The first order with a new Chinese supplier is where most importers feel exposed. You are asked for a deposit to a company you have never met, in a country whose legal system you don't know, for goods you have only seen as samples or photos. The good news: the vast majority of Chinese exporters are legitimate, and a small number of well-understood tools — the right Incoterm, a sensible payment structure, company verification and an inspection clause — reduce the risk dramatically.
This guide is written for buyers placing their first orders, whether for valves, auto parts, bags, batteries, machinery or packaging — categories represented by suppliers such as MIC Valve, Kingrun Auto, Bag Promotion, Sunder Battery, BOEVAN Packaging Machinery (Shanghai) and Dongguan Fison Packaging on CifyChina.
Incoterms in plain language
Incoterms (ICC Incoterms 2020) define who pays for and bears risk on each part of the journey. The ones you will see most with Chinese suppliers:
| Term | Supplier's responsibility | Buyer's responsibility | Good for |
|---|---|---|---|
| EXW (Ex Works) | Make goods available at the factory | Everything from loading at the factory onward, including export clearance | Buyers with a strong forwarder in China; consolidation |
| FCA (Free Carrier) | Deliver to your forwarder's carrier, cleared for export | Main freight, insurance, import | A cleaner alternative to EXW |
| FOB (Free On Board) named port | Deliver goods loaded on the vessel at the Chinese port, export cleared | Ocean freight, insurance, destination costs | Sea freight when you control the forwarder |
| CFR / CIF named destination port | Pay freight (and minimum insurance for CIF) to your port | Risk from loading in China; destination charges, duties | Buyers who prefer the supplier to book freight |
| DAP (Delivered At Place) | Deliver to your named place, not cleared for import | Import clearance and duties | Door delivery with buyer handling customs |
| DDP (Delivered Duty Paid) | Everything including import duties and taxes | Unloading | Small shipments, courier; risky for large imports |
Two practical tips:
- FOB with your own forwarder gives you control over freight cost and schedule, and transparency on destination charges. With CIF, some suppliers choose low-cost freight whose destination charges are high.
- Risk transfers earlier than many buyers think. Under FOB and CIF, risk passes to you when goods are on board in China. Arrange cargo insurance with adequate cover (CIF's minimum insurance is often not enough).
Many inquiries we receive ask specifically for "CIF [port]" pricing — for example CIF Annaba, CIF Arica or CIF Bar — which is sensible for buyers without a forwarder, provided the destination charges are clarified.
Product photos are taken from the supplier listings on CifyChina and link to each supplier's page. They illustrate the product type discussed; they are not an endorsement of any specific item.
Payment options compared
- T/T (telegraphic transfer) with deposit: the most common structure — typically 30% deposit with the order, 70% before shipment (against inspection or photos) or against a copy of the bill of lading. Simple and cheap, but the deposit is exposed.
- Letter of credit (L/C): the bank pays when compliant documents are presented. Good protection for larger orders, but costs and document discrepancies can cause friction. Make sure document requirements (inspection certificate, B/L, certificate of origin) are realistic.
- Escrow or platform protection: e-commerce platforms offer order protection services where funds are held until conditions are met — useful for small first orders.
- Documentary collection (D/P): the bank releases documents on payment; less protection than an L/C for both sides.
- Open account: payment after delivery — generally available only after trust is established.
For a first order, a common compromise is 30% deposit, balance after a satisfactory third-party pre-shipment inspection. For machinery, link the balance to a signed factory acceptance test — see Factory Acceptance Testing for Machinery from China.
Verify the company before you pay
- Business licence: ask for a copy and check the unified social credit code on China's National Enterprise Credit Information Publicity System. Confirm the registered name, scope, legal representative and registered capital.
- Name consistency: the company on the contract, proforma invoice and bank account must match. Payment to a different company or a personal account is the biggest single red flag.
- Export capability: check whether the company exports directly or through an agent.
- Factory verification: a video call walking through the factory, an audit by a third-party inspection company, or a visit.
- References: ask for buyers in your region you can speak to.
Payment fraud: the business email compromise problem
A common fraud intercepts email between buyer and supplier and sends "updated bank details". Always confirm any change of bank account by phone or video call to a known contact, never by replying to the same email. Legitimate suppliers rarely change bank accounts mid-order.
Write a simple purchase contract
Even a two-page contract helps. Include: product specification (with drawings or approved sample reference), quantity, unit price and currency, Incoterm and named place, payment terms, delivery date, packaging and marking, inspection rights and acceptance criteria, warranty and remedy for defects, and dispute resolution. Chinese courts and arbitration bodies (such as CIETAC) do enforce contracts; a contract in both English and Chinese is helpful.
Inspection before the balance
Book a third-party pre-shipment inspection when production is at least 80% complete and packed. Define an AQL sampling plan, list critical checks (dimensions, function, labelling, packaging), and state in the contract that the balance is due only after a passed inspection. Category-specific checklists are in our guides on How to Vet a CNC Machining Supplier in China and Custom Packaging MOQs in China Explained.
Samples first
For almost any product, a paid sample is the best investment before a first order. It verifies quality, packaging and the supplier's communication. Keep an approved "golden sample" as the reference for production.
Special cases
- Vehicles: see Importing Electric Vehicles from China for documentation and payment considerations specific to cars.
- Dangerous goods such as lithium batteries have extra shipping requirements that affect Incoterm choice.
- Small orders: courier shipping on DAP or DDP terms can be simplest for samples and very small orders.
A first-order checklist
- Company verified (licence, name match, bank account match).
- Paid sample approved and retained as the golden sample.
- Written contract with specification, Incoterm, payment and inspection clauses.
- Deposit paid by bank transfer to the company account on the contract.
- Pre-shipment inspection booked; balance conditional on pass.
- Cargo insurance arranged; forwarder briefed with the shipping marks.
After the first order
Once the first order arrives and meets expectations, review what worked. Many buyers negotiate improved terms on the second or third order — for example a lower deposit, balance against copy of bill of lading, or a longer payment window — in exchange for predictable volume. Keep a simple record of each order's quality results, delivery performance and communication; it is the best basis for deciding whether to consolidate volume with the supplier or keep a second source.
Frequently asked questions
Is paying 100% up front ever acceptable? For samples and very small orders, often yes. For production orders, a deposit structure is standard and reasonable.
Should I use FOB or CIF? If you have a reliable forwarder, FOB. If not, CIF can be convenient, but ask for destination charges in advance.
What if the goods are defective on arrival? Document with photos and batch numbers, notify the supplier promptly, and refer to the contract's warranty and remedy clause. Inspection before shipment prevents most disputes.
Have a similar requirement? Send the specification or drawing on WhatsApp and we will match it against the suppliers in the directory.