Online
Marketplace

Auto
Parts & Accessories

Baby
& Children's Products

Computer
Products

Electronic
Components

Electronics

Fashion
Accessories

Garments
& Textiles

Gifts &
Premiums

Hardware
& DIY

Home
Products

LED
& Solar Products

LEDs
& Optoelectronics

Machinery
& Parts

Medical
& Health Products

Mobile
Electronics

Security
Products

Sports
& Leisure

Telecom
Products

Underwear
& Swimwear

Trade Shows

China Sourcing Fairs

Electronics & Components

Fashion Accessories

Garments & Textiles

Gifts & Premiums

Hardware & Building Materials

Home Products

Mobile Electronics

Security Products

Underwear & Swimwear

Global Sourcing Fair

Mobile & Wireless

India Sourcing Fairs

Garments & Accessories

Korea Sourcing Fairs

Electronics & Components

Trade Show Center

China Int'l Optoelectronic Expo

China (Shenzhen) International Brand Clothing &
Accessories Fair

IIC-China

Shenzhen
Int'l Machinery Manufacturing Industry Exhibition

Magazines

Magazines

Sourcing Reports

Other
Services

Product
Alerts

Sourcing News & Advice

Private Sourcing Events

Buyer Support

About Us

Reliable exporters: find them and meet them

Path: Sourcing News & Advice
>> Import from
China Advice >> Why this supplier won't accept a
letter of credit?

Sourcing News & Advice
Home

Industry
News

Surveys

Import from China
Advice

Ask
the Experts

Buyer's
Guide

Why this supplier won't accept a letter of credit?

Posted: November 19, 2014

by Mike Bellamy

My supplier in China insists on having
payments for ordered goods as follows: 10% T/T + 90% L/C while my home bank
asked me to insist on paying for ordered goods by 100% L/C. My Chinese suppliers
turned down payments by 100% L/C and I cancelled the order. Why do you think my
Chinese suppliers rejected payments by 100% Letter of Credit. Why were they in
desperate need of the 10% T/T. Thanks

I have faced
similar situations with suppliers and here is my best guess on what is going on
behind the scenes:

If it is the first order, the supplier may not
yet have a handle on the expected lead time. If their production delays cause
the shipment to miss the target dates specified in the L/C, the buy side has the
right to refuse payment and cancel the order. By getting 10% upfront, the
supplier has some leverage.

Cash flow
issues.

While the
following is unlikely if this is a legit supplier, it is possible they are
planning to get a deposit and disappear. This happens when a supplier is on the
brink of closing up shop anyway, and they do all they can to get some money in
their pockets before they close the door on the shop and run away. For that
very reason, if feel due diligence is essential on large orders. Luckily due
diligence is not expensive. Here
is an article I wrote on the
process.

BTW, did they give any explanation why they were
so stuck on getting 10% upfront? If yes, pass that on to me as it may help me
understand the specific situation a bit better.

If you need
support finding a supplier here are four
options.

Let me know
how things work out for you.

Glad to
help.

Question
answered by Mike Bellamy, an Advisory Board Member & Featured Blogger at the
not-for-profit China Sourcing
Information Center. Mike is also the author of "The
Essential Reference Guide to China Sourcing" and founder of PassageMaker
Sourcing Solutions.

Read more Sourcing
News & Advice

RSS Feed

Subscribe to get the latest China sourcing news and
advice

Ask the Experts

Feedback

Send us your comments and suggestions, or share your sourcing
experiences.

Find Suppliers Online

Browse Product Categories

New Products

Top
Products

Top China Suppliers

Source by Country

Top 20 Products by Industry

Wholesale Directory

Wholesale Products

Español

Buyer Tools

Download Sourcing e-Magazines

Buy
Sourcing Reports

Monthly Sourcing Highlights

Sourcing News & Advice

Magazines
Mobile App

Global
Sources Direct

Supplier Tools

Reach Qualified Buyers

Sign up for a Free Trial

Become a Verified Supplier

多渠道曝光/推广

供应商成功故事

免费网上广告注册

高效参展

About Us

About Global Sources

Our
Services

Our
Quality Commitment

Buyer Testimonials

Investor Relations

Videos

Meet Suppliers Face-to-Face

Sourcing
Fairs

Private Sourcing Events

Buyer Support

What
Every Buyer Needs to Know

Ask the Sourcing Experts

Learn to
Source from China

Help

User
Guide

Help
& FAQ

Contact Global Sources

Site
Map

Follow Us

Facebook Twitter Google + LinkedIn RSS

Global Sources Sourcing Sites: GlobalSources.com | CantonFair | 环球资源内贸网

Global Sources Other Country Sites: Hong Kong

Global Sources Management Site: 世界经理人

Global Sources eMedia Sites: EE
Times – Asia | EE
Times – India | EDN
Asia | IIC-China

電子技術設計 | 电子工程专辑 | 電子工程專輯 | 电子技术设计
| 国际电子商情 | 电子圈微报 | 元器件规格书网

Copyright © Trade Media Holdings Ltd. Copyright ©
Trade Media Ltd. All rights reserved.

Terms of Use Privacy Policy Security Measures IP Policy