Opinions, knowledge and resources from China Checkup's expert contributors

Make These 4 Checks Before Sending a China T/T Payment

by Matt Slater March 20, 2019

China T/T Payment

One of the most common ways to pay a Chinese supplier is to make a China T/T Payment, but it is not a method that comes without risk.

We regularly see cases where Chinese suppliers request payments to individual accounts, third parties, offshore accounts and offshore entities, rather than to their own Mainland Chinese corporate bank accounts.

Before sending a China T/T payment, pause and take a moment to make these 4 simple checks - they will help you ensure your payment is really going to the correct Mainland China entity.

What is a China T/T Payment?

The acronym T/T stands for "Telegraphic Transfer" and is an international bank wire transfer usually made through the SWIFT system.

In this article we are talking about telegraphic transfer payments made by foreign businesses to companies based in Mainland China.

Why Take Care With China T/T Payments?

Before sending a China T/T payment to your Chinese supplier it is important to make yourself aware of some potential pitfalls.

We have seen numerous cases where supposed Mainland China companies have requested T/T payments to be sent to individuals, third parties and entities registered offshore.

More often than not, the reasons for this are not disclosed and the Chinese companies are far from transparent about what is going on.

Following the four checks outlined in this article will help ensure that your payment is really going to the Mainland China-registered entity that you are dealing with.

Before Sending a China T/T Payment Make These 4 Checks

Follow these 4 simple checks to make sure your payment is really going to the Mainland China company you are dealing with:

Check 1: Is the Payee an Individual or a Company?

When you are sending money to a Chinese company you want to make sure you are making payment to their corporate account, not the account of an individual.

Key points:

  • Desired Outcome: Payee is a Company
  • Exercise Caution: Payments to Individuals

How to tell:

View the provided banking details and check if the payee is an individual or a company. If you are not familiar with Chinese names here are some examples:

  • Examples of Chinese Individual Names:
    • WANG PING
    • SHI CHUANG GEN
    • ZHANG HONGYU
    • GU YU
  • Examples of Chinese Company Names:
    • SHANGHAI NEW GLORY INDUSTRIES CO LTD
    • SUZHOU YANGPIN SHANGDIAN CO., LTD.
    • YUNNAN WIDGET MANUFACTURING LIMITED
    • WAIGUO (TIANJIN) STEEL CO LTD

Avoid making any China T/T payments to individual accounts wherever possible.


Check 2: Is the Payee the Correct Entity?

You have been dealing with one Chinese company, but when it comes to making payment you are asked to make payment to another company. Unfortunately this happens quite regularly for a wide range of reasons and is certainly something to be very cautious about.

Key points:

  • Desired Outcome: Payee name is consistent with the company you have been dealing with
  • Exercise Caution: When payment is requested to a different company name

How to tell:

Carefully confirm that the name of the company provided as the payee on the bank details is identical to the name of the company you have been dealing with.

Here are some places where the company will have previously given their name -  it is worth checking each and every one:

  • Company website
  • Trade website (e.g. Alibaba)
  • Quotation
  • Invoice
  • Email signature
  • Brochure
  • Copies of certificates & test reports provided

Are they all the same? If not, why not? Ask! Any differences can be very significant and do need to be clarified.

The issue of Chinese company English names is rather complicated and there are circumstances where it is understandable that a Chinese company may have presented their English name in different formats.

On the one hand it is important to remember that in China only names in Chinese are official, however the company does need to provide an English name in order to use the SWIFT system.

If the payee company name ends in the text "Limited" rather than the usual abbreviation "Ltd.", the China T/T payment recipient is quite likely to be a Hong Kong-registered entity. It is quite common for Mainland China companies to operate a Hong Kong trading company and this article explains some of the reasons for this. 


Check 3: Where is the Bank Located?

If you are dealing with a Mainland China company you should be making your T/T payment to their Mainland China bank account.

Key points:

  • Desired Outcome: Bank is located in the same Mainland China city (or at least province) the company is registered in
  • Exercise Caution: Bank is located in a different province to where company is registered, or in Hong Kong or other overseas jurisdictions

How to tell:

The China T/T payment bank details you have been provided with will specify the name of the bank and the address of their branch which the funds are to be sent to.

This may sound obvious but it is worth emphasizing: Mainland China companies should be requesting payment to their bank accounts which are held with Mainland China banks and located in Mainland China.

In the vast majority of cases these accounts should be held at a branch which is in the same province as the company itself is registered in. I.e. if the company is registered in Shanghai they should be providing the address of a bank in Shanghai, not in Beijing or Hong Kong.

Another thing to consider is the name of the bank. Although many Mainland China banks also have operations in Hong Kong, they are named slightly differently and often have the text "Hong Kong" or "Asia" in brackets at the end of their name.

  • Examples of popular Mainland China banks
    • Agricultural Bank of China
    • Bank of China
    • Bank of Communications
    • Bank of Shanghai
    • China CITIC Bank
    • China Construction Bank
    • China Everbright Bank
    • China Merchants Bank
    • China Minsheng Bank
    • Industrial and Commercial Bank of China
    • Ping An Bank
    • Shanghai Pudong Development Bank
  • Examples of popular Hong Kong banks
    • Bank of China (Hong Kong)
    • Bank of Communications (Hong Kong)
    • China CITIC Bank International
    • China Construction Bank (Asia)
    • Hang Seng Bank
    • Hongkong and Shanghai Banking Corporation
    • Industrial and Commercial Bank of China (Asia)
    • Shanghai Commercial Bank
    • Standard Chartered Hong Kong
    • The Bank of East Asia
    • Wing Hang Bank

If you are being asked to make payment to a bank account outside of Mainland China you are almost certainly not making payment directly to the Mainland Chinese company.


Check 4: Is it an Onshore or Offshore Account?

Even if the last 3 checks come back positive you still need to watch out for offshore accounts held in Mainland China. 

Key points:

  • Desired Outcome: Payment to a standard Mainland China onshore account
  • Exercise Caution: Sending payment to an offshore bank account

How to tell:

So you're confident you are dealing with the correct company's Mainland China corporate account, that should be fine right? Not so fast!

Look closely at the bank account number you have been given. Usually it should contain only numbers and be 19 digits long.

However, if the account number has a 3-letter prefix (usually "OSA"), it is an offshore account.

  • Explanations for the various prefixes:
    • OSA (Offshore Account)
    • NRA (Non-Resident Account)
    • FTN (Free Trade Non-Resident)

Another way to tell is that as far as we are aware there are only 4 Mainland China banks which offer "OSA" offshore accounts and each has a dedicated SWIFT code for their offshore banking unit.

  • The 4 banks in Mainland China offering "OSA" offshore accounts are identified below:
 Chinese Bank Offshore Banking Introduction Offshore Banking Unit SWIFT Code
Bank of Communications Link COMMCN3XOBU
China Merchants Bank Link CMBCCNBS008
Ping An Bank Link (Chinese language only) SZDBCNBSOSA
Shanghai Pudong Development Bank Link SPDBCNSHOSA

Note there are also many domestic banks that offer NRA accounts, including the Xiamen International Bank and the Industrial Bank, as well as some international banks operating in Mainland China.

What is happening here?

If a Mainland China company is requesting payment to these kinds of offshore bank accounts, you are actually making payment to an offshore company - not the Mainland China entity you thought you were paying.

This is how it works: a Chinese individual/company establishes an offshore company and gives it an official English name (and sometimes a Chinese name too) which is identical to their Mainland China business  That offshore entity then registers an offshore account with a Mainland China bank.

In situations like this the entity you are making payment to is often registered in a "tax haven" such as the British Virgin Islands or the Cayman Islands.

Why is this a problem? Because you need to have recourse with the Chinese company if & when things go wrong.

Here is a quote from this excellent article on the China Law Blog:

Before contracting with anyone, you should do your due diligence and make sure the party you are paying is not a shell entity or a sourcing company with little or no assets.

If you are being asked to make a China T/T payment to this type of account it should raise some alarm bells, and you are absolutely entitled to ask some hard questions.


Verifying Chinese Companies

If you have received a request for payment from a Chinese company and are in any doubt it is always worth performing a verification.

Our China company verification service can help you identify China T/T payment issues such as covered in this article - simply upload the invoice in question when submitting an order and we will review for you.

 

Verify a China Company?

Order online & get peace of mind

Mainland China Company Verification Reports
Cost: from $129 USD
Turnaround: from 1 working day



 




Matt Slater
Matt Slater

Author

Hi there, I'm Matt, the founder of China Checkup. Originally from the UK, I am now based in Brisbane, Australia.

Frustrated by the scarcity of concise, high-quality and timely information about Chinese companies, I setup China Checkup whilst living in Shanghai in 2013.

My team are proud that China Checkup's company verification reports have now helped thousands of clients from all corners of the world to do business in China more safely.

  

 


Related Articles

Which Bodies Manage Chinese Lab Accreditation?
Which Bodies Manage Chinese Lab Accreditation?
Chinese lab accreditation is managed by different accreditation bodies depending on whether the laboratory is located in Mainland China, Hong Kong or Taiwan. When you are importing products from China, requesting test reports to demonstrate that the product meets necessary standards can often be cri
Read More
Can You Trust Alibaba Suppliers?
Can You Trust Alibaba Suppliers?
Last year we ran a simple experiment on our website to find out whether or not our audience trust Alibaba suppliers.  Thousands of visitors to our blog received the automated message from our live chat software "Just a quick question, do you feel that you can trust an Alibaba supplier?". The 109 rep
Read More
5 Ways to Check Chinese Certificates are Legitimate
5 Ways to Check Chinese Certificates are Legitimate
Has your business ever needed to check Chinese certificates for fakes or forgeries? If so, you are not alone. Regrettably, it is quite common for some unscrupulous Chinese companies to use fake or altered certificates, unfairly tarnishing the reputation of the majority of companies that do the right
Read More


Also in Safer, Better Business in China

China ISO 45001 Certificate - An Introduction
China ISO 45001 Certificate - An Introduction

by Matt Slater June 14, 2019

Have you received a China ISO 45001 certificate and wondered what it is, if it is real and how to check it?

Replacing the previous standard OHSAS 18001 in 2018, this new international standard specifies the requirements for occupational health and safety.

The uptake of certification to this standard in China has been quick and many Chinese organizations are providing their clients with copies of their China ISO 45001 certificate. Learn more about it here.

Continue Reading

8 Most Useful China Map Websites
8 Most Useful China Map Websites

by Matt Slater May 21, 2019

Whether you are planning a trip to China, researching a specific location, or trying to figure out how bad the Beijing rush hour is, there are plenty of good reasons to use China map websites.

Although most international map websites cover China, these websites face various restrictions which mean they can't provide a service as in-depth as their Chinese counterparts, so it is a good idea to know your options.

In this article we introduce the 8 most useful China map websites, including both international services available in your language, and some impressive domestic websites only available in Chinese.

Continue Reading

Top 5 Cities for China to Europe Freight Trains
Top 5 Cities for China to Europe Freight Trains

by Matt Slater May 07, 2019

With the high cost of sending freight by air, and the slow speed of sea freight, Chinese exporters are increasingly utilizing China to Europe freight trains as a means of sending their produce west.

As might be expected, the majority of these trains depart from cities located far from China's coastline and her seaports, but which Chinese cities have the most rail shipments?

We took a look at the data and found that the top 5 cities for China to Europe freight trains are each provincial capitals with huge populations - with Chengdu in Sichuan province leading the way. 

Continue Reading