Paying a Chinese supplier: terms, and how money actually goes missing

What the standard terms are, and why

The conventional split is 30% deposit against the proforma invoice and 70% against a copy of the bill of lading. It is a genuine compromise: the deposit covers the factory's material purchase, and the balance falls due once goods are demonstrably on a vessel but before you can collect them, since the original bill of lading is released only on payment.

Variants shift with relationship and order size. Long-standing buyers get 30/70 against copy documents or open account terms; new buyers of custom goods may be asked for 50% up front, which is not unreasonable when tooling is involved.

Full payment before production is the term to push back on. If a supplier will not carry any of the risk on an order they have quoted, ask what the tooling and material actually cost, and offer to pay that portion specifically.

Tie the balance to a passing inspection as well as to the bill of lading. The two together are what make the schedule work for you.

The bank account is the risk

The pattern is consistent enough to be worth memorising. Somewhere in a long email thread, a message arrives from your supplier's address — or an address one character different — explaining that their usual account is under audit, or frozen for the New Year holiday, and asking you to remit to a different bank this time. The invoice looks right because it is right; only the account details changed.

The compromise is usually on the supplier's mailbox rather than yours, which is why the thread reads naturally and quotes your own earlier messages back to you.

The defence is procedural, not technical. Any change of bank details is verified by voice or video call on a number you already had, never on a number supplied in the message requesting the change. Treat it as a rule with no exceptions, because the exception is the whole attack.

A changed bank account mid-order is the single highest-risk event in an import transaction. Nothing else comes close.

Check the beneficiary name, every time

The account holder should match the company name on your contract and invoice. A mismatch is not automatically fraud — group structures are real and some manufacturers legitimately invoice through an affiliated trading arm or a Hong Kong entity — but it is always a question to ask before sending, and the answer belongs in writing.

Payment to an individual's personal account is a different matter. It removes the transaction from the company's books, which means you have no commercial relationship to enforce and no paper trail for a dispute or your own tax position.

If a supplier cannot explain plainly why the beneficiary differs from the seller, that is the point to stop and ask again rather than the point to send.

Letters of credit and platform escrow

A letter of credit shifts the risk to banks and suits large or first-time orders with unfamiliar suppliers. It costs real money and administrative effort, and its limitation is fundamental: an L/C pays against documents that comply, not against goods that are good. A perfect document set for a defective shipment still gets paid.

Platform escrow such as Alibaba Trade Assurance covers orders placed and paid through the platform, on the platform's terms, with the platform as arbiter. It is genuine protection within those bounds and no protection at all once the conversation moves to email and a direct transfer, which is where most relationships end up.

Neither instrument inspects anything. Both are settlement mechanisms, and quality remains a separate problem solved by specification and inspection.

An L/C guarantees you pay for compliant paperwork. It does not guarantee you receive compliant goods.