How to pay Chinese suppliers: Everything you need to know

Key takeaways

• Sending payments to suppliers in China can be expensive, slow, and fraught with regulatory risk. The complexity can hold businesses back from working with such suppliers.

• The simplest and most affordable way to pay Chinese suppliers is with a local currency account. Your money will be transferred on local payment rails, arriving quickly and at low-cost.

• Airwallex offers local currency accounts in 60+ markets, as well as multi-currency cards and payment acceptance – it’s the full-stack financial infrastructure you need to access the Chinese market.

China is a growth engine for UK businesses, whether you’re expanding production or selling to a new market. Handling this growth in an efficient, cost-sensitive way can drive you on to further success, stronger relationships, and provide a platform for future expansion.

In this article, we’ll show you how to pay Chinese suppliers through different methods, assessing their benefits and drawbacks, as well as helping you solve some of the common challenges that come with funding UK-to-China supplier arrangements.

Common ways to pay Chinese suppliers

There’s more than one way to pay your Chinese suppliers, with options to suit different scenarios.

If you aren’t totally clear on the nuances of Chinese renminbi, this article explains the differences between CNH and CNY renminbi. In short, they’re both official Chinese currency, but the latter is used exclusively in mainland China.

Bank details required to pay Chinese suppliers

To make a successful payment to a Chinese supplier, you’ll need the right set of account or payment details. This will vary depending on the payment method you choose, but we’ve covered all of the previously mentioned methods in the table below.

One quick note: If you engage a supplier from Hong Kong, they will use a CNH account. See our docs for more information on payouts to China.

Using Airwallex to pay Chinese suppliers

Airwallex helps you pay your suppliers – in China and the rest of the world – with more efficiency, transparency, and fair costs.

Using your Global Account, you can send CNY to your Chinese suppliers in a flash and for a low cost. The CNY bank details attached to your Global Account mean your money will be sent on local payment rails, arriving quickly and without expensive intermediary or conversion fees. You can send payouts to 150 other countries, too.

Plus, Airwallex supports your business in other ways – like with multi-currency cards. You can spend like a local – no FX, no fees – when you visit suppliers in China. Integrations with accounting software let you simply categorise and reconcile your multi-currency spending. You can also add popular payment methods in China, like Alipay and WeChat, to your checkout and invoices.

With Airwallex, you can grow across borders. Today, it’s China. Tomorrow, the rest of the world.

Paying Chinese suppliers in RMB vs foreign currency

Your suppliers might not want or need payments in renminbi yuan, it’s entirely possible that they might accept GBP, USD, EUR, HKD, or other currencies. Either way, the principles still apply: You need to move your money across currencies and borders.

Paying a GBP invoice is far simpler than one in CNY, but any other currency presents many of the same challenges. Conversion risks, FX and transfer costs, and settlement delays aren’t exclusive to China; they’re a part of all cross-border payments.

The best solution for moving money internationally is to use a platform with access to local rails, for local currency transfers. It doesn’t matter if it’s USD, EUR, or CNY – for a UK business to pay an international supplier, multi-currency payments are a reliably effective way to do it.

Check our guide to paying international suppliers for a more detailed analysis.

Payment timing, terms, and milestones

When importing from China, you’ll rarely be making a single payment. Schedules depend on variables including service(s) being provided, order quantities, and supplier relationships.

For manufacturing and production, as well as wholesale, a deposit and final payment structure (e.g. 30%, then 70%) is common. Some schedules are split into three (e.g. 30%, 40%, 30%). Your payment schedule and international commercial terms (incoterms)² should all be agreed and evidenced in a signed contract.

More payments mean more risk exposure when paying suppliers in China, including:

• Variations in the exchange rate between payments (i.e. one installment will cost you more or less than your next).

• More opportunities for input errors, compliance issues, and other payment mistakes.

• Depending on the incoterms, you may be responsible for insurance and duty payments – even if you return the goods.

These are all serious concerns, so let’s review these risks (and others).

Risks to consider when paying Chinese suppliers

You’ll know the specific risks relating to your suppliers and contracts; below, we look at some of the most universally applicable risks businesses face when working with Chinese suppliers. 

Fraud and faults

Fraud is a risk with any business transaction, but the geographical distance between you and your Chinese suppliers can increase the risk. Faulty, missold, or otherwise not-to-standard goods can cost you a lot of money and you might struggle to pursue the supplier for resolution. 

Work with reputable suppliers, ideally based on first-hand recommendations from trusted sources, to mitigate this.

Meeting compliance standards

Sending money across any borders means complying with regulatory and statutory rules, but China can be especially heavy-handed with compliance measures. For example, it’s vital that you get your Purpose of Payment codes right. An incorrect or incomplete code when sending your payment could see your funds held, frozen, rejected, or potentially even seized.

Hidden fees in foreign currencies

If you’ve received a quote or invoice in a non-renminbi currency (e.g. USD), you may be paying more than you need to. Suppliers can add a markup, acting as a buffer against exchange rate fluctuations between generating the invoice and receipt of funds.

Best practice tends to be paying in the local currency, but your circumstances will dictate this.

Using consumer tools for business transactions

Using consumer wallets like Alipay or WeChat is a big risk. It might be tempting, given how prevalent they are in B2C and P2P, but these are not designed for B2B transactions. You risk the payment being frozen, as these platforms don’t offer the ability to enter purpose codes and are hard to reconcile.

Managing FX volatility

You also need to account for movement in exchange rates. In simple terms, a bill for 940,000 CNH might cost you £100,000 one month, then £105,000 the next.

You can mitigate this with a renminbi account that you fund with forward contracts and stop/limit orders, but you can’t completely avoid FX risks.

How to reduce fees and payment delays

Simply put, the cheapest way to pay your Chinese suppliers is by choosing the right payment provider. With a platform like Airwallex, you can use your multi-currency Global Account to send Chinese renminbi yuan to your suppliers using local payment rails. It’s as if you were their neighbour, so the time and financial costs will be some of the lowest possible.

Your next best option is a cross-border payments platform, which will charge lower FX and transaction fees than a traditional bank will.

If you must use a UK bank account to pay your Chinese supplier, search for the bank that offers the lowest and most transparent fee structure. This will be the costliest and slowest option, though.

Pay your Chinese suppliers quickly and affordably

UK businesses are increasingly global – imports are growing year-over-year.³ China plays a big part in that, thanks to its manufacturing capabilities and relative affordability.

Paying your suppliers in China could cause quite a headache for your accounts team, but not with the right tools in your finance stack. A platform like Airwallex lets you send local currency, using local rails, to pay your suppliers as easily as your UK bills.

Other options expose you to more risks, higher costs, and longer delays. Three things that nobody wants in a supplier relationship. A multi-currency Global Account mitigates these risks and keeps your business flowing happily across borders.

FAQs

What is the safest way to pay Chinese suppliers?

A local currency account (CNY or CNH) is the safest way to pay Chinese suppliers, as you’re not dealing with any cross-border payment risks or compliance issues.

Do Chinese suppliers prefer RMB or foreign currency?

Preferred currencies vary from supplier to supplier, but paying in the local currency is generally good for business. It means less work for your supplier and gives you some more control over fees and costs.

What bank details are required to pay a Chinese supplier?

It depends on the type of transfer you’re sending. A SWIFT payment requires your name, address, bank identification, and reason for payment (a Purpose of Payment code). It also needs your recipient’s business name, address, and their CNAPS code (this is a bit like a UK sort code). It also needs your recipient’s bank name, address, and SWIFT/BIC code.

Sending local currency, you’ll need your supplier’s name, bank account number and CNAPS code.

Can UK businesses pay Chinese suppliers without a Chinese bank account?

Yes, you can use cross-border payments platforms to send money to China with no need for a Chinese bank account. Companies like Airwallex can help you book a foreign exchange trade at mid-market rates, with low transfer costs, offering an affordable option.

What causes payments to Chinese suppliers to fail or be delayed?

When paying Chinese suppliers, delays and issues with settlement can come from incorrect Purpose of Payment codes, manual errors when entering account details, using slower methods (like SWIFT instead of local payment rails), and sending high-value payments.

Sources and references

1. https://www.gov.uk/government/statistics/trade-and-investment-core-statistics-book/trade-and-investment-core-statistics-book#imports

2. https://iccwbo.org/business-solutions/incoterms-rules/

3. https://www.gov.uk/government/statistics/customs-importer-and-exporter-population-2024/customs-importer-and-exporter-population-2024