In this guide we’ll go over the basics of using telegraphic transfer, or “T/T” bank wire transfers to pay your Chinese suppliers. While T/T is considered to be a universally accepted and relatively secure method of payment, it does require some close attention to detail in order to make sure your money gets where it needs to go. Let’s face it, any transfer of large sums of money halfway across the world and through language and cultural barriers is going to expose the payer to some amount of risk. By following these steps, readers can help minimize the risk of delaying payment or being victimized by fraud.
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Chinese business names tend to be long — too long even to fit in many Western online banking text fields. Take
Shenzhen XinYingxin Electronics Technology Co., Ltd. factory for example. Two potential hazards arise when addressing a T/T to a company with a name like this.
– Instead, use the address fields to fill in whatever part of the payee’s name was cut off.
It’s common for unsuspecting buyers to be swindled by scam artists posing as their supplier. They set themselves up to receive payment for your order “on behalf” of the factory management. However, in reality, they have no actual relationship with your supplier. Once they receive your payment, they’re riding off into the sunset, never to be heard from again. Meanwhile, your real supplier is wondering why you haven’t paid for your order yet.
On the other hand, whereas some inexperienced buyers make the mistake of being too trusting, many others make the mistake of being too suspicious. These buyers assume everybody is out to get them, and even legitimate, licensed export agents or intermediaries are treated like thieves. Whereas these more suspicious buyers may be less likely to cheated, they’re much more likely to unnecessarily delay the payment process, causing frustration and profit loss on both sides of the deal.
– In other words, if the Shenzhen XinYingxin Electronics Technology Co., Ltd. instructs you to wire payment to the Hong Kong XinYingxin Electronics Technology Co., Ltd., there’s no need to be overly suspicious.
– But if you’re instructed to pay into an offshore account whose name does not resemble the factory with which you’ve been doing business already, this should raise a red flag.
– Even if you don’t yet have specific plans to send payments to China on a regular schedule, there’s no harm in telling your bank that you plan on using this service more in the future. It’s not unusual for a bank to offer lower transfer rates in exchange for even just the chance at a more long term business arrangement.
– Regardless of how you and your supplier plan on handling these fees (will you pay them all? Will they? Will you pay the outbound fees and they pay the inbound fees?), make sure it’s agreed to in writing.
– In most cases, only the outbound bank will have access to the fee schedule of the intermediary bank. So if your agreement requires the supplier to take on any part of this cost, you will probably have to provide them with documentation of it, because they likely won’t be able to look it up from their end.