China is the often the first place we consider when looking to import goods. Be it for your eCommerce site, to sell on Amazon or similar marketplaces, or imports for a traditional brick and mortar business. However, knowing exactly how to pay your suppliers in China can be slightly confusing and can vary depending on your supplier and where you are sourcing your products from.
In this article we take a look at two of the most common supplier payment types – a local business importing who needs to simply make a supplier payment and an eCommerce business who is using their foreign currency sales revenue to pay suppliers on Alibaba.
Businesses Importing Goods to ANZ – Get a Great Exchange Rate on Supplier Payments
Paying a foreign supplier invoice for imports from China is extremely common amongst businesses in Australia and New Zealand. WorldFirst are experts in dealing with such payments, below we will explain a common process for this.
USD invoices are common with Chinese suppliers when doing business with Australian and New Zealand clients. WorldFirst will be able to make payments direct to your supplier’s onshore account paying in USD. These payments can be completed in less than two business days and at a great exchange rate.
We are starting to see more businesses pay their suppliers in CNH for the comparative advantage and often it is cheaper to pay in CNH.
WorldFirst will pay the invoice in CNH, before the supplier’s bank then converts it to CNY based on the People Bank of China rate, plus their margin. This margin charged is generally cheaper than that on USD, therefore there we have noticed an increase in CNH/CNY invoices. Generally these funds will also be received in 2 business days.
An important thing to note if you do receive a CNY invoice is to ensure you also receive a Chinese National Advanced Payment Systems (CNAPS) Code from your supplier as they are required for these payments. Your supplier can get this from their bank.
How to pay suppliers with WorldFirst
- Register for a free WorldFirst Business Account online.
- We will ask you a few questions to get to know your business and may request documents based on your business structure.
- You will have access to our WorldFirst platform and will receive a dedicated account manager.
- When you are ready to make a payment to your supplier, either do it online or over the phone through your account manager.
Online Sellers – Pay Suppliers Using Your Foreign Currency Sales Revenue
Online sellers commonly source their products through Alibaba, one of the safest ways to make this payment is through Alibaba Trade Assurance. Similarly to businesses importing, you may receive invoices in USD or AUD. However, there are minor differences as the payment will go through Alibaba as part of Alibaba Trade Assurance.
World Account allows your business to receive funds in 10 different currencies, all with local bank account details. These include GBP, USD, EUR, CAD, JPY, AUD, SGD, NZD, HKD & CNH. For example, this will allow you to receive payments from Amazon USA or your eCommerce store and make payments to your supplier in China in USD. We call this a same-currency payment.
How to pay your Alibaba supplier using your USD sales
- Register for a free World Account online.
- Source your products from Alibaba, and select Alibaba Trade Assurance as your payment option.
- You will have the option of 3 methods to pay the supplier; Online Banking (DD), Cheque, Wire Transfer/TT.
- Select Wire Transfer/TT which will prompt the supplier’s bank details.
- If you would like to make a payment through WorldFirst’s online platform, you will need to add the provided bank details as a beneficiary. You can also choose to call or email your account manager and they will happily get this payment through for you.
- If you have an existing storefront or are already selling on Amazon USA and receive funds in USD, you can simply make a same-currency payment direct from the account.
Speak to an Expert!
WorldFirst have been helping businesses save on their Chinese supplier payments for over 15 years! Contact our local team or visit our website for more information on how you can save on your international payments.
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These comments are the views and opinions of the author and should not be construed as advice. You should act using your own information and judgement.
Whilst information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed.
All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice.
Please consider FX derivatives are high risk, provide volatile returns and do not guarantee profits.