If you have come across this blog, this means that you are looking to find the best way to send money to China & pay Chinese suppliers.

Have you ever lost any money when making payments to Chinese suppliers?

Are you interested in the legal ways to send money to China and the risks to avoid when making payments?

Being an importer of products from China, you will have to make payments on regular basis. What seems to be an easy task, sometimes become very challenging.

Many people have lost huge amounts of money because they didn’t understood the process of sending money to the suppliers in China and became victim of scams. Also getting that money back is also a long painstaking process.

At EJET, we care for those who are dealing in imports from China. We are writing this blog to help you understand the right process of sending money to China, understand the risks involved and also what to do to get your money back if you have been scammed by a supplier.

Table of Content

Chapter 1: Real Case Studies- Customers losing money to Chinese Supplier

Chapter 2: Risks to avoid when Sending Money to China & Pay Chinese Suppliers

Chapter 3: 7 Best Legal Ways to pay Chinese Suppliers and their Pros and Cons

Chapter 4: How to get your money back after you paid to Chinese Suppliers

Chapter 5: Why do most companies in China use banks in Hong Kong

Chapter 6: FAQs About Send Money to China

Chapter 1: Real Case Studies – Customers losing money to Chinese Supplier


When you are dealing with international trade and buying in bulk from China, there will be huge amounts of transactions taking place. These can go up to millions of dollars sometimes.

Now imagine you send 1 million dollars to the wrong bank account, or you were scammed by a supplier to send this money into his or her personal bank account. Well, this was exactly what happened in the cases we will share below.

Once you read these cases, you will be able to understand the importance of this topic, and later on in the blog; we will provide you the ways to avoid such issues.

1. Losing 600,000 $ when making Payment to a Supplier

  • The Case :

A recent case happened in 2021 about sending money to China in which a customer lost around 600,000$. What happened was that this customer was taking service of a sourcing company for a long time.

Before he was always transferring the payment to the company’s official bank account which was registered in the name of the company, however, later on, he transferred payment to an employee’s personal account.

Once the employee received the money, he stopped coming to the company and disappeared and the customer lost this money.

The employees took the money and never return to the company. The customer transferred money to a bank account that did not belong to the company. In this way, the customer lost his money.

  • What he should have done to avoid this Issue


So what the customer should have done to avoid this loss? He should have only transferred the money to the company’s official account. Only the amount transferred in the company account stands legal in the court of law in China.

It is also important to understand that why the customer moved from sending payments to the company account to sending payment to the employee’s personal account.

This can also mean that customer made a deal outside of the company with that employee. Maybe the employee told the customer that he will help him to get cheaper prices and the customer in his greed decided to send the money into her personal bank account.

2. Supplier kept the Deposit (4000 USD) but didn’t Ship the Order.

  • The Case:

The buyer placed an order and pay the Supplier in China. The product was paper bags and the supplier was located in the Chinese city of Qingdao.

The payment terms agreed between the buyer and the seller was 20% advance or deposit and 80% balance. The total order value was 20,000$. So for a 20% deposit, the buyer paid him around 4000$.


The supplier asked the buyer to send this payment into this personal account by making an excuse that his company accounts are having some issues.

After receiving the deposit, the supplier refuses to finish the remaining goods and demands to be paid the remaining amount first.

He also kept the deposit of the buyer and refused to pay him back. So the buyer lost 4000$ in this whole process and didn’t even get the remaining goods shipped to him

What he should have done to avoid this Issue

He should have used Alibaba Trade Assurance and make very detailed and specific contracts on Alibaba with the supplier.

The contract should mention how much is the deposit and how much will be the balance amount; it should also include the delivery dates promised by the supplier.

If the buyer would have used this way and the supplier refuses to ship the goods on the promised time, Alibaba.com will intervene in this case and will refund the money to the buyer saving him time, headache, and a big loss.

Chapter 2: Risks to avoid when Sending Money to China & Pay Chinese Suppliers

Chloe Bennet GIF by ABC Network

The above 2 cases in chapter 1 would have opened your eyes to this important issue. It is quite clear how people can lose money if they do not learn the right process of sending money to China and what kind of risks they should avoid.

In this chapter, we will now talk about different kinds of risks before making any payments for your imports from China.

1. Supplier Scams – Suppliers take a deposit and refuse to produce the goods

Let’s understand how this scam works. It involved the supplier asking for a deposit or 100% amount in order to start production of the goods. Once you make this payment, the supplier completely cuts off communication with you and do not respond at all.

Another way is that he takes the deposit and uses delay tactics in producing your goods. Once you become frustrated and contact him many times, he will ask you to send the balance first and then he will produce the goods.


This is also a scam and if this happens, it is highly likely that you have lost the deposit amount already.

However, incoming chapters we will also talk about legal ways on how to deal with such suppliers so not to worry at all and keep reading the blog.

-How to avoid this risk:

  • Never pay 100% amount upfront. The general rule in China is 30% deposit and 70% balance once the goods are finished and you have inspected and they are ready to be shipped.
  • Try to negotiate a lower deposit amount. Sometimes suppliers will also agree on a 5% or 10% deposit. The lower the deposit, the lower your risk.
  • Have to proper legal contract in place with the supplier. Make sure it is in Chinese as the Chinese version stands of value in the court of law compared to an English version.

2. Email Scams – Fake email asking buyer to deposit money in a bank account

You will receive an email looking very legitimate and real coming from the supplier. However, there can be 2 things.

Firstly, the supplier email may have been hacked and the hacker used his email address to send you the email for making the payment into another bank account that will belong to the hacker.


Another reason can be that this email has been sending from a random person who had your email address and it’s made to look like a real email, tricking you into thinking that it is from the supplier.

This will make you go ahead and transfer the amount to the given bank account into this email.

In both cases, you will lose your money since it is a scam intended to trick you into transferring the money.

-How to avoid this risk:

  • Whenever you receive any email, first always confirm it with the supplier on the call that it is he who have send this email. Another way to check that email is legitimate is that it is from the company’s official email and not from GMAIL, QQ, and OUTLOOK etc.

3. Making Payments into the Supplier’s Personal Bank Accounts

This is a huge risk if you make payment into a supplier personal bank account. Because this transaction will not stand in the court of law. The international trading transactions should always be done from company bank account to company bank account.

Sometimes to save taxes, the buyer will send the money to supplier’s personal bank accounts. But by doing this, you are putting all this money at risk.


Because if the suppler refuses to produce your goods and delays or even make poor quality goods, you cannot sue him or take him to the court. Because sending money into personal bank account is considered illegal.

-How to avoid this risk:

  • Never send payment to suppliers’ personal bank accounts. Always ensure that you are sending payment to the Company’s official account.

4. Using 3rdparty for Payments

Sometimes the importer will use a 3rd party to transfer payments to their Chinese suppliers. But they do not know the background of these 3rd parties.

They maybe sending millions of dollars every day and this money can be black money. Black money will mean the money earned through illegal activities like drugs, gambling etc.

So once the 3rd party transfers money to the Chinese supplier bank account, it will be blocked by the public security institutions in China.

Recently there has been a huge crackdown on these kinds of money transfer activities and many suppliers got their accounts frozen or blocked by the banks.

It may look like the real problem in this case is for the supplier. However, it is your money which is not in his bank account.

He will not refund you or process your order unless his bank account is unblocked so he can use the money you send him.

This will mean you may have to wait sometimes for 3 – 6 months. This is the time taken by the bank to investigate the matter and make a decision.

-How to avoid this risk:

  • The best way is to use your own Importing Company’s bank account to transfer payments to the supplier’s company bank account.

5. Using Hawala/Hundi System for Payments


Let us first understand what is Hawala or Hundi system. Both words mean the same and it is a kind of system to transfer money. This system is based on trust. For example there is a buyer and a seller.

Buyer is in USA and wants to send money to a supplier in China. Now the buyer knows someone in USA let’s say person A. Mr. A asks the buyer to give him Dollars in USA and he will arrange Chinese Yuan directly in China through Mr. B. So it means that Mr. A and Mr. B are using Hawala system to send money from USA to China.

Please note that in such a system there is no real money being send across the borders. Mr. A after taking Dollars from the buyer in USA, calls Mr. B who is in China and informs him that he has received money from the buyer and Mr. B can transfer money to the seller’s bank account or his WeChat or Alipay account.


This is totally illegal since such kind of money transfer is not being done through International Banking channels.

Also we do not know if Mr. B account is being suspected by the bank as sending illegal money which can result in the supplier’s bank account to be frozen or blocked.

-How to avoid this risk:

  • Hawala and Hundi system is completely illegal and there are large crackdowns on such people who are using this system in China. Refrain from it and use the proper legal ways to send payments to China. We will discuss these legal ways in detail in the coming chapter.

6. Making Cash Payments to Chinese Suppliers

If you pay money by Cash to a Chinese supplier, there is no record of it and this is a huge risk. What if after receiving money the supplier completely denies it.

How can you prove this in the court of law or to any other public security institution in China to get your money back.


Many buyers use this way if they are physically present in China. Making Cash payments is ok to buy small quantity for testing purposes or samples in order to verify the quality of the goods.

But making Cash payments for a whole shipment is very risky and you have to no backup to protect your money in case of any issues with the Supplier.

-How to avoid this risk:

  • Avoid making cash payments and use proper legal Channels for money transfers like Bank to Bank Transfer, Alibaba Trade Assurance, and PayPal etc.

Chapter 3: 7 Best Legal Ways to pay Chinese Suppliers and their Pros and Cons

1. Company to Company Account – Bank Wire Transfer or T/T

This is so far one of the most common method to make payments to the Chinese suppliers. It is legal channel and also secure since the banks are involved in it.

In this method you simply use your bank account to make an International wire transfer to the supplier’s company bank account.


For some people this is a good option especially if you are large company dealing in huge transactions every day, but for smaller companies sometimes this method is very expensive due to large transaction fees.

2. Letter of Credit – L/C

Buyers also have an option to open Letter of Credit with the bank on their company’s behalf. You can ask your local bank to open an L/C for you to make payment to the Supplier’s bank in China.

The bank will coordinate with your Supplier’s bank and will do the legal paper work.  This is a very safe way to make payments to Chinese suppliers since it is always against the documents.


3. Taking Services of a Sourcing Company to send money to China

This is also a very good option to make payments to Chinese suppliers or send money to China. Why? Well because you are giving over all the payment risks to the Sourcing Company. In this method, the Sourcing Company will bear all the risks on your behalf.

Let’s say you need to pay to 10 different suppliers who do not have foreign currency accounts. With the help of the sourcing company, you just need to transfer all the money to them in one transaction.

This means a lower transaction fee for you since you do not have to make 10 different transactions. The Sourcing Company can receive Dollars into their accounts, exchange them into RMB and make payments to all the 10 suppliers on your behalf.

4. Alibaba Trade Assurance option to make payments to Chinese Suppliers


Many importers from China consider this method as the most secure way to send money to China. The way this method works is that you ask the supplier to make a contract on Alibaba and share the payment link with you of Alibaba Trade Assurance.

Through that link you can get the Bank Account details of the Alibaba website and make the payment into the account.

The payment remains will Alibaba and Alibaba will asks the supplier to start the production. Once the supplier receives notification from Alibaba that payment is receive, he is bound to follow the contract and finish the production on time and make the shipment.

If for any reason the supplier do not fulfill the terms in the contract, you can open a dispute with Alibaba for refund. Also Alibaba will not release the payment to the Suppliers unless he has fulfilled all the terms of the contract.

5. Using PayPal to send money to China


This method is not so popular in China but it is still a good option when you want to transfer small amounts. Sometimes you want to pay just for a sample product in order to inspect it and then place the bulk orders. In this way PayPal is a good option and it is also secure.

PayPal does offer a buyer protection however; you must understand their protection policies as they are very complex. Also if a dispute arises it may take some time to settle it.

6. Western Union payment options to send money to China

Western union is also acceptable to make payments to Chinese suppliers, but usually for small amounts too. You can use it for payments for Samples of small orders. But for large orders it can be expensive as the transaction fee is high.


Also you have little protection as once the money is send; it is very hard to recover it. Their exchange rate is also high when they change the currency from USD to RMB. The supplier can go to any Western Union branch and get the payment in RMB.

7. Make a local transfer from a business account – Offshore Bank Account

This way is not highly preferable but is use sometimes. If you want to avoid high international transfer fees and also the waiting times to collect that payment. Many people prefer to open a bank account in Hong Kong.

We have explained this point in Chapter 5 regarding the reasons why Hong Kong bank account is feasible and better.


Many Chinese suppliers also have their bank accounts in Hong Kong. So you can transfer money to your Hong Kong bank account which is convenient and fast and also the transaction fees are low.

Then from your Hong Kong bank account, you just make a local transfer to the Supplier’s bank account in Hong Kong.

The amount can be transferred directly in USD so there is not conversion rate loss. Once the supplier knows the payment is sent, he will start the production.

8. Pros and Cons of each Method – Table

Bank Transfer
  • Widely used for large payments as it is secure.
  • All transactions are recorded and can be traced
  • Can have tax issues, invoice value and exact amount transferred needs to match.
  • Not suitable for every time. The exchange rate is high sometimes.
Letter of Credit
  • As a buyer, it provides more comfort that the supplier will follow the agreement
  • Good for large transactions
  • Very safe and secure
  • A little complex procedure involving many documents and a bit difficult for small payments.
  • Many suppliers may not accept L/C
  • Many buyers’ banks cannot open the L/C. You need a down payment amount.
Sending Payment through a Sourcing Company
  • Protects your payment in escrow account of Alibaba
  • If you have any quality issues you can complain to Alibaba
  • Disputes can take long time to solve
  • Limited Supplier choice for Trade Assurance.
  • Limited Amount of Trade Assurance
Alibaba Trade Assurance
  • Protects your payment in escrow account of Alibaba
  • If you have any quality issues you can complain to Alibaba
  • Disputes can take long time to solve
  • Limited Supplier choice for Trade Assurance.
  • Limited Amount of Trade Assurance
  • Very convenient to use, can pay by credit card through PayPal
  • Suitable for small payments as the transaction time is very fast
  • Many suppliers do not accept big payment through PayPal.
  • The fee is very high, not good for large payments
Western Union
  • Western Union is a very fast transfer. Payment is available after few minutes
  • Easy to use and cheap transaction charges
  • Suitable for only smaller payments and not large payments
  • Payment goes into the personal account which can be a high risk.
Offshore Bank Account
  • Fast transfer and easy to use process
  • No transaction fee is bank accounts are in the same bank
  • Convenient to avoid tax legally
  • Not every supplier will have a Hong Kong bank account
  • Accounts can be frozen if the payment arrives from a blacklisted bank account.

Chapter 4: How to get your money back after you paid to Chinese Suppliers

When you are working in International trade and transferring large sums of money. It is possible that you may become a victim of a scam by the supplier and are not able to get your money back. One may wonder what can be the different ways to use in order to get that money back.

We will provide you some ways but understand one thing that this can be a long painstaking process. Sometimes it requires a lot of time and money with lawyers and a lot of documentation as well.

Also you should make sure that the money send to the supplier must be through legal channel.

If it is from illegal channel and the supplier is refusing to pay you back and not also shipping your goods, then you are out of luck because illegal channels are illegal activity and have no legal grounds in the court of law.

Pay Me GIF by Team Coco

It is also important to learn the techniques in the first place on how to find a reliable supplier, so that you do not have to face this issue.

But still there are always risks involved in business. Here are some tips that you can follow if you have lost money to a supplier and need to get it back.

1. Contact an Attorney to recover money from a bad supplier in China

This is by far the best and most suitable option. Find a good lawyer, explain him the complete case and show him all the related documents, including proof of legal transfer of payments and contract with the supplier.

The lawyer will then help you on how to make educated decisions and what is the right process to follow according to the Chinese legal system and get your money back. The lawyer is also responsible to take this case in court and fight it on your behalf.


Make sure to find such a lawyer who have enough experience in such cases and has won several cases in which the buyer got his money back.

Also a point to note here is that Chinese judges rarely allows testimonies in such disputes, rather you will have to provide hard physical evidences in the court of law.

Also in Chinese court, the Chinese documents and contracts are considered superior over English documents and contracts. So if there is any difference between their content, the Chinese version will stand powerful in the court of law.

Below, we are providing you a flow chart in order to make the right decision whether to follow a lawsuit or not.


2. Help from the Chinese Police

You may also file a police report in a case of being scammed. However, unless the loss is very large, you will not be able to find a lot of support from the local police.

However, a police report is also helpful in the court of law and is also sometimes required. However, to do this you need to be physical present in China or appoint somebody to represent you by giving them the power of attorney.

3. Use your Embassy or Consulates to recover the amount

This option will depend from country to country because some country’s embassies are very helpful and some are not. It also depends if you have any personal connections within the Embassy or Consulate of your country.


However, do not expect that the Embassy staff is liable to help you in this matter. Because business payment issues do not come under their jurisdiction, however what they can help you with is provide a letter on embassy’s letterhead stating the whole issue and requesting the Chinese authority to help you back.

4. Use your Country’s  Business Chambers Group

In China, especially the cities where the foreigners are in huge numbers, they have formed different Business Chambers or Business Groups or Unions of their country people.

Such groups have high influential people from respective countries who have been living in China for many years and have faced such issues several times. Having contacts with such groups can help you a lot.


Firstly, there is trust since these are your own country mates. Secondly you can have advantages from their experience.

They may provide you with connections like good lawyers and help you to understand the whole process in detail. They may also follow up the case with you from start to finish and provide emotional and financial support as well.

Make sure that if you have such a group belonging to your country in China; do join them by becoming a member. Normally they will have a yearly membership fee and will arrange various seminars and events throughout the year in China.

Chapter 5: Why do most companies in China use banks in Hong Kong.

It is important to understand the difference between a Chinese Mainland Bank account and Hong Kong bank account. Although Hong Kong is part of China, it is still government under the rule of One Country, Two Systems.


This means that there are differences of how banks operate in Hong Kong and they provide some added benefits to their customers compared to the banks in mainland China.

1. Mainland China Bank Accounts:

The Banks in mainland China are faced with tight rules regarding foreign exchange. In part few years, Chinese government has been more and stricter is stopping illegal money entering into China and money leaving China without the proper channels.

This means that the account holder is required many documents and applications for foreign currencies for their overseas business operations and need permission from the bank authority in order to use the Dollars send to their accounts from buyers outside China. This is one of the reasons why most Chinese companies would prefer to create bank accounts in Hong Kong.

2. Hong Kong Bank Account:

For many Chinese companies, Hong Kong bank account is the most preferred one. For example the HSBC bank in Hong Kong is very easy to wire money from Hong Kong to mainland China.

Therefore many companies will prefer to receive money in Hong Kong and then transfer it into mainland China. The transfer cost is also very low in HK.

Also there is less documentation required in HK Bank Accounts and also there is less strictness over transactions and daily limits.

Chapter 6: FAQs About Send Money to China


1. Many bank accounts have been frozen in China recently. How to solve this issue?

If the bank account is frozen there may be different reasons to it. The Chinese Public Security departments need to make sure where this amount came and was it for a legal and lawful purpose or not.

This means first, you should always transfer and receive payments through legal channels. Secondly, if it gets frozen, contact your bank and provide them all the documentations and proofs of payment being legal. They will investigate and provide you with a decision.

2. If suppliers do not have Dollar bank account, how should I pay them?

You can take the services of a sourcing company who have a dollar bank account. You can then transfer the money to their account and they will handle all your purchase from the Chinese supplier and pay the suppliers in local currency.

3. Does Alibaba Trade Assurance will always protect the buyer’s money?

It most cases it does protect your money because when you pay by Alibaba Trade Assurance, the money is not send into the supplier’s bank account. It is kept with Alibaba and Alibaba will only release this money once the supplier.

However, in case of any issues you have to open the dispute with Alibaba and after listening to your side of story as well the buyer’s side, Alibaba will make a final decision.

4. How can I avoid payment fraud when paying to Chinese suppliers?

Always make a proper detailed contract about payment terms. Make sure that you only send payment to the supplier’s company account.

Double-check the bank account details with the supplier and also reconfirms once the payment is send. Make sure that the beneficiary name matches the company name of the supplier you are buying your product from.

Never pay to a bank account that is registered in a completely different city, province or country other than the city where the supplier’s company is registered.

It is possible that the supplier office is located in Guangzhou but his company is registered in Hong Kong. In this case he will have a Hong Kong bank account registered under the name of his company.

5. If I pay by WeChat or Alipay, is it also considered a legal payment?

No. It is not considered legal payment in International Trade. Because WeChat and Alipay and local Chinese payment platforms and not cross border platforms.

You cannot transfer Dollars through these platforms and also you will need to have a Chinese bank account to be able to use them.

This means that the money being paid to the supplier is from within China which will not be help you to create import documentation for custom clearance.

You will need to proof to your country’s customs that the money has been send from your country to China in order to clear the goods and pay the duties and taxes. You cannot achieve this through WeChat or Alipay payments.


As a conclusion we can say that making payments to Chinese supplier is a very important matter and you should understand all the risks and issues that may arise in this process. It is important to be aware of how to secure your investment and what steps you need to take in case you are scammed or not getting your money refunded.

In this blog, we have covered all the important questions that we got from our customers and provided the detailed information so that you can be confident when importing products from China.