Home / Guides / Payment terms for a first order from China
Payment terms for a first order from China
Updated 2026-10-18 · China
Payment terms are usually negotiated as a percentage. The percentage matters less than the structure around it: who receives the money, what evidence releases the balance, and what happens if the goods fail inspection. A first order with friendly percentages and no document control is riskier than a conservative structure with clear release conditions.
In short
- The account name is the first term. If the beneficiary is not the contracting entity, the rest of the terms do not protect you.
- The balance should be tied to documents or inspection, not to a promise. Decide what evidence releases it before production starts.
- Inspection before shipment is a payment term. It is the point where you can still refuse; after the vessel sails, you are in claim territory.
- Incoterms split cost and risk. EXW, FOB and CIF put different parties in control of carriage and insurance.
The common structures
| Structure | How it works | Where it protects you | Where it does not |
|---|---|---|---|
| Deposit + balance before shipment | Deposit to start, balance when goods are ready | Simple, common for first orders | You pay before you have seen the goods unless inspection is agreed |
| Deposit + balance against documents | Balance released against copy of bill of lading | You see shipment evidence before paying | The documents can be right while the goods are wrong |
| Letter of credit | Bank pays against compliant documents | Document discipline and bank involvement | Costly and slow; documents must match exactly |
| Escrow / platform payment | Funds held by a third party | Neutral release mechanism | Not all suppliers accept; fees and disputes process |
We do not publish percentages, because the right structure depends on the order, the factory and the relationship. Ask any supplier to state the structure in writing before production.
The four controls that matter more than the percentage
- Entity match: contract party, invoice issuer and bank beneficiary are the same legal entity.
- Release condition: the balance is released against a named document or a passed inspection, agreed in advance.
- Inspection window: third-party inspection happens before the balance is released and before the vessel cut-off.
- Title and documents: who holds the bill of lading, and when the original is released to whom.
Incoterms in one paragraph
EXW puts almost everything on the buyer; FOB puts the goods on board and the main carriage on the buyer; CIF has the seller arrange carriage and insurance to the destination port. The term changes who controls booking, insurance and the documents — which is why it is a payment term as much as a shipping term.
How to lower first-order risk
- Keep the first order small enough to survive if it goes wrong.
- Approve a sealed sample and inspect the lot against it before the balance.
- Pay only to the corporate account of the contracting entity.
- Agree in writing what happens on a failed inspection: rework, reject, re-inspect, who pays.
- Keep every document — invoice, packing list, bill of lading, inspection report, certificates — in one file.
Categories this applies to
Electric oven · Air fryer & multi-cooker · Stand fan · Induction cooker
Buyer questions
Is a deposit always required for a first order?
Usually, because the factory funds materials and production. The useful negotiation is not whether there is a deposit but what protects the balance: inspection, documents and account control.
Is a letter of credit worth it for a small first order?
Often the bank costs outweigh the protection at small values. For larger first orders it can be the right tool, provided the document requirements are drafted carefully.
Can I pay the balance after the goods arrive?
Some suppliers accept it, most do not for a first order. If you need that structure, expect to pay for it in price or to provide a stronger guarantee.
What if the supplier asks for payment to a third-party account?
Stop and get an explanation in writing. Paying a party that is not the contracting entity removes most of your legal recourse. If there is a legitimate reason, the contract should name it.
Who arranges insurance under FOB?
Under FOB the buyer arranges the main carriage and insurance. Under CIF the seller arranges carriage and insurance to the destination port. Check the term before you assume cover exists.
Primary sources
Checked 2026-10-18. Rules change; verify with the authority before you ship.
Ask about your product
Not sure whether this applies to what you are buying? Send the specification and we will tell you what has to be in whose name — request a quote, or email sales@xinhuichuan.com.