Minimizing Risk through Payment Terms Negotiation with Chinese Suppliers Factors to Consider with Negotiating with Suppliers in China

In the last post we looked at 8 payment methods you can use to pay your Chinese suppliers. In this post, I will look at “Payment Terms” that go along with the choice of payment method & factors influencing the negotiation of payment terms.

Payment Terms

It is important not to confuse “Payment Terms” here with “Trade Terms” (FOB, CIF, etc.). “Payment Terms” include:

  • The choice of payment method
  • The timing of the payment
  • Whether there is a pre-payment required & the percentage of the pre-payment

The combination of the factors above dictates the proportion of risk each party takes & the negotiation power buyers have in case disputes arise. Ideally, in every transaction there would be a 50-50 sharing of risk but in practice, that is hardly the case.

payment terms

Continue reading