Payment Terms for Importing from China: T/T, L/C, Deposits, and Tooling Milestones

The standard payment terms for importing from China are a T/T (telegraphic transfer) with a 30% deposit against order confirmation and the remaining 70% before shipment — or, on a cleaner structure, against a copy of the bill of lading. Use a letter of credit (L/C) for larger first deals where the bank relationship replaces trust. Move to Open Account (OA) only after three to five clean orders prove the relationship.

This guide compares the five payment methods you will meet in practice, shows how to structure tooling payments by milestone, and lists the red flags that separate safe terms from risky ones.

Compare the five payment methods you will meet

Two practical notes:

• Balance-on-B/L-copy is the structure to ask for. The bill of lading exists only after the cargo is on the vessel, so your final payment releases after loading — the single biggest buyer protection available without bank fees.
• L/Cs cost money on both sides. For a USD 20,000 order the fees eat the margin; for a USD 100,000 first deal they are cheap insurance. Ask both banks before you propose one.

Structure the tooling payment by milestone

A die is an asset, and its payment should follow its progress:

1. 30% at order — starts engineering and steel purchase.
2. 40% at die completion + T1 approval — the die exists and the first-article report passed. This gate is the same one in our T1 sample guide.
3. 30% at final inspection of the pilot run — the parts ship to you before the last payment.

If a supplier refuses milestone payments on tooling and wants the full die price upfront, treat that as a pricing signal: the cost guide explains where tooling cost actually comes from, and it is nowhere near as “sunk” as 100% upfront implies.

Read the fine print in the deposit clause

Your deposit covers three things — check that the contract names them:

• Material booking (coil/sheet reserved against your order)
• Die engineering and steel (in the case of NRE)
• Capacity reservation (press time held on the schedule)

A deposit that is “non-refundable under any circumstances” is not a deposit, it is a prepayment. A deposit that is refundable against the first mass order, or credited at cancellation, is a normal deposit. That one sentence in the contract is the difference.

Avoid the red flags in payment terms for importing from China

• 100% advance with no milestone tied to deliverables
• Requests to wire to a personal account or a company with a different name than the contract
• Mid-order changes of bank account (“our old account was closed”)
• No written contract, quote only
• Price suddenly 30% below the normalized market range — the risk is being priced in somewhere else

Verify every banking detail by phone on a number from the contract, and keep the wire reference matching the PO number. Fraud on trade wires is a real, documented category of loss; the countermeasures are boring and cheap. The international payment instruments behind these structures are published by the ICC.

Protect yourself without slowing the program

• Put the milestone schedule in the PO, not in chat history
• For first deals, consider a third-party inspection before the balance releases
• Keep the bill of lading copy as the balance trigger in writing
• Escalate disputes to the contract’s governing law early — not after the vessel sails

Xinjiuxinji quotes 30/70 on B/L copy as the standard, with tooling paid by the milestone schedule above, and will adjust for L/C on first deals over USD 30,000. Send the order value and structure you need — we reply within 2 hours. You can reach the team through our contact page; if you are still deciding between offers, run them through the quote comparison worksheet first.

FAQ

What are the standard payment terms for importing metal parts from China?

T/T with a 30% deposit and 70% balance before shipment or, better, on a copy of the bill of lading. L/C covers larger first deals; OA arrives after a proven track record.

Is a 30% deposit normal?

Yes, it is the market norm. It covers material booking, die work, and capacity reservation — check that the contract names what it covers.

Should I pay the balance before or after shipping?

Ask for balance on bill of lading copy. The B/L exists only after loading, so your final payment releases after the cargo is on the vessel.

When is a letter of credit worth the bank fees?

On first deals, roughly above USD 30,000–50,000, or whenever the seller does not yet know you. Below that, T/T with inspection covers most of the risk more cheaply.

Can I negotiate payment terms after five orders?

Yes — most relationships move to 30/70 on OA or L/C usance with 30–60 day terms once the order history is clean.

What should I do if a supplier asks for a 100% advance?

Treat it as a red flag on a new relationship. Either move the structure to milestones, verify the supplier harder, or re-quote — the quote comparison worksheet shows how to benchmark the alternative.