How To Cooperate With Your Chinese Supplier, Part 20: Sending Money to a Chinese Factory: Don't Get Confused

I noticed that two topics are particularly frustrating to importers, when it comes to paying Chinese factories. One is the ever-changing company names. And the other is the need to send a bank slip after a wire. They are tightly linked, actually.

1. Different company names

I described this issue in Why do Chinese suppliers change names?. You might meet a sales person working under a certain company name, and then get a quotation on a pro forma invoice bearing another company name.

This is a serious issue for South African importers, for example. That country’s Customs office requires the names of the supplier signing the contract, of the supplier issuing invoices, and of the supplier getting paid to be the same.

This is a very common case. Lawyers advise their clients to sign the contract with the company that has significant assets (as explained here on the China Law Blog).

2. Sending the proof of payment so the factory starts production

Is it sufficient to wire money to the supplier and to tell them “We just wire the money”? Usually not. They might wait for one or two weeks before taking action (e.g. purchasing the components).

Does it accelerate the process if you send them the bank slip that indicates the wire is done? It often doesn’t — especially if you are not a regular customer of theirs. They will usually wait for the money to hit their bank account.

So, is it useless to send them the bank slip? No! In many situations, your supplier is using another company’s bank account. This is quite common for Hong Kong bank accounts, and it also happens in the mainland. It means that bank account is used for many companies… Which is why they often change the names shown on invoices and bank account numbers!

They need to identify the source of the payment to confirm who the money belongs to. Without a bank slip, this is not easy. In some cases they are not sure and they don’t start production for 2 or 3 weeks after the money arrived. Make sure to communicate regularly and avoid this situation.

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A few useful articles about payments to Chinese suppliers:

Confirming quality when paying by bank wire (T/T)