Payset prespective
December 13, 2022

How to Pay Your Chinese Suppliers

If you regularly do business with mainland China, it can be a task to make payments to your suppliers in China easily. Here are some alternatives to traditional banking methods to make it easier for you to find out how to pay your Chinese suppliers.

If you regularly do business that requires you to order goods and services from mainland China, then you will be familiar with the hassle of paying your Chinese suppliers quickly and easily in a way that works for both parties.

Because China has such strict capital controls and has only been engaging in international trade for around twenty years, paying your Chinese suppliers can be an expensive, complicated, and time-consuming process.

How Are Payments to Chinese Suppliers Divided?

There are often two parts to the payment process when paying your Chinese suppliers as they have their own business regulations and requirements to follow and adhere to. 

  • The first step of the payment process is to pay 30% of the overall cost, which acts as your ‘deposit’ for your order. It is to be paid before production begins to secure your order.
  • The second step is to pay the remaining 70% of the total costs once the order is complete.

This means that there will often always be two payments made to your Chinese suppliers per order which doubles the transaction fees and conversion rate charges for you as a business. This is something to keep in mind as fees and charges can add up when paying your Chinese suppliers.

What Are the Most Common Ways to Pay Your Chinese Suppliers?

International Wire Transfers via Your Bank:

An international wire transfer from your bank is the most straightforward way to pay your Chinese suppliers. If you already have a business account it is easy to go into your local branch or head to your online banking portal and make the transfer from there.

Wire transfers are usually the best practice, especially for smaller factories as most Chinese suppliers are already familiar with this form of payment and therefore it is their most preferred method.

There are a few things you will need to have included in your invoice when making a wire transfer to a Chinese company:

  • Reference number
  • Payment amount
  • Date of your order
  • Quantity of goods you have ordered
  • Name of the shipping company handling your order

There is a chance that you could be asked to provide additional information and details in some cases as capital controls are strictly enforced in China. Transferring any amount of money into the country is often scrutinised and often requires a lot of information about why you’re making the transaction.

There are huge fees involved in Bank Wire Transfers, usually in flat fees for processing between both banking agencies and even more in conversion fees, international transfer fees and correspondent banking fees.

Set up a Business Account in Hong Kong and Send Fees as a Local Transfer:

To avoid these high fees and costly exchange rates when paying suppliers in China it could be helpful for you to set up a Hong Kong Business Account and pay your Chinese suppliers from there.

Lots of Chinese suppliers have Hong Kong business accounts to avoid capital controls in China and high transaction costs. They will also open Hong Kong Business Accounts for their Western trading companies as they often deal mainly in USD. If both you and your supplier have Hong Kong Business Accounts it’s as easy as sending payments via local transfer at a local rate and cost. 

Send Payments via a Third-Party Source:

For many SMEs and young businesses, it can be costly and time-consuming to work out how to pay your Chinese suppliers using the methods above.

An alternative solution to this is to pay your Chinese suppliers via a third-party source such as Payset to avoid building up fees and international charges. Our Payset multi-currency account allows you to make payments and transfers quickly and easily without having to worry about hidden charges and additional fees.

In general, whilst there are many ways to work out how to to pay your Chinese suppliers wire transfer is still the most common method to use in China. It’s often the more established and larger companies that have the means to support other payment methods or are able to bend to suit your needs.

If you already have an established relationship with your Chinese suppliers and are planning to be making regular payments to them in the future setting up a Hong Kong Business Account might be the best option for facilitating payments.

However, if you are seeking a more reliable multi-currency wallet provider, check out Payset which allows you to make payments to suppliers anywhere in the world including China. The application is fully digital and your account can be opened quickly and easily, so speak to us today to get started.

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Frequently asked questions

What is a multi-currency account/virtual IBAN?

A Payset multi-currency account allows you to receive money in 34 different currencies and send money in up to 38 currencies, all within the same account.

You can deposit and withdraw funds, convert currencies at competitive exchange rates, and hold your chosen currencies to capitalize on market movements.

A Payset multi-currency account allows startups and business owners to receive payments from clients virtually anywhere in the world and pay suppliers, staff, and contractors quickly and affordably in their chosen currency.

  • Funds can be deposited and withdrawn from the account for a small fee.
  • Account holders can send and receive money with other Payset users for free.
  • Depending on your region, you can use various payment networks from your Payset account, including SWIFT, SEPA, ACH, Fedwire, Faster Payments, BACS, and CHAPS. 
  • Once you register an account, you will be provided with a Virtual IBAN (International Bank Account Number), which makes all of these transfers easy.
  • We provide you with local payments and collections. For example, transactions in USD, EUR, CAD, and GBP are processed through the local payment networks, which is far cheaper and takes minutes as opposed to days

Are there limits on the amount of money I can send and receive?

No, there are no transaction limits on Payset multi-currency accounts.

However, higher-volume transactions may require additional anti-fraud verification. If you plan to make a large transaction, contact us in advance to avoid verification delays.

How is Payset regulated?

Payset is regulated as an authorized Electronic Money Institution by the UK Financial Conduct Authority. Our activities are also regulated by the Payment Services Regulation 2017 and the Electronic Money Regulation 2011 (SI 2011/99).

How do I send money from my account?

Once you have opened your verified IBAN account and added money to a balance, transferring funds is simple.

Simply log in into your account and add a beneficiary, then simply “make a transfer” in your preferred currency to that beneficiary.

Information contained in this publication is provided for general education and information purposes only and should not be construed as legal, tax, investment or other professional advice or recommendation, or an offer of, or solicitation for, any transactions or any other actions (or refraining therefrom); This material has been prepared without taking into account any particular recipient’s financial objectives or situation. We make no warranty, guarantee or representation, whether express or implied, as to the completeness or accuracy of the information contained herein or fitness thereof for a particular purpose; Use of images and symbols is made for illustrative purposes only and does not constitute a recommendation or advice to take or refraining from any action; Use of brand logos does not necessarily imply a contractual relationship between us and the entities owning the logos, nor does it represent an endorsement of any such entity by Pay Set Limited, or vice versa; Market information is made available to you only as a service, and we do not endorse or approve it; Any reference to past performance, predicted returns, or likelihood performance scenarios may not reflect actual future performance and certainly do not guarantee future outcomes.

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