Please tell me about L/C and T/T payments in china ?

Question

i would know about T/T and L/C payments which usually takes place in china .. the way china people do ? thanks ,

Answer 1

A T/T is essentially a bank transfer of cash from your bank account to their bank account. Most Chinese exporters ask for 30% deposit and 70% before they will release the shipment. Clearly this is extremely risky if you do not personally know the supplier, since they have 100% of your cash AND they have your goods. At that point you need to cross your fingers and hope (1) they release the goods, (2) they release the goods on time, and (3) that what's inside the cartons is what you paid for. There is no way anyone should ever agree to T/T 30% down and 70% prior to shipping with any supplier in China. Less risky is 30% down and 70% after the goods ship; that is, after you receive the bill of lading or air waybill. But you need someone on the ground in China to inspect the goods before they ship, and you risk losing your deposit if you are not careful.

Letter of credit (L/C) is less risky - you and the supplier agree on the terms and conditions which must be met in order for you to release payment and the supplier to receive the payment. Your money is held by a bank until the conditions are met, at which time the bank releases the funds. As above, a 30% deposit on production orders is not unreasonable, with balance payable after shipping. With an L/C you can agree to balance payable before shipping as long as you have someone on the ground in China to inspect the goods before they ship.

If you need help with managing your suppliers, sourcing products, financing, and/or logistics arrangements, visit my Web site or give me a call: www.chinatownsourcing.com; 212-847-7175. -Hank

Answer 2

L/C is a letter of credit. Normally you would need to work with a Bank in to make sure that you are going to get your product while the manufacuture would make sure they are going to get their payment. The bank would then hold your money (for a fee) until a consolidator or or cargo company confirms that you have received your product, then they manufacturer will take the signed L/C to the bank to receive their funds. A W/T is a wire transfer. The fee's are lower and you are able to use a domestic Bank.

Answer 3

The chinese companies mostly accept all terms of payment in international trade as what you do in your country. But for the L/C, they mostly trust the L/C issued from developed countries or other devoloping countries with good reputation.

The rest are settled by 100% T/T before shipment.