How to Pay Chinese Suppliers: A Guide for Malaysian SMEs

The simplest way for a Malaysian SME to pay Chinese suppliers is to hold offshore RMB (CNH) in a multi-currency account and pay suppliers directly, which cuts out bank intermediaries and high FX markups.

Knowing how to pay in China is crucial when sourcing affordable, high-quality goods. Using the wrong method can lead to high costs, delays, or disputes. Whether you’re a business owner, a foreigner paying in China, or even a tourist learning how to pay in China, your choice depends on order size, supplier trust, and convenience.

This guide compares popular payment methods to send money to China, currencies, risks, and costs, and explains how services like WorldFirst can simplify the process.

Key takeaways

• For regular orders, the cheapest way to pay Chinese suppliers is to hold and send offshore RMB (CNH) from a multi-currency account, which avoids intermediary banks and a second FX conversion.
• Match the method to the order: escrow or PayPal for samples and new suppliers, direct CNH payments or a telegraphic transfer for larger orders with trusted suppliers, and letters of credit for high-value deals.
• Paying in CNH usually beats paying in USD, because your supplier receives RMB without converting again and often prices better as a result.
• WorldFirst lets you pay a supplier’s Chinese bank account in CNH, or pay 1688 suppliers through World Pay, with funds typically arriving the same day and no Chinese bank account needed on your side.
• Goods imported from China are taxed under Malaysia’s SST, not VAT or GST: usually import duty plus 5% or 10% sales tax, with a flat 10% on low-value goods under RM500.
• WorldFirst is part of Ant International and holds a Class A Money Services Business licence from Bank Negara Malaysia.

CNY vs CNH vs USD: which currency should you pay in?

Before you compare methods, it helps to understand the currency options:

• CNY (Chinese Yuan): The official currency of Mainland China. Foreign buyers typically cannot pay directly to CNY bank accounts unless specific settlement arrangements are made.
• CNH (Offshore RMB): A version of the Chinese Yuan designed for cross-border payments. CNH is regulated offshore and ideal for international businesses.
• USD (US Dollar): Still widely accepted by Chinese suppliers, though may carry higher FX conversion costs.

Tip: If you’re trying to import wholesale products from China or setting up a viable cross-border payment system, many Malaysian SMEs benefit from negotiating in CNH to reduce FX risk and simplify supplier-side processing.

Quick summary: Which payment method suits my business?

10 ways to pay Chinese suppliers (with pros, cons, and acceptance)

1. Multi-currency cross-border transfers

Many multi-currency accounts in Malaysia, including WorldFirst allow Malaysian SMEs to hold, manage, and pay in CNH or USD. Payments go directly to the supplier’s offshore CNH account, avoiding unnecessary intermediaries. You convert your funds to CNH once, at a competitive rate, then send, so there is no second conversion eating into the payment on the supplier’s side. Suppliers receive RMB in their local account, usually the same day, and you do not need a Chinese bank account of your own. If you are sourcing on 1688.com, you can also pay 1688 suppliers through World Pay at checkout.

• Pros: Low FX rates, fast processing, excellent for frequent or high-volume importers
• Cons: The Supplier must have CNH receiving account.

2. International Telegraphic Transfer (T/T)

Also known as bank transfer to China, is still one of the most commonly used methods. Most factories structure it as a 30% deposit to start production and 70% before shipment. Because the payment can pass through two or three intermediary banks before it lands, each one can take a cut and add time, which is why a TT often costs more and moves slower than a direct CNH payment. It suits larger orders with suppliers you already trust, where bank-backed reliability matters more than speed.

• Pros: Widely accepted, bank-backed
• Cons: High fees, multiple intermediaries, slow (3–5 days), exchange rate markup

3. Letters of Credit (LC)

A letter of credit is a guarantee from your bank that the supplier will be paid once they meet every agreed condition, such as presenting shipping documents and a packing list. It protects both sides on large, high-stakes orders, since the supplier knows payment is secured and you know funds are only released when terms are met. The trade-off is cost and complexity: letters of credit involve bank fees and detailed paperwork, and they take time to arrange, so they rarely make sense below the high-value threshold, often around USD 50,000.

• Pros: Trusted by large factories and trading houses
• Cons: Expensive, complex paperwork, not ideal for small businesses

4. Alibaba Trade Assurance / Alipay Escrow

With Trade Assurance, your payment is held by Alibaba and only released once your goods arrive and match what was agreed, and you can open a dispute if they do not. It is a free buyer-protection service, which makes it a sensible choice when you are ordering from a supplier for the first time. The main limits are that it only covers orders placed through Alibaba, and the payment method you pick at checkout, a card for example, may carry its own processing fee.

• Pros: Buyer protection for purchases on Alibaba
• Cons: Limited to Alibaba platform, 5%+ fee often passed on to buyer

5. PayPal

PayPal is quick to set up and convenient for paying for samples or small test orders, and more consumer goods and electronics suppliers now accept it. The catch is cost and protection: transaction and FX fees are high for cross-border business payments, and PayPal’s buyer protection is weaker for goods bought for resale than many people assume. It is best kept for low-value orders rather than bulk production runs.

• Pros: Easy setup, fast payments
• Cons: High transaction + FX fees, limited buyer protection for business purchases

6. Western Union

Western Union moves money fast and is occasionally requested by smaller suppliers, but it is built for personal remittances, not trade. There is no buyer protection and little recourse if an order goes wrong, so it carries real risk for business payments. Use it only for small amounts with suppliers you trust completely, if at all.

• Pros: Accepted by some suppliers
• Cons: High markups, zero recourse if fraud occurs

7. Sourcing agencies

A sourcing agent in China pays suppliers locally on your behalf and can also handle quality control, consolidation and shipping. This is useful when language is a barrier, when you need someone on the ground to inspect goods, or when you are juggling several suppliers in one order. The downside is an added cost, often 5 to 10% of order value, and you are placing a lot of trust in the agent, so their integrity and track record matter.

• Pros: Local risk management, handles logistics and QC
• Cons: Additional cost (~5–10%), dependent on agent integrity

8. Cash

Cash is sometimes used for face-to-face deals in wholesale markets, where paying on the spot can unlock a small discount. But it is risky, leaves no paper trail for your accounts or for customs, and does not scale beyond in-person buying. Treat it as an exception for on-site purchasing, not a payment strategy.

• Pros: Immediate settlement, potential cash discounts
• Cons: High risk, not scalable or traceable

9. Credit/Debit Cards

A handful of suppliers accept credit or debit cards, most often for software, electronics or smaller components. Cards give you some buyer-side protection and are convenient, but acceptance is low, fees are steep, and suppliers carry chargeback risk, which is why many avoid them. They work for occasional smaller B2B purchases rather than regular sourcing.

• Pros: Buyer-side protection, convenient
• Cons: Very high fees, chargeback risk for seller, low acceptance

10. WeChat Pay/Alipay (Domestic use)

WeChat Pay and Alipay are the default for everyday payments inside China, and they work well if you are physically there or paying a freelancer or very small supplier. Support for foreign cards has improved, but these wallets are designed for domestic and personal use and usually need to be linked to a local Chinese account to use fully. For larger B2B trade from Malaysia, a direct CNH payment is more practical and traceable.

• Pros: Fast, low-cost for in-country payments
• Cons: Limited to personal transactions; not suitable for larger B2B trade

What to consider before choosing a payment method

Here are the most important factors to consider when choosing a payment method:

• Supplier relationship: New supplier? Use escrow or partial payments. Trusted supplier? Consider TT or WorldFirst.
• Order size: For small orders, PayPal or escrow may suffice. For bulk or repeat orders, CNH payments offer long-term efficiency.
• Currency preference: Always confirm the quote currency and payment expectations early.
• Documentation needs: LCs and bank wires often require commercial invoices and packing lists.
• Payment timeline: Some methods (e.g., LCs) require longer lead times.

How to pay Chinese suppliers using WorldFirst

WorldFirst is ideal for SMEs looking to make cost-effective, reliable payments to Chinese suppliers.

WorldFirst is built for SMEs that want cost-effective, reliable payments to Chinese suppliers. You can pay a supplier’s Chinese bank account in CNH directly, or, if you are sourcing on 1688.com, pay 1688 suppliers through World Pay.

To pay a supplier’s bank account directly, follow these steps.

Step 1: Add your supplier as a payee

Go to Payees, select Add new payee, then Third-party account, and choose whether the account is personal or corporate.

Step 2: Choose CNH and enter the account details

Select CNH as the receiving currency and fill in the supplier’s account details.

Step 3: Declare the nature of the payment

State what the payment is for, for example OEM production or a goods purchase, to keep the transfer compliant.

Step 4: Verify the payee

Complete SMS or authenticator verification to finalise the payee setup.

Step 5: Fund or convert to CNH

Make sure you hold enough CNH, or convert from another currency balance at a competitive rate.

Step 6: Send the payment

Go to Payments, then Send and Withdraw, enter the amount, schedule the payment for now or later, then confirm.

That is it. Your supplier receives RMB in their Chinese account, usually the same day, and you stay compliant with Mainland regulations throughout. WorldFirst is part of Ant International and holds a Class A Money Services Business licence from Bank Negara Malaysia, so your cross-border payments are handled by a licensed provider.

Save more on every transaction with the World Card

WorldFirst also offers the World Card, a multi-currency business card that lets you:

• Pay in 150+ currencies across 210 countries and territories
• Earn up to 0% cashback on all eligible business expenses
• Avoid FX fees on 10 currency balances , when spending from your CNH or USD balance
• Control team spending with multiple cards and real-time limits

Whether you’re paying for supplier invoices, ads, logistics, or e-commerce website fees, the World Card helps you track, save, and scale.

Do you pay tax on goods imported from China to Malaysia?

In most cases, yes. Malaysia replaced GST with the Sales and Service Tax (SST) in 2018, so there is no VAT or GST to pay. Instead, goods imported from China are generally subject to import duty plus sales tax, and the amount depends on the product’s HS code and value.

Here is how it usually works:

• Goods valued at RM500 or less, bought online and shipped to Malaysia, carry a flat 10% low-value goods (LVG) sales tax, collected at checkout. This has applied since 1 January 2024.
• Goods valued above RM500 are subject to import duty, where it applies, plus sales tax of 5% or 10%, calculated on the CIF value (cost, insurance and freight) and paid before the shipment is released.
• Many ecommerce goods carry 0% import duty, and China-origin goods can qualify for 0% duty under a free trade agreement such as ACFTA or RCEP, provided you have a valid Certificate of Origin.
• Imported digital services, such as ads or software subscriptions, are subject to an 8% service tax.

Rates vary by product and can change, so always confirm the current position with the Royal Malaysian Customs Department (RMCD). Knowing your landed cost before you order helps you price accurately and protect your margins.

Start paying suppliers smarter

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Unlock competitive FX rates without hidden margins, schedule multiple transfers, track expenditure, and more, all from a convenient dashboard.

Ready to grow globally? Register for a WorldFirst Account today.

Frequently Asked Questions (FAQ)

1. How to pay in China as a foreigner?

Foreigners can pay in China with WeChat Pay or Alipay. They can link an international credit card or use special “Tour Pass” wallets. For larger trade payments, Malaysian SMEs often use WorldFirst to transfer CNH or USD directly to suppliers. Cash is less common and not widely accepted.

2. How to use WeChat Pay in China?

To use WeChat Pay in China, download the WeChat app, complete real-name verification, and link a bank card. For foreigners, some cards (Visa, Mastercard) work for wallet top-ups, though functionality may have limitations. Many businesses widely accept WeChat Pay for daily purchases, and tourists often find it to be the easiest method.

3. Do I have to pay VAT on goods from China?

Yes. Malaysian SMEs that import goods from China usually pay import duties and VAT or GST. This depends on the HS code of the product. VAT rates vary by product category. Always confirm with Royal Malaysian Customs for the latest rules, as VAT obligations affect landed costs and pricing strategy.

4. What is the cheapest way to pay Chinese suppliers from Malaysia?

For regular or higher-volume orders, paying suppliers directly in CNH from a multi-currency account is usually the cheapest, because you convert once and avoid intermediary bank fees. For one-off samples or small orders, escrow or PayPal may be enough.

5. Should I pay my supplier in CNY, CNH or USD?

CNH is often the most efficient. You hold and convert offshore RMB once, your supplier receives RMB on their side, and there is no second conversion to absorb. Paying in USD works too, but your supplier may price in a buffer to cover their own conversion.

6. How do I pay a Chinese supplier without a Chinese bank account?

You do not need one. With WorldFirst you pay from your CNH balance and the funds arrive in your supplier’s Chinese bank account in RMB, usually the same day.

7. Is it safe to pay a new Chinese supplier?

Treat new suppliers carefully. Verify their track record, start with a sample or a partial deposit, and use a method with protection, such as Alibaba Trade Assurance or escrow, until trust is established. Keep all terms and chats in writing.

8. How long do payments to China take?

With WorldFirst, most payments reach the supplier the same day or within 24 hours. A traditional telegraphic transfer typically takes three to five business days because of intermediary banks.

9. Do I have to pay tax on goods I import from China?

In most cases, yes, but not VAT or GST. Malaysia uses SST, so imported goods are generally subject to import duty plus 5% or 10% sales tax, with a flat 10% sales tax on low-value goods under RM500 bought online. Confirm the exact rates for your product with RMCD.