How to pay Chinese suppliers from South Asia
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Take a look at the main payment methods for paying suppliers in China, including the World Account
Key takeaways
- Paying Chinese suppliers from South Asia involves navigating currency barriers, conversion costs and slow settlement times
- Common payment methods include bank wire transfers, escrow, international cards and multi-currency accounts–each with different fee structures and risk profiles
- Most Chinese suppliers prefer to be paid in Chinese yuan, but China operates two currency codes: CNY (onshore) and CNH (offshore)
- World Pay, supported by WorldFirst, is the authorised international payment provider for 1688.com, letting businesses pay suppliers directly in CNH without a Chinese bank account
For importers and e-commerce businesses in Pakistan and Bangladesh, sourcing products from China is a common part of the supply chain. But making routine international payments while ensuring your profits stay protected can be rather challenging.
Chinese suppliers typically expect payment in yuan or USD. For businesses paying from local currency accounts, this means converting PKR, BDT or INR into yuan or USD every time a payment is due. The total cost of each conversion often exceeds what the exchange rate alone suggests, once FX markups applied by traditional banks and deductions from intermediary banks in the payment chain are factored in.
Settlement times stretching up to seven business days add a further layer of complexity for businesses that are already managing tight inventory timelines.
So what is really the best way to pay Chinese suppliers?
This guide covers the main payment methods available for paying Chinese suppliers along with the costs and risks associated with each.
Why paying Chinese suppliers from South Asia is complicated
For importers and e-commerce sellers in Pakistan and Bangladesh, paying a Chinese supplier is not always as simple as initiating a domestic bank transfer. There can be several challenges, including:
Currency barriers
Chinese suppliers typically expect payment in yuan or USD. For businesses paying in yuan, it is important to understand that China operates two versions of its currency–CNY (onshore yuan, used within mainland China) and CNH (offshore yuan, used for international transactions). Most international buyers settle supplier payments in CNH or USD when paying from outside China.
Conversion costs
Every cross-currency payment carries a conversion fee. Traditional banks apply their own markup over the mid-market rate, and intermediary banks in the payment chain can deduct additional fees before the funds reach the supplier’s account.
Slow settlement
International wire transfers to China can take anywhere from three to seven business days, depending on the payment route and the number of intermediary banks involved. For businesses managing tight inventory timelines, that delay can disrupt supply chains.
Platform restrictions
Major sourcing platforms like 1688.com may not accept all kinds of international cards.
Different ways to pay Chinese suppliers from South Asia: Payment methods compared
Bank wire transfers
Bank transfers are the most traditional method for paying Chinese suppliers. The process involves sending funds from your local bank to the supplier’s Chinese bank account, usually via SWIFT, in either USD or CNH.
Banks charge a per-transfer fee, intermediary banks may deduct additional amounts, and the exchange rate applied typically includes a markup over the mid-market rate.
Escrow
Escrow services hold the buyer’s payment with a third party until the goods are received and confirmed. This reduces the risk of paying for products that never arrive or arrive in poor condition.
For instance, Alibaba, the leading B2B marketplace, offers Trade Assurance escrow which works as protection for buyers. The payment is held in an escrow until the buyer confirms receipt. If there is a dispute, the platform assists with resolution. However, escrow is typically limited to suppliers on the specific marketplace offering the service, and processing fees and conversion charges apply on top.
International credit or debit cards
Some suppliers accept card payments in USD, and cards can be used on marketplaces like Alibaba. The advantage is speed and convenience for smaller transactions.
The disadvantage is cost. International card transactions attract foreign transaction fees, often ranging from 1% to 5%, plus the card issuer’s exchange rate markup. For larger orders, these percentages translate into meaningful amounts. Cards are also not accepted on 1688.com for international buyers.
Multi-currency account
A multi-currency account lets businesses hold funds in several currencies, including CNH and USD, and pay suppliers directly in either currency without routing through intermediary banks or paying double conversion fees. Rather than converting local currency into USD or CNH at the time of payment, businesses can hold balances in advance and convert when exchange rates are more favourable, giving them more control over the total cost of each supplier payment.
How to pay Chinese suppliers with WorldFirst
WorldFirst is an international payments provider that’s focused on simplifying cross-border supplier payments for businesses in South Asia. The World Account is a multi-currency account that lets businesses send, receive, and hold funds in 15+ currencies.
Here’s how it helps streamline payments to Chinese suppliers:
Pay in CNH, CNY or USD
The World Account lets businesses pay Chinese suppliers directly into their business or personal bank accounts in CNH, CNY or USD. Businesses can hold balances in these currencies and pay suppliers in whichever currency they prefer.
Direct payments on 1688.com
For businesses sourcing from 1688.com m China’s largest B2B wholesale marketplace, World Pay enables direct payments from the World Account balance in just a few clicks. World Pay is the authorised international payment provider for 1688.com, meaning businesses in South Asia can access the platform and pay 1688 suppliers without a Chinese bank account.
Fast settlement
Payments into China through WorldFirst can arrive within hours, or within seconds if the supplier also holds a World Account, skipping the three to five business day wait typical of traditional bank wire transfers (cut off timings apply).
Competitive real-time FX rates
Businesses can convert local currency to CNH or USD in real time, 24/7, at competitive exchange rates, and pay suppliers directly from the converted balance.
FAQ
Do I need a Chinese bank account to pay suppliers in China?
No. Businesses in Pakistan and Bangladesh can pay Chinese suppliers without a Chinese bank account. WorldFirst’s World Account includes a CNH local currency account for holding offshore yuan, and World Pay enables direct payments to 1688 suppliers in CNH.
What is the difference between CNY and CNH?
Both are Chinese yuan, but they operate in different markets. CNY is the onshore yuan used within mainland China. CNH is the offshore yuan used for international transactions outside mainland China. When paying Chinese suppliers from South Asia, most cross-border payments are settled in CNH. WorldFirst’s World Account includes a dedicated CNH balance for this purpose.
How long does it take to pay a Chinese supplier through WorldFirst?
Payments to 1688 suppliers through World Pay are processed instantly. For non-1688 supplier payments sent from the World Account, processing times depend on the payment route and currency, but are typically faster than traditional bank wire transfers.
This article is intended for informational purposes only and does not constitute legal advice or professional advice. This article should not be regarded as constituting an offer or a solicitation to buy or sell any regulated or financial products or services. WorldFirst makes no representations or warranties regarding the accuracy, completeness, or applicability of the content, and readers are encouraged to consult with legal professionals or other professionals for advice tailored to their specific situation. WorldFirst does not guarantee the accuracy and completeness of this article and expressly disclaims any and all liability to any person in respect of the consequences of anything done or omitted to be done wholly or partly in reliance on this article.
Hu Wenzhan is the Emerging Markets Country Manager at WorldFirst. He brings expertise across Fintech, Payments, Banking, New Markets Growth to help clients grow their global business.
Hu Wenzhan
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