TL;DR: Standard China payment terms are 30 percent deposit and 70 percent balance before shipment. T/T is the default. L/C for orders above $50,000. Never pay 100 percent upfront to an unverified supplier. The balance payment is your last leverage.
Payment terms are the least discussed and most important part of importing from China. A bad price costs you margin. Bad payment terms can cost you everything.
The Standard: 30/70 T/T
30 percent deposit to start production. 70 percent balance before shipment, after inspection. Payment via telegraphic transfer to the factory’s business bank account.
This structure exists because both sides need protection. The factory needs working capital for raw materials. You need leverage over quality. The 30 percent covers their material cost. The 70 percent is your guarantee that the factory finishes the job properly, because they want that money.
The inspection checkpoint between production completion and balance payment is the most important moment in the transaction. Your inspector checks the goods. If they pass, you pay. If they fail, the factory fixes them or you negotiate. Never pay the balance until someone you trust has seen the finished goods.
T/T vs L/C vs Others
| Method | How It Works | Best For |
|---|---|---|
| T/T (Telegraphic Transfer) | Wire transfer, usually 30/70 split | Orders under $50,000. Fast, simple, low bank fees. |
| L/C (Letter of Credit) | Bank guarantees payment when documents match terms | Orders over $50,000. More paperwork but more protection. |
| LC at sight | Payment when compliant documents presented | First-time buyers wanting bank-grade security. |
| OA (Open Account) | Goods shipped before payment | Only for verified long-term partners. High risk. |
Where the Money Goes Matters
Always pay to the factory’s business bank account. Never to a personal account. The account name must match the company name on the business license and the proforma invoice. A factory that asks for payment to a personal account is either evading taxes or setting up a structure where you cannot recover your money if something goes wrong.
This single check catches more scams than any other verification step. A legitimate business uses a business bank account. A scammer uses a personal one.
What to Never Do
Never pay 100 percent upfront to a factory you have not verified in person or through someone you trust. A 5 percent discount for full upfront payment sounds like a good deal until you realize why they want all the money before production starts.
Never send money through Western Union, MoneyGram, or cryptocurrency to a Chinese supplier. These are irreversible and untraceable. If a supplier asks for these payment methods, walk.
Written by Xinya Zhang. I help importers set up payment structures that protect their money. Tell me what you are buying