Payment Risk in China Sourcing
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Risk in China sourcing is most concrete at the moment money moves — the gap between paying a supplier and receiving conforming goods. The main payment terms each shift that risk differently: T/T (telegraphic transfer) is fast but leaves a deposit exposed, an LC (letter of credit) ties release to documents, and escrow holds funds until delivery, each trading cost and protection.
When you set terms, a common structure is 30% deposit and 70% before shipment against an inspection report, so you never pay the balance on goods you haven't checked. The common pitfall is wiring 100% up front to a new supplier on a large order; for first deals, smaller stakes plus a pre-shipment inspection cuts the realistic exposure dramatically.
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FAQ
What payment terms protect a buyer best when sourcing from China?
A split T/T (e.g., 30% deposit, 70% after a passing pre-shipment inspection) balances cost and protection for most orders. Letters of credit add bank-level document control for large or high-risk deals, at higher cost and complexity.
Is it safe to pay a Chinese supplier 100% upfront?
Rarely, especially with a new supplier or large order. Full prepayment removes your bargaining power if quality or delivery slips. Keep a balance payment tied to inspection, or use escrow for the first transaction.
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