Payment is the point where an import stops being a conversation and becomes a commitment. It is also the step where the fewest new importers know their options. This is an overview of how payments to Chinese suppliers are commonly arranged from Bangladesh, and what each route does for you.

Before anything else: rules for foreign payments, documentation and permissible channels are set by the authorities and by your own bank, and they change. Treat this article as background, and confirm the current requirements with your bank or a qualified professional before acting on them.

Why the method matters as much as the amount

A payment route decides three things: whether the transaction is documented, what happens if the goods never arrive, and whether the cost of the shipment can be accounted for properly at your end. A cheaper route that leaves you with no record and no recourse is not cheaper.

The routes most importers use

Letter of credit

Arranged through your bank, a letter of credit pays the supplier only when the documents specified in it are presented. It is the most structured option and the one most used for larger commercial shipments. It involves bank charges and paperwork, and both sides have to agree the terms in advance — which is exactly what makes it protective.

Bank transfer

A direct transfer from your bank to the supplier’s company account. Simpler and faster than a letter of credit, and common for moderate orders. The protection here comes from your own diligence rather than from the mechanism, so it suits suppliers you have checked or already worked with.

Platform escrow

Some sourcing platforms hold the payment and release it to the supplier after agreed conditions are met. This can be useful for first orders and smaller amounts, because the platform sits between the two sides. The protection only applies to orders placed and paid through the platform — which is precisely why some suppliers ask you to move off it.

What your bank will expect

Whichever route you use, the bank works from documents: a proforma invoice or contract, your business registration and import documentation, and details of the goods. Getting the supplier’s paperwork right before you start saves far more time than rushing the payment does. Requirements vary by product category and shipment value, so ask your bank what they need for your specific case.

Deposit and balance

Split payments — a deposit to begin production and the balance at an agreed later stage — are a normal arrangement. What matters is that the split, and the event that triggers the balance, are written down and agreed before production starts, not settled by messages afterwards.

Keep every payment traceable

  • Pay the registered company you are contracting with, not an individual
  • Make sure the name on the invoice matches the name on the account
  • Keep the invoice, contract and transfer records together for each shipment
  • Ask questions before paying if any detail changes at the last moment

Unofficial channels that promise to move money faster or more cheaply leave you with no documentation, no standing if the goods never arrive, and exposure of their own. For a business that intends to keep importing, the formal route is the cheaper one over any reasonable time frame.

Not sure what a supplier’s payment terms should look like for your order? Talk to us before you commit to anything.

Related reading: how to check a Chinese supplier before you pay and how to import products from China to Bangladesh.