China Law Blog

In its post, "Paying your Chinese Supplier – Know your payment terms and options in advance," SourceJuice does a yeoman like job setting out the various options for paying a Chinese supplier. The post explains the following options, and describes the risks of each:

-- Advance, Cash in Advance or Cash Advance – these are known as payment in advance terms

-- Telegraphic Transfer, Telex Transfer, Bank Wire Transfers – these are known as T/T or TT payment terms

-- Wire and Funds Transfer Services like Western Union and Money Gram
Internet payment companies like PayPal.com, Moneybookers.com, and Escrow.com

-- Letter of Credit and the various options that banks offer on these instruments – these are known as LCs, L/C, or LC payment terms

-- Documentary Collections like Documents Against Acceptance or Documents Against Payment – these are known as DA or DP payment terms and sometimes referred to as

-- “Bills of Collection” or “Bills of Exchange”

-- Open Account or Pay Post Receipt or Goods in Advance – When the Seller provides you Credit

I strongly urge anyone who buys from China to read SourceJuice's post in full. The one thing I would add to it is the advice to have a written contract (preferably in Chinese) with your Chinese supplier. In many cases, such a contract is necessary for you to be able to pursue a refund for bad product.