Does your company ever experience difficulties paying suppliers in China?
So you have suppliers in China who need to be paid? There are a number of methods to pay them. However, some are safer, simpler and more cost effective than others. According to the World Bank, China is one of the top receiving countries of international remittances.
Here are some tips to help you find the most cost effective, fast and secure option for paying suppliers in China:
Check the Chinese currency rules
It is very important to know that there are a number of restrictions relating to receiving money in China. Before making your transfer, always check with your beneficiary in China about the currency in which he or she is allowed to accept transfers in. i.e. USD, HKD, CNY, CNH etc.
Compare the exchange rates as well as the transfer fees
You should find a provider that offers you a competitive exchange rate because the exchange rate will affect the final amount of money to be received by your beneficiary. It is also worth noting, in general, sending larger quantities gives you a better exchange rate. All money transfer providers generate revenue on each transfer. In most cases, this fee is a fixed amount as well as a profit margin on the exchange rate. In many foreign exchange bureau, the margin could be as high as 10% – 15% of the amount of money you want to send to China (depending on the amount and foreign currency denomination).
Pay by local bank transfer (use the cheapest payment method)
You should know that sometimes there are additional costs associated with the type of payment method you use. For example, if you make a payment by credit card, you’ll pay a commission of circa 1.5% – 3%. Whereas with some UK debit cards, you can avoid these additional costs. However, one of the best methods to send money to China is through a local bank transfer. You should ensure that your supplier has that option available, a local wire transfer. This is how TransferMate operates, utilizing a local baking network, cutting out intermediary banks and thus eliminating international wire fees.
Use a registered Payments Institution
To ensure your transactions are safe, you should always use an institution that is registered as a Payments Institution. For example, in the UK that means being registered with the FCA. This simply means that their registration applies across the EU (Post-Brexit this will be a major issue for EU payments institutions who are currently based in the UK). TransferMate is positioned well for this situation, so post-Brexit trading will remain as normal.
Look for the company’s refund policy for “unexpected expenses”
When sending funds to China, some intermediary banks will charge you additional charges. So, you should be choosing an institution that ensures full reimbursement of these unexpected expenses. When importing from China or from any country for that matter, there isn’t a “de facto” payment method as such and your choice will depend on several factors, most importantly being the final amount funds to be sent and the time frame involved.
Below, are a number of payment methods commonly used by companies:
- International Wire Transfer (TT)
- Letter of Credit
- Credit Card
- Online Escrow
- Sourcing Companies/Agents
- Wire Transfer via a Payments Institution (like TransferMate)
How can TransferMate help improve your payments to China?
- Vast experience in Chinese payments
- Due to TransferMate’s Global Regulation and extensive banking network, we can help your company send funds into China.
- At a time when other payment providers have withdrawn from sending funds into China, TransferMate continues to provide the service for clients, opening up a huge market potential for new clients sending funds to China.
Speak with Balwinder Singh today to find out more or get started by creating an account with us.
Balwinder Singh, National Business Development Manager.
Phone: Australia: 02 9037 2735 | NZ: 09 984 9400 | Mobile: 0407 303 433
We also run Webinars on Chinese Payments. To join a Webinar, please contact Anthony Mulligan today!
Phone: Ireland: 01 635 3700 | UK: 0207 659 9185 | USA: 312 924 3737