Most Chinese building material suppliers work on a deposit-and-balance structure paid by telegraphic transfer, with the deposit released to start production and the balance released before or against shipping documents. The negotiable part is not usually the percentage — it is what event triggers the balance payment.
That trigger is the whole game. A balance due “before loading” and a balance due “against a passed pre-shipment inspection” are separated by one clause and by all of your remaining leverage.
The standard structures
| Structure | How it works | Where it suits |
|---|---|---|
| Deposit + balance (T/T) | Deposit on order confirmation, balance before shipment or against B/L copy | The default for most building material orders |
| Deposit + balance against inspection | Balance released only after inspection is passed | Best practice — the version to negotiate for |
| Letter of credit (L/C) | Bank guarantees payment against compliant documents | Larger orders, new relationships, higher-value cargo |
| Documents against payment (D/P) | Documents released by the bank on payment | Less common, moderate protection |
| Open account | Payment after delivery | Established repeat relationships only |
| Full payment in advance | Everything up front | Small orders, samples — highest risk to the buyer |
The deposit percentage varies by category, order size, customisation level and relationship history. Treat any figure quoted as a market norm with caution — ask the specific factory what they require and why, because a custom product and a standard stock item are not comparable.
What the deposit is actually for
The deposit is not a goodwill gesture. It funds raw material purchase and reserves a production slot. This matters for two practical reasons.
Lead time runs from deposit receipt, not from order confirmation. A supplier quoting a production time counts from the day the money lands. A deposit delayed by a week delays delivery by a week, and often by more if the production slot is reallocated.
Custom products carry higher deposits for a reason. Bespoke tooling, a custom colour batch or a non-standard profile has no resale value if the order is cancelled. A factory asking for a higher deposit on a fully custom item is managing real exposure, not being difficult.
The balance trigger — the clause that matters
Three common versions, in descending order of buyer protection:
1. Balance against passed inspection. Inspection happens, a report is issued, non-conformances are corrected, then the balance is paid and the cargo ships. You retain leverage exactly when you need it. This is what to ask for.
2. Balance against B/L copy. Cargo is loaded, the supplier sends a copy of the bill of lading, you pay, the original B/L is released. You cannot collect the goods without the original, and the supplier cannot get paid without shipping. Balanced, but the inspection has to be separately contracted or it does not happen.
3. Balance before loading, no inspection clause. You pay in full, then find out what you bought. Avoid.
The difference between (1) and (3) is a single sentence in the proforma invoice. Ask for it before the deposit, not after.
Related: Pre-shipment inspection for construction materials · What is a China quality inspection report and how to read one
T/T versus L/C
Telegraphic transfer (T/T) is a bank wire. Fast, cheap, universally accepted, and offering no inherent protection — once sent, it is gone. Its safety comes entirely from the structure around it: how much is at risk at each stage, and what has to happen before the next tranche is released.
Letter of credit (L/C) is a bank undertaking to pay against compliant documents, governed by the ICC’s UCP 600 rules published by the International Chamber of Commerce. It shifts the payment obligation to a bank and gives both parties document-based certainty. The costs are issuing fees, amendment fees, slower processing, and a hard requirement for document accuracy — a discrepancy as small as a misspelled product name can cause rejection.
| T/T | L/C | |
|---|---|---|
| Cost | Low | Higher — issuing, advising, amendment fees |
| Speed | Fast | Slower |
| Buyer protection | Structural only | Document-based, bank-backed |
| Supplier acceptance | Universal | Varies; small factories may decline |
| Document discipline | Low | Very high — discrepancies cause rejection |
| Suits | Most orders | Large orders, new relationships |
A practical middle path used on larger construction material orders is T/T for the deposit and L/C for the balance — the supplier gets working capital, you get document control on the larger tranche.
Protecting yourself without changing the payment structure
Even on standard terms, several controls cost nothing:
- Pay to the company account, in the company’s registered name. A request to pay a personal account, an account in a different name, or an offshore account belonging to a third party should stop the transaction until it is fully explained. This is the single most common vector for payment fraud in China trade.
- Verify bank details out of band. Confirm any change of bank details by phone or video call with a known contact, never by replying to the email that requested the change. Compromised email accounts and intercepted invoices are a persistent problem across international trade.
- Tie the balance to an inspection report by name and reference number in the proforma invoice.
- Match the invoice to the licence. The company on the proforma invoice should be the company on the business licence and on the export documents. Mismatches make claims very hard.
- Keep the deposit proportionate to what the supplier actually has to outlay before production.
Related: How to read a Chinese business licence before you order · How to spot a fake or scam supplier on Alibaba
What a proforma invoice should state
The proforma invoice is the commercial spine of the order. It should carry:
- Full registered company name and address of the seller
- Buyer details
- Itemised product lines with specification references
- Unit price, quantity, total, currency
- Incoterm and named place
- Production lead time, stated from deposit receipt
- Payment terms with the balance trigger stated explicitly
- Packaging specification
- Bank details, in the registered company name
- Validity period
If the proforma invoice does not include the balance trigger and the packaging specification, it is not finished. Ask for a revision rather than paying against an incomplete document.
Currency, and who carries the risk
Most China building material trade is quoted in USD. Some suppliers will quote CNY, and some buyers prefer EUR. Whoever is not transacting in their own currency carries the exchange risk over the production period — which on a long lead-time order is not trivial.
Two practical points: fix the exchange basis in the proforma invoice rather than leaving it to the payment date, and confirm who absorbs bank charges on the transfer. Intermediary bank fees deducted mid-route routinely cause small shortfalls that suppliers then chase.
Payment terms across a multi-supplier project order
On a project BOQ sourced from six or eight factories, payment terms become an administrative problem in their own right: eight deposits, eight balance triggers, eight sets of bank details to verify, eight opportunities for a fraudulent payment instruction.
Consolidating this is a real part of what a sourcing partner does. JEES Global, a construction material sourcing company in China, coordinates the commercial terms across the factories in an order so the buyer manages one payment structure rather than eight, with the balance release tied to inspection rather than to loading. Company details and registration are on the About page; the BOQ sourcing process sets the terms out per line at quotation stage.
Nothing in this article is legal, financial or trade-finance advice. Payment structures, currency controls and banking requirements vary by jurisdiction — confirm your own position with your bank and, where the sums warrant it, your legal adviser.
Frequently asked questions
Is a deposit safe to pay to a Chinese supplier?
It is standard practice and normal. The risk is not the deposit itself but the verification behind it — whether the company is real, whether the bank account matches the registered company name, and whether the balance is tied to an inspection.
Can I pay 100% after delivery?
Very rarely on a first order. Open account terms are extended to established repeat customers after a payment history exists, not at the start of a relationship.
What is the safest payment method for a large order?
A letter of credit shifts the payment obligation to a bank and ties release to compliant documents. It costs more and moves slower, which is why it is used on larger orders where the protection is worth the friction.
Should I use an escrow or platform payment service?
Platform escrow services exist and can suit smaller transactions. For project-scale building material orders they are usually impractical, and structured T/T with an inspection-linked balance is the more common route.
What if the supplier asks me to pay a different company?
Stop and verify directly by phone or video with a known contact. There are legitimate reasons — an export agent handling the declaration, for instance — but this request is also the most common form of payment fraud in China trade and must never be accepted on the strength of an email alone.
Discuss commercial terms
Send your material list or BOQ. Quotations come back with payment terms, deposit structure and the balance trigger stated per supplier, before you commit to anything.