European small and medium-sized enterprises exporting goods and services to China often raise questions about payment options, conditions, and procedures related to payment. Among their main concerns are how to assess the financial credibility of the buyer or importer in China and how to minimise risks of delayed payment or no payment. SMEs tend to be unfamiliar with local bank products and services, as well as with the fragmentation of the Chinese banking system and its position within the international banking system. Foreign exchange control procedures can be difficult to understand and time-consuming, raising questions on the average time needed for the completion of a payment.
Our new guidelines aim to provide EU SME exporters with reliable information to navigate international trade payments, when exporting goods and services to China. Although many obligations in relation to payment lie with the importer or buyer in China, we include an explanation of these obligations and process in order for the EU exporter to understand the complexity of overseas payments from China, and not be misled by arguments from the Chinese party if it insists on better conditions for its side (e.g. more advantageous payment methods), if it delays payment or fails to pay. Read the guidelines online >
In these guidelines, exporters will find detailed explanations on the different payment options available to them, the documentation required and the risk level of each. They will also find illustrations of typical cross-border payment scenarios on the trade of goods and services between European companies and Chinese partners. The cases highlight common risks and demonstrate best practices to mitigate them. Finally, the appendices provide detailed references, including a list of designated banks, key regulations, and a flowchart on service contract registration and tax procedures.
Doing business with China demands an understanding of its payment and banking landscape. Payment in RMB has become increasingly common. This report compares settlement in RMB versus foreign currency and explains how foreign companies can receive and use RMB. It also clarifies whether RMB can be paid under contracts that specify a foreign currency. By preparing for regulatory compliance and choosing appropriate payment methods, foreign companies can reduce delays and improve financial efficiency.
1.1 General introduction to foreign exchange control in China
1.2 Being paid for exporting goods to China
1.2.1 Foreign exchange administration for Chinese buyers
1.2.2 Designated foreign exchange banks
1.2.3 Major banks’ products related to international trade
1.2.4 Payment options for the import of goods
1.2.5 Role of the Chinese importer during the payment procedure
1.3 Being paid for exporting services to China
1.3.1 Foreign exchange control
1.3.2 PRC tax withholding procedure related to payment for the export of services
2.1 General introduction on RMB payment
2.2 Comparison on settlement in RMB and foreign currency
2.3 How foreign companies can receive a payment in RMB
2.4 How foreign companies can use the RMB received
2.5 Payment in RMB if the currency shown in the import contract is a foreign currency
4.1 Importing goods: A case study of an EU importer purchasing from China
4.2 Exporting goods: A case study of an EU exporter selling to China
4.3 Importing services: A case study of a European technology firm outsourcing to China
4.4 Exporting services: A case study of a European firm providing services to a Chinese company
4.5 Mitigating risks in cross-border transactions
Appendix 1: List of designated foreign exchange banks
Appendix 2: List of main laws and regulations related to payment procedure and foreign exchange control
Appendix 3: Service contract registration and tax record filing for payment to overseas service providers
