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How to pay your Chinese suppliers. A guide for small businesses

Are you considering importing products from China but don't know where to start when it comes to overseas payments? Whether you're setting up a long-term business relationship with several suppliers, or just taking the first step into importing products, the thought of sending money to someone across the globe can be nerve wracking.

How to pay your Chinese suppliers. A guide for small businesses
August 3, 2023
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Are you considering importing products from China but don't know where to start when it comes to overseas payments? Whether you're setting up a long-term business relationship with several suppliers, or just taking the first step into importing products, the thought of sending money to someone across the globe can be nerve wracking. But don't worry - we've got your back! In this blog post, we will break down everything you need to know about paying a manufacturer in China from , so that you can make transactions faster and more securely.

Before you confirm your order

Once you are ready to place your order with your preferred supplier, you will receive a pro forma invoice. This is a document that serves as an initial billing statement, indicating what the final invoice may look like. It includes all details that help both parties understand the scope of the transaction. Essentially, a pro forma invoice acts as a preliminary agreement between the buyer and seller.

Your pro-forma invoice would include details such as:

  • Your manufacturer’s legal name
  • Details of the products you’ve ordered: colour, sizes, materials and any other relevant specs
  • Unit price and total price (most commonly in USD)
  • Quantities
  • Packaging information: how your products are going to be packed. E.g: Film wrap. 50 per pack, then on 10 pallets
  • Lead time: this is the time it will take for your product to be delivered to you
  • Shipment details: where are your products going to be delivered
  • CIF: This is a term that covers the costs of insurance and freight while your order is in transit
  • Payment terms: generally manufacturers ask for a split payment with a deposit before the production and the reminder paid upon delivery and QC (usual splits are 30/70 or 50/50)
  • Bank information: this should include company name, bank name, account number, swift code and address.

Pro tip: It is a red flag if your Chinese manufacturer asks to send your payment to a bank that is not located in China (For example in Singapore or Vietnam). If you make payments to your Chinese supplier through an account that is not specific to China and not in their Chinese name, it can be interpreted as tax evasion. Additionally, this may invalidate your agreement with the supplier, making it unenforceable. 

Checking your pro forma invoice

Before you confirm your order, it is crucial to ensure that all the details in your proforma invoice are accurate and error-free. There's nothing worse than an unexpected surprise or hidden cost that can delay the entire process.

Pro tip: Get a sourcing agent to check the details in your pro forma invoice so they can catch any potential mistakes or oversights before they become problematic.

Organise a purchase agreement

When importing products from China, it's important to always be prepared for things not going exactly as planned - and that means getting a purchase agreement in place with your manufacturer. This type of agreement serves as a legally binding contract that details the terms and conditions of your deal, leaving no room for confusion or misunderstandings.

This simple yet essential document can help protect you from any unexpected issues during the manufacturing and delivery process. It is a critical step in reducing potential disagreements or disputes with your manufacturer and ensuring that you get the product you expect. A purchase agreement also ensures that your manufacturer is held accountable for any mistakes or delays, so you can rest easy knowing that you have legal protection in place.

Pro tip: A good sourcing agent can help you put together a suitable purchase agreement. Here at Epic Sourcing we give our clients access to a template that they can use to establish the agreement with their Chinese manufacturer.

Popular Payment Options

In today's digital age, there are multiple ways to transfer funds from New Zealand to China. Bank transfers have been around for quite some time, allowing people to transfer money from one bank account to another. However, with the rise of online payment platforms, people can now easily send and receive money from the comfort of their smartphones.

It is important to note that each method comes with its own advantages and disadvantages, and certain payment options may be more suited to your business needs than others. Ultimately, the decision on which payment option to choose will depend largely on factors such as the size of your payment, your relationship with the manufacturer, and the level of risk you are willing to take.

Paying by wire transfer

To pay your Chinese suppliers by an international wire transfer, you just need to head to your local branch or log into your online banking portal. Wire transfers are the norm, especially for smaller Chinese factories. Chinese suppliers prefer this payment method for its familiarity and practicality.

To make a successful wire transfer, ensure your invoice includes a reference number, payment amount, the date of your order, quantity of goods ordered, and the name of the shipping company handling your order. Sometimes, you may be required to provide additional information as capital controls in China are strict. Be prepared to explain the transaction's purpose to the authorities.

The biggest downside of choosing this payment method are the fees; Expect big fees from Bank Wire Transfers, from flat processing fees between the banking agencies to conversion fees, international transfer fees, and correspondent banking fees.

Letters of Credit

Letters of Credit, or LCs, may be accepted by some large suppliers and international trading companies, with some going as far as insisting on this payment method. However, for small and medium-sized factories, this may not be the payment method of choice as it can be quite complex and difficult to navigate.

Although LCs may provide some degree of security for both the supplier and the buyer, the fees associated with this method can be quite overwhelming and the paperwork involved can become quite burdensome. Therefore, it is strongly advised that you seek professional advice before conducting your first monetary transactions.

Bear in mind that LCs are typically reserved for large transactions or are only offered as a condition of doing business with certain suppliers.


Chinese suppliers are gradually warming up to PayPal, which is becoming a viable option for small transactions, such as electronics sales. Although PayPal promises buyer protection, risks still abound, especially for cross-border deals. If you ever find yourself in a dispute, their protection policies might prove intricate, something that could delay your claim or even lead to an unfavourable outcome.

PayPal's fees are charged as variable percentages, depending on the transaction amount, in addition to exchange rate costs. For instance, purchasing samples or small quantities might be more convenient with PayPal, provided you don't mind the fees associated with that. However, if you’re an importer making large orders, the costs could escalate quite fast.

In a nutshell, PayPal can work for low-budget transactions, but it might pose a challenge and become costly for larger importers placing bulk orders.

Western Union 

For those seeking to transfer small or medium-sized amounts of money, Western Union (WU) is a widely accepted option known for its speed, ease of use, and affordability. However, it's important to note that there are inherent risks involved once payment is sent, and WU should only be considered once trust has been established with suppliers.

Be aware of additional fees, as WU profits from currency exchange. While published fees may appear low, conducting a quick Google search of currency values will expose a significant difference. Unfortunately, WU's online price calculator won't reflect these markups, so you'll need to create and log into your account in order to obtain accurate pricing.

Payoneer, Epic’s preferred provider for International Payments

If you're looking for a payment solution that allows you to easily make international transactions, Payoneer might just be the answer. With Payoneer, you can quickly and securely send and receive payments from across the globe.

One of the best parts about Payoneer is that it's incredibly user-friendly. Setting up an account is a breeze, and once you're up and running, you'll find that making payments is a straightforward process. Plus, with the ability to use Payoneer for multiple currencies, you'll be able to avoid costly currency exchange fees. On top of that, Payoneer also offers robust safety measures for transferring funds securely across borders.

Overall, Payoneer provides easy, convenient, fast, and secure international payment options to individuals and businesses alike, making it our recommended payment option.

Here at Epic Sourcing we understand that finding the right manufacturing partner can be an overwhelming process – that’s why our team of professionals specialise in assisting clients with their sourcing needs so they can do what they do best – build relationships and grow their business. So if you're looking for help navigating payment options for suppliers based in China from New Zealand, don't hesitate to reach out today — we can help you take the stress out of sourcing from China!

0800 88 EPIC

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