How do I pay for Chinese building materials suppliers?

In China, you can pay building materials suppliers in 5 ways. The method you choose depends on which methods can be easier or cheaper.

1. Wire transfer: T/T payment

Bank transfers are often the most common form of payment for businesses that work with foreign suppliers. 90% of factories in China prefer this payment method.

This is a straightforward payment method. All you need to do is go to the bank or use the bank’s e-banking portal and transfer the funds to the supplier’s account.

The disadvantage of paying Chinese suppliers by wire transfer is paperwork. You will need to provide the bank with details such as vendor invoices, shipping company, etc. You will also need to explain why you wired.

This option is ideal for large companies that can pay for expensive SWIFT/international transfers.

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Wire transfers apply to all payments, no matter how much you want to pay. Payment takes 2 to 7 days to reach the vendor’s account.

2. Transfer locally

If you will do business regularly with suppliers from China, the most practical way is to open a business account in Hong Kong. You can then pay the vendor through a local transfer.

Most suppliers from China have business accounts in Hong Kong because it is easier to transfer funds in and out of Hong Kong. It is also easier to do business with the dollar through Hong Kong banks. It is also easier to open business accounts with banks in Hong Kong and move funds into and out of China.

Since it is a local transfer, you can avoid the complexity and high costs of international transfers. However, it can be difficult for small and medium-sized enterprises to open bank accounts in Hong Kong because these banks require you to visit the branch in person at the time of opening the account.

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Local transfers are suitable for importers who are open regularly. Reductions in bank charges and payments can be received quickly.

3.PayPal

You can also choose to transfer payments from your PayPal account to your PayPal account with a supplier in China. PayPal is not as popular in China as Western entrepreneurs. If your supplier in China also has a PayPal account, instant transfers are allowed via PayPal transfer.

However, PayPal conversion and transfer fees are high. Your supplier in China must also use a remittance company so that they can transfer funds from PayPal to their bank account. The entire process may take approximately 2 days.

This is an ideal and safe way, especially when you pay a down payment.

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PayPal payment applies to small amounts of less than $1000 per transfer. High processing costs but instant transmission. Typically, the receiver must pay about 5%.

4. Remittance Center

Western Union is a popular global remittance center. You can choose to use WU or other third-party money transfer centers. They don’t use SWIFT networks, so there’s not much to hide.

Transferring payments to your suppliers in China is simple and fast. Your supplier can request a remittance within 24 hours.

Most Chinese suppliers are unfamiliar with Western remittance companies, such as Western Union, so small manufacturers may not accept this form of payment. There are not many remittance companies that specialize in sending money to the Chinese market.

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If you are a one-time payment and do not like to pay the huge transfer fee for international remittances, payment through the remittance center is ideal.

5. Use Alibaba Trade Guarantees

This is ideal if you are paying the first transaction fee with a Chinese supplier and you want to get the highest quality of your product.

Alibaba Trade Guarantee is a very safe option because when you make your payment to Alibaba, the funds will be managed. Funds will only be issued to your suppliers after you approve the final product specifications and quality.

Alibaba Trade Guarantee is a tailor-made service for the Chinese market in China. However, some Chinese suppliers do not accept Alibaba’s trade guarantees because Alibaba is demanding that payments to suppliers be cut.

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Alibaba’s payments are not easy for many suppliers. Alibaba, in particular, requires suppliers to become members. So far, such payments have been unusual in China.