital must be published there within 20 working days, which makes the record a more useful check on whether the beneficiary exists and is in good standing.
Trade-in-goods payments are current-account transactions under China's foreign-exchange regime, administered by the State Administration of Foreign Exchange (SAFE), and exporters normally receive foreign currency into accounts in their own name. The specific SAFE rules on export receipts and individual foreign-exchange quotas were not verified for this guide, so whether a supplier is legally required to use a company account in every case is left open here. The commercial rule does not depend on it: an account in a personal name, or in a company name that differs from the contract, needs written contractual documentation before any money is sent.
Hong Kong accounts deserve the same scrutiny. They are used in legitimate trading arrangements and in fraud alike; the FBI's 2025 report includes a case in which stolen funds were routed to "a fraudulent international account in Hong Kong." That is a single case, not a statistic, but it is a reason to verify any Hong Kong beneficiary against the contract.
Payment-diversion fraud: what the IC3 data show
The FBI's Internet Crime Complaint Center (IC3) defines business email compromise (BEC) as "a scam targeting businesses or individuals working with suppliers and/or businesses regularly performing wire transfer payments," carried out by compromising email accounts, phone numbers or virtual meeting applications. In its 2025 Internet Crime Report, IC3 recorded:
| Year | BEC complaints | Reported BEC losses |
|---|---|---|
| 2025 | 24,768 | $3,046,598,558 |
| 2024 | 21,442 | $2,770,151,146 |
| 2023 | 21,489 | $2,946,830,270 |
IC3 also reported that businesses lost over $30 million in 2025 to BEC schemes involving AI. These figures carry a caution: they are complaint-based, self-reported losses from victims who filed with IC3, not a census, and they cover all BEC, including real-estate cases, not only supplier payments. They show the scale of the risk, not its China-specific share.
The typical pattern for an importer is an email, apparently from the supplier, announcing new bank details. The defense is procedural: confirm any change by calling a phone number already on file, never one given in the email; require the change in writing on the supplier's letterhead and against the contract; and treat any change of beneficiary as a fraud event until it is verified.
If a payment went to the wrong account
Speed decides the outcome. IC3's guidance is direct: "If you discover a fraudulent transfer, time is of the essence. Immediately, contact your financial institution and request a recall of the funds," and file a complaint at ic3.gov "regardless of the amount lost."
IC3's Recovery Asset Team runs the Financial Fraud Kill Chain, a process for freezing stolen funds. In 2025 it handled 3,900 incidents involving $1,163,919,846 in attempted theft and froze $679,013,183, a 58% success rate. International cases were far fewer: 326 incidents with $171,970,560 frozen. Two cautions apply. The figures cover all eligible crime types, and IC3 notes that 2025 initiations rose in tech-support and account-takeover cases, so the BEC share is not given. And recovery depends on prompt reporting. A wire to an overseas account that is discovered weeks later is, in most cases, a loss.
Common mistakes
- Paying a personal account, or an account in a different company name, without contractual documentation.
- Paying 100% up front on a first order with an unverified supplier.
- Paying the balance before the inspection report, which removes the reason to withhold it.
- Using an L/C without an inspection certificate and then expecting protection on quality.
- Moving payment off-platform at the supplier's request and losing platform protection.
- Accepting new bank details by email without a call-back to a known number.
Frequently asked questions
What payment terms are normal with Chinese suppliers?
The common pattern is a T/T deposit before production and the balance before shipment or against a copy of the bill of lading. A 30% deposit and 70% balance is often quoted, but no official benchmark exists and percentages are negotiated. Buyers should time the balance after the pre-shipment inspection report, so a failed inspection still matters.
Is a letter of credit safer than a T/T?
A letter of credit shifts risk from trust to documentary compliance under UCP 600: the bank pays when compliant documents are presented. That protects the buyer against non-shipment but protects quality only if the credit requires an inspection certificate from an inspector the buyer controls. Costs and document discipline are higher than for a wire.
What should I do if I sent money to a fraudulent account?
Contact your bank immediately and ask it to recall the funds, then file a complaint at ic3.gov regardless of the amount. IC3's Financial Fraud Kill Chain froze $679,013,183 of $1,163,919,846 in attempted theft across 3,900 incidents in 2025, but recovery depends on prompt reporting, and international freezes are far fewer.
Can a Chinese supplier ask me to pay a Hong Kong account?
It happens in legitimate trading arrangements and in fraud. IC3's 2025 report describes a case in which stolen funds were routed to a fraudulent account in Hong Kong. Before paying, confirm that the Hong Kong beneficiary is the entity named in your contract, or is documented in the contract, and verify the account by calling a known number.
Does Alibaba Trade Assurance protect payments made outside Alibaba?
No, according to Alibaba.com's own Trade Assurance Guide (footer dated 2023), which says the program protects orders placed and paid through Alibaba.com and warns buyers never to pay outside the platform. Current coverage limits and claim windows could not be confirmed for this guide, so check the terms shown at checkout.
How do I confirm a Chinese supplier's bank account is genuine?
Pay only the legal entity named in your contract, identified by its registered Chinese name and Unified Social Credit Code, and check that entity on gsxt.gov.cn. Confirm the account by calling a phone number already on file, never one supplied in the payment email, and treat any change of beneficiary as fraud until independently verified.