How Should You Pay When Importing From China

Payment Options

When we asked entrepreneurs if they wanted a comprehensive course on how to import from China, they all said yes. The biggest concern they had was payment. How should they pay their supplier. So we decided to make The truth is that there are many scammers online. And at the end of the day the only real way to protect yourself is to develop a relationship with your supplier and have that trust. Because let’s face it, if you send 10,000 USD to a supplier half way around the world, what is really stopping them from taking you money and disappearing?

A key rule is to always purchase a small order first. Do a test payment to see how the suppler handles the orders.  Make sure you do your background check and verify them as a legit supplier. Here is a list of of payment methods you should use when making payment overseas.



You may think that people who don’t have PayPal are scammers. The truth is that it is kind of difficult to open a PayPal account in China. But many supplier do accept it. so if you can find those suppliers you are good. PayPal is great because they have an awesome depart for scams and you can open up a dispute. While you may not always win, you are more protected with PayPal then sending a money order or doing Western Union. They have shifted more to a buyer friendly structure. So the power is on your side.



What is escrow? With escrow you send the money to a 3 rd who holds the funds. the funds are only release when you confirm that y0u have received your items and they are satisfactory. This is the safe payment method because you pay when you get your product. AliPay is Alibaba’s escrow service. I have used it a couple times to get some watches and to do big order of adhesive collar strips. No problems.

If a supplier doesn’t do escrow or just accepts Western Union or Money Gram, it is possible you can pay and not hear from them again. If someone is selling you Beats by Dre and you can only pay them with wire transfer, you are going to get scammed. No if, ands, or buts about it. For one they should n’t be selling a branded product and not wanting to give you that extra layer of protection is a sure tell sign of a scammer.

Wire Transfer


So with this method of payment you are send money from your bank account to a supplier’s bank account. Sounds a little fishy? Well it depends. To start if offers NO protection from scammers.

You should only do this with suppliers you trust. When we did the Alibaba Crash Course, I had a chance to interview Ajit Nawalkha of Mindvalley Productions. He imports and manufactures for people. He said that he does wire transfers with suppliers now who he has done business with for long periods of time. The wire transfers are automatic.

These transfers take 3-5 business days and the transfer fees with vary from bank to bank. Fee will vary depending on your bank. You should alway be sending money to a business account, never a personal one.

Credit/Debit cards


Think of this as another layer of protection. Its one of the safest ways to operate. Why? Because you are using other people’s money. And banks don’t play about their money.

Chinese companies may be a little hesitant, but American companies usually won’t have a problem with it. Legit companies who accept credit cards, more than likely haver a merchant account and had to go through verification to get it.

There are a couple reasons you may want to use credit cards when dealing with suppliers. One is the added layer of protection. If you use this with PayPal, you have two layers of protection. Most companies will do a charge back if something goes wrong with your order. So the advantage is on your side. next advantage is that you can use points. Edmund recently realized that he has tons of points from all the order he has made over the years.


Look out for taxes when importing from China. Like regular income taxes, you can be so caught up that you “forget” it. The taxes you will deal with

Import Duty

A tax collected on imports and exports by Customs of a country. It is based on the value of goods or the weight, dimensions, or other criteria of the item such as its size. It is also called tariff or import tariff. This tax is used to raise state revenue.

These import duties vary based on the product. Check the rates with

Value Added Tax (VAT)

A type of consumption tax that is placed on a product whenever value is added at a stage of production and at final sale. Value-added tax is most often used in the European Union.

Here is an example. A computer is built by a company in Europe the manufacturer is charged a value-added tax on the suppliers purchased to produce the computer. Once the Computer reaches store display, the consumer who purchases it must pay the value-added tax. VAT is the value of the good + the shipping + the import duty. 

The purpose of VAT is to generate tax revenues to the government similar to the corporate income tax or the personal income tax. A VAT is like a sales tax the consumer sees. It differs from the sales tax in that, with the later, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. This tax is paid every time an order is made.

To put it in to perspective, VAT was implemented in China in 1984. In 2007, the revenue from VAT was 15.47 billion yuan ($2.2 billion). It made up 34 % of China’s total tax revenue for the year. Thats a lot of cash!

Sources: Wikipedia and Investopedia

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