What is the Best Way to Pay My Chinese Yoga Mat Supplier?

On the Internet, several potential Western importers repeatedly asked the question: “What is the best way to pay a Chinese yoga mat suppliers?”

The answer to this question is not simple, as each method of payment has its advantages and disadvantages, and it depends a lot on the size of your order. We will discuss these methods shortly.
However, the key is to follow the golden rule:

  1. Don’t send money to your personal account by any means of payment: Insist on getting the business account details of the company you’re dealing with, and if you can’t provide them, don’t do business with them. Don’t make excuses and put money into a personal account unless you never want to see your money or promised goods again.
  2. Draft a strong agreement: Ideally, before you pay potential suppliers, you must draft strong payment terms in the agreement you sign with them to secure your benefits. These clauses relate to the choice of timing and method of payment.

How do you pay your Chinese yoga mat supplier?

When you make a payment in China, there are two common methods of payment: telegraphic transfer and a letter of credit. We now detail the various payment options that businesses buying yoga mats from China can use to pay their suppliers, as well as their pros and cons.

International Wire Transfers

This is an umbrella term that involves the electronic transfer of money from one place to another using a network of banks and money transfer agencies around the world. This includes interbank transfers, as well as those handled by companies such as Western Union (more on that later). Interbank wire transfer is one of the most common forms of payment. It is best to use this method if you have done some due diligence on the supplier (for example, verifying that they are a legitimate registered supplier before sending them money).

This form of payment is widely accepted by both buyers and sellers. Fees can be high, however, as you need to factor in your bank’s foreign exchange rate (which is never in your favor) as well as paying a fixed fee per transaction. When they get the money, the recipient may also have to pay some sort of flat fee. As these transactions can take between two and five working days to process, the supplier is also exposed to currency exchange rate fluctuations from the date the payment order is signed to the date the payment is credited to the supplier’s bank.

While there is no payment protection built in here, banks often do some sort of identity check on businesses and people who have accounts with them, so this is considered a more secure payment method than many others.

With this method of payment, you can protect yourself from the risk if you pay the supplier in batches – say, a 30 percent down payment when you place your order and 70 percent after quality checks and shipping.


In this method of payment, a trusted third party holds the funds the buyer has agreed to pay the supplier and only transfers the money to the seller if certain predetermined criteria are met – such as the buyer receiving the merchandise (as described) on time.

Chinese business-to-business platform Alibaba offers a service for buyers and sellers that it calls “Trade Assurance”, which is similar to an escrow service. Alibaba says the assurance adds an extra layer of security for buyers dealing with Chinese suppliers. It promises a refund if:

a.  Your shipment is delayed, beyond the promised date.

b. Your product does not meet predetermined quality standards.

This mode of payment is, however, not very popular among suppliers in China.

Escrows protect both buyer and seller. The buyer is protected from fraud from sellers who disappear as soon as they receive the money without sending the merchandise. Sellers are protected as they are guaranteed payment from the buyer if the goods are delivered as promised.

For buyers, the limitations with regard to the Alibaba Trade Assurance is that you will be restricted to suppliers on Alibaba.

Even within that platform, you will have to pick from a smaller basket as not all suppliers on Alibaba have signed up for this service because it charges them a 5% fee (which many presumably pass on to the buyer). Also, you need to make a full payment at the initial stage itself, so your money can be tied up for some time.

Letters of credit

This is a payment mechanism whereby the bank guarantees payment to the seller on behalf of the buyer. Banks usually issue these letters of credit only to customers (buyers) who have pledged some collateral to them, for a fee of a percentage of the value of the credit.

Letters of credit are most suitable for large companies with large orders because high fees can cut into the small profits of small companies with small orders.

There are several kinds of letters of credit, it is too complicated to introduce them all here. Suffice it to say that while this is a reliable method of payment, it is not an ideal one as it is quite expensive and the process is cumbersome – there is a lot of paperwork involved.


This method of payment is only suitable for small orders or first samples. That’s because PayPal not only charges a percentage of the amount transferred, but it also charges a currency conversion fee for each transaction. You have to be very careful here not to put money into a personal account.

It has the advantage of quick payment but a high cost. Their payment protection policies are complicated, so read the fine print carefully before you make any large payments through PayPal.

Western Union

Although Western Union is convenient for individuals who want to send money around the world on an emergency basis, most serious buyers avoid this form of payment. That’s because it doesn’t really offer them any payment protection, and their fees can be quite high.

When you send money through Western Union, you are given a 10-digit remittance control number, which you then forward to the person you are paying. Anyone with that number and ID can withdraw money from a Western Union branch. But if that person disappears with your money, there’s not much you or Western Union can do.

It is also unusual for legitimate suppliers to request payment via Western Union. So be on your guard if you hear any potential suppliers asking to be paid in this way.

Sourcing Agents

If a sourcing agent, such as sourcing Allies, helps you with your sourcing projects in China, you may also be able to pay your suppliers through that agent.

If you have a trusted purchasing agent, this is a reliable way to pay your supplier. But you need to check whether the purchasing company will charge you for this service on top of the purchase fee.

Sourcing Allies has offices in the United States, Sweden and China. The benefit of paying suppliers through us is that you can handle us as a domestic company and you don’t have to send money to a company somewhere in China with all the associated risks.

When you pay through us, the risk of fraud is low because we usually work with Chinese companies and have built strong partnerships with them.

If we work with a new supplier, we will vet the supplier by visiting the company’s premises before sending money to them. We will not make full payment until the product has been approved and shipped by us.

When and how much to pay your Chinese yoga mat supplier?

In China, every transaction is done in dollars. There are technical reasons behind this, such as the fact that the renminbi is not a fully convertible currency, but the point is to be prepared to pay in US dollars.

When dealing with suppliers or suppliers’ home countries, we are used to getting payment terms of 30 or 60 days after receiving the goods. That’s not usually the case in China, especially when you’re starting out.

In China, the usual payment terms are 30% down payment and 70% upon completion, especially if you are working with a supplier for the first time. For some resource-intensive products that require suppliers to pay large upfront payments for resources (such as steel, brass, etc.), they may demand higher payment terms, perhaps 50%/50% or even 100% upfront payments. However, if you are a new importer entering into a relationship with a supplier for the first time, I would be skeptical of anything over 30%/70%.

What do we mean by finished? Completion usually means they send you a copy of the bill of lading to confirm that the goods have been shipped and are being delivered to you.

This does not mean that ownership of the goods has been assigned to you, just that the supplier has shipped the goods. Once you have paid for the goods, your supplier will send you a copy of the original bill of lading to give you title to the goods.

What currency would you use when dealing with Chinese yoga mat suppliers?

In China, every transaction is done in dollars. There are technical reasons behind this, such as the fact that the renminbi is not a fully convertible currency, but the point is to be prepared to pay in US dollars.

You may have heard that the renminbi (China’s currency) is basically pegged to the US dollar, so there is no real exchange rate fluctuation in payments made in US dollars. However, there may be considerable exchange rate fluctuations for you.

If your currency is particularly strong against the dollar, your goods will be cheaper; If your local currency is particularly weak against the dollar, then your goods will be more expensive. During the 2008 financial crisis, many European importers had a tough time as the value of the euro fell sharply against the dollar, so for most importers, constant monitoring of exchange rates is a hobby.

How to negotiate better terms with your Chinese yoga mat suppliers?

If you are nervous about paying your supplier 30% before the product has even started production, remember that your supplier is just as nervous because they have already started manufacturing the product but have not yet received the 70% payment.

In international trade, trust is very important, and so is credit. We’re not talking about credit in your FICO score, but the credit you build with your vendor as a reliable customer who always pays.

As you build relationships with suppliers, you can negotiate better payment terms. We’ve all lent money to friends with varying degrees of suspicion. We are happy to lend some friends a few hundred dollars and don’t worry about when they will pay us back because we know they will.

For other friends, we’re nervous to even lend $20 because we’re not sure we can pay it back. The same goes for your suppliers. If you have placed several orders with your suppliers and are engaged in relationship-building activities, such as actually visiting them in China, you are building your suppliers’ credit.

After visiting any of my suppliers in China, I have never had a problem asking for 100% payment after an order is completed. Meeting a person removes that uncertainty because you’ve only talked to people via email or Skype. So visit your vendor and you can expect similar results.

Over time, you may even be able to ask for part of the fee after you receive the order. It is not uncommon to require payment of 75% upon completion of the order and 25% after 30 days.

Bottom line: Cash flow matters

Monitoring cash flow is essential for any import business. When you’re just starting out, having a 30 or 60-day funding limit during the production of your order may not be a big deal. But as time goes on and your orders get bigger, it becomes a bigger problem.

Therefore, you should always be aware of your credit in the eyes of suppliers, make your payments on time and reliably, and participate in relationship-building activities such as visiting suppliers.

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