China payments made easy

The same as when purchasing goods from any foreign company, it’s important to do your research when considering a new supplier. You should also find out about any licensing and import obligations. China offers an abundance of affordable supply options. These can be high quality and supplied at scale – be it large or small – by reliable suppliers that are keen to grow their own businesses.

China’s currency is officially called the renminbi.

Renminbi comes in two forms: onshore and offshore. Onshore renminbi (CNY) is used in mainland China and offshore renminbi (CNH) outside China.

The yuan is actually the unit of account. It was first issued by the People’s Bank of China in 1948. While the two terms are used interchangeably, the relationship is similar to that of sterling and pounds in the UK.

Yes, but if you’re outside of China you can only purchase CNH against EUR. CNH can be traded freely against other currencies in the international exchange markets, just like USD or GBP or EUR, so it’s a popular option for paying suppliers in China.

The main differences between the CNH and CNY are the regulations and restrictions imposed upon them and their use. Transactions in CNY are restricted to onshore use while CNH isn’t. While the local value of CNY is dictated by the People’s Bank of China, CNH is freely tradeable like most other currencies. This can lead to the value of the currencies diverging and on any day of the week an offshore yuan (CNH) being valued by the markets as worth more or less than one available on the Chinese mainland (CNY).

A Chinese seller may not have the required regulatory documents in place in China, i.e. an export licence. This often results in returned CNH payments, as the China’s State Administration of Foreign Exchange (SAFE) will block the payment. Always check with your supplier to ensure they’re licensed to export goods and that they can provide the necessary documents to their bank in China.

More information about SAFE

According to SAFE guidelines, when a corporate (the beneficiary) handles the foreign exchange receipts and payments for goods trades, the bank may inquire about the corporate directory information and classification information.

This is conducted via the SAFE system in accordance with the business development principles of “know your customers”, “know your business”, and due diligence and the provisions of these guidelines to confirm the authenticity, rationality and logic of the receipt and payment.

The bank may confirm, but are not limited to: nature of the fund, the transaction entity, amount and other elements listed in the transaction document are consistent with the foreign exchange business.

More information about SAFE

Pre-payment (payments before the export of goods): sales contracts, commercial invoices, etc. The bank may require receipt of the final payment within 30 days and the corresponding export certificate.

Post payment (payments after the export of goods): sales contract, commercial invoices, bill of lading, customs declaration and other information required by the bank.

Note: The above isn’t a comprehensive list. Please check with your supplier to ensure you’re supplying all necessary documentation.