How to Pay a Chinese Supplier Without Prepaying Everything

Quick answer

Typical terms are 30% deposit and 70% before shipment. Anything above 50% up front deserves a written reason.
A letter of credit costs money and time, and rarely pays off below USD 50,000.
A deposit becomes recoverable only when the contract names the trigger and the refund amount.
Pay the company account printed on the business licence. Never a personal card.

The three routes, compared on what goes wrong

Each route fails differently, so the choice is about which failure you can survive rather than which one is cheapest on paper.

Bank transfer is fast and cheap. Its weakness is timing: once the money lands, your only lever is the next payment.

A letter of credit puts a bank between you and the factory. That protection is real and it is slow. Amendments cost money, and a single mismatched word on a shipping document can hold payment for a week.

Route	Fits when	Direct cost	Risk sits with
T/T deposit and balance	Repeat orders under USD 50,000	Bank fees, usually under USD 50	Buyer, until goods are shipped
Letter of credit	First order with a new factory	0.1–0.5% of value plus amendments	Split between banks and documents
Platform escrow	Small trial orders, standard catalogue	1–3% of order value	Platform, until you confirm receipt
Cash against documents	Known supplier, stable specifications	Bank fees only	Buyer, from document acceptance

Fruit wholesale stall with produce stacked in cartons printed with Chinese characters, electronic scale in front — Burst · free to use

How to pay a Chinese supplier without prepaying everything

The deposit percentage gets argued about more than it deserves. Three quarters of the deposit disputes we handle start somewhere else: the buyer paid against a drawing, a sample or a mould that was never signed off in writing.

A 30% deposit is normal because a factory buys material with it. If the request climbs to 50% or beyond, ask what the money buys. A specific material order has an answer. Silence is an answer too.

Tie the balance to a document rather than a date. A pre-shipment report you commissioned, not one the factory wrote, is the cleanest trigger we know.

Shenzhen skyline with the Ping An Finance Centre rising among Futian tower blocks — Burst · free to use

Four clauses that make money recoverable

Payment terms do the work that trust cannot. These four have settled more arguments than any relationship.

The refund trigger, written as an event: failed inspection, missed shipment date, or sample rejection within a stated number of days.
The refund amount, as a number or a formula. A deposit with no stated refund is a gift with extra steps.
The account name on the contract matching the name on the business licence, character for character.
Mould and tooling ownership, stated separately, with the price of moving them to another plant.

Shanghai Tower, Shanghai World Financial Center and Jin Mao Tower seen from street level in Lujiazui — Burst · free to use

What we do around a payment

We verify the factory, the account and the documents, then report what we found with photos and dates. The decision to release money stays with the buyer.

That division is deliberate. A party who benefits from a payment should not be the party confirming it was earned.

Common questions

Is a 30% deposit always safe?

The percentage matters less than what it is paid against. A 30% deposit paid after a signed specification and a verified factory is safer than 10% paid against a quotation.

Is a letter of credit worth it for a small order?

Usually not. Below roughly USD 50,000, the bank charges and the document risk cost more than the protection is worth. Use a verified supplier and split the payments instead.

The factory wants payment to a personal account. Should I agree?

No. A company that cannot receive money in its own name is telling you something about how it is registered. Ask for the company account on the licence, and treat a refusal as a finding.

We do not take payments on behalf of factories, do not advance funds and do not hold deposits. Money moves between you and the supplier’s company account; our work is on either side of that transfer.