How to pay China suppliers from Singapore?
China continues to be Singapore’s major trading partner as local businesses bounce back from the pandemic’s economic impacts.
There are certainly many benefits of using Chinese suppliers, for instance, lower labour costs and a strong business ecosystem. And with avenues such as the China International Import Expo (CIIE), Singapore businesses have numerous opportunities to engage with Chinese suppliers.
Yet, it remains difficult to make overseas payments to China cheaply and quickly.
Read on to learn how you can send money to China more efficiently and how using Airwallwex ensures your transactions have the best currency conversion rates.
Understanding the different types of Chinese currency
Before exploring the various ways you can transfer money to China, it’s important to understand how the Chinese currency system works.
While China has one official currency –– the Renminbi (RMB), there are two types of RMB: CNY and CNH. CNY is RMB that’s used in mainland China; while CNH is RMB that’s used offshore from mainland China, including Singapore. Although both CNY and CNH are worth the same amount of RMB, they have different exchange rates against foreign currencies like the Singapore Dollar.
The nature of the transaction ultimately affects the exchange rate you get to enjoy. So while you can send money in CNY, you’ll likely get CNH when receiving money from a Chinese business. This is a crucial point to note for overseas companies engaging in business with China.
We’ve covered the distinctions between CNY and CNH in greater detail in another article. For now, simply keep in mind that transactions in and out of China are impacted by exchange rate differences when switching between CNY and CNH.
China wire transfer restrictions
According to Anti-Money Laundering Laws and Regulations, Chinese banks and other financial institutions in China have to report all single or accumulated value of all transactions, overseas or domestic, within a day and should not exceed 50,000 RMB.
If the amount exceeds 50,00 RMB, an AML Reporting Entity is required to report to the Chinese authority. Due to this regulation, payers tend to split payments of more than 50,000 RMB into multiple smaller amounts.
How to pay your Chinese suppliers in RMB
1. Pay suppliers in China with Airwallex
Airwallex is one of the quickest and easiest ways to make payments when buying directly from Chinese manufacturers on Alibaba and elsewhere. If you’re an eCommerce business that makes regular payments to China, Airwallex can help you save big on excessive transaction fees while accessing excellent FX rates.
Designed for enterprises in today’s digital economy, Airwallex’s multi-currency account and international payout capabilities enable businesses to easily convert money to CNY and pay Chinese suppliers all on one online platform that can be accessed wherever and whenever.
To transfer funds to your Chinese suppliers with Airwallex, you can choose to pay RMB directly from your multi-currency account or convert other currencies to complete the transaction. You won’t even have to worry about distinguishing the CNY and CNH rates as Airwallex helps you carry out transactions at competitive currency conversion rates.
And with our multi-currency virtual payment cards, you can even enable your team to conduct business operations in China.
2. Make payments to China via your bank
Bank-to-bank transfer, also known as wire transfer, is one of the most common payment methods in China. Most of these bank transactions are completed via the SWIFT payment network, which requires you to provide the receiving bank account details and their SWIFT code.
However, transactions can be subject to additional fees imposed by sender, intermediary and beneficiary banks. Banks’ exchange rate spreads can also go up to 3.5% above the interbank rate. In comparison, Airwallex only charges a small FX margin of 0.4% for payments in CNY.
3. Pay Chinese suppliers by credit or debit card
Credit and debit card payments such as Visa and MasterCard are typically unpopular amongst Chinese suppliers. This is because sellers are charged a high fee by card companies, which will likely be passed on to you. Therefore, not many Chinese manufacturers, especially smaller ones, readily accept card payments.
Local businesses can circumvent this by connecting their credit or debit cards to Alipay and transfer funds to their suppliers through the third-party payment platform. To further enjoy Airwallex market-beating currency conversion rates, connect your Airwallex’s Borderless card to Alipay.
4. Use PayPal to pay Chinese suppliers
If you’re looking to make payments to China for small orders or product samples, some Chinese manufacturers now accept PayPal. However, most Chinese suppliers still don’t accept PayPal for large-sum transactions.
Moreover, you will be charged a fixed fee as a percentage of your order on top of hefty currency conversion rates. While these costs may not seem significant for smaller orders, it can be substantial when it comes to purchasing bulk orders. And while PayPal offers buyer protection, its protection policies are complicated for overseas transactions, requiring longer waiting times for dispute resolution.
Conversely, Airwallex offers competitive CNY exchange rates, helping you save up to 90% on transaction fees. In the unlikely event of a dispute, simply submit a transaction dispute request on Airwallex’s portal, and our Risk team will get back to you within 1 working day.
How to make payments to Chinese bank accounts using Airwallex
Create an Airwallex Global Account. A Global Account is equivalent to a multi-currency business account. You can store up to 11 currencies (USD, AUD, EUR, GBP, CAD, JPY, SGD, HKD, CNY, CHF, NZD). Top up this account by transferring any of the above 11 currencies to your Airwallex Global Account.
Make a new transfer to China. Click “New Transfer”. Enter the amount of CNY that you want to transfer, and the details of the recipient’s China bank account.
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