Deposits, Splits and Balance Payments: What T/T Really Looks Like in Chinese OEM Deals
First-time importers panic when a supplier asks for a T/T deposit before starting production. Don't. It's normal, it's how OEM manufacturing works globally, and refusing on principle will just push you to worse suppliers. The question isn't whether to pay a deposit — it's how much, to what account, and under what protections.
Why factories ask for a deposit at all
Chinese OEMs typically operate on 10–20% margins with 30–60 day supplier payment terms of their own on raw materials. Fronting the material cost on a new international customer's speculative order is not something they can do at scale. The deposit funds the raw materials; the balance funds the labour. This is not extraction, it's cash flow.
The standard splits
30/70 T/T is the most common: 30% before production starts, 70% before the container ships or against a B/L copy. 50/50 for custom tooling or long lead times. 30/40/30 for larger buyers with leverage: deposit, mid-production, post-inspection. Anything requiring more than 50% before production on a first order deserves a hard look.
Red flags inside 'normal' terms
The account name doesn't match the licence. The account is in a different city or country than the registered address. The supplier asks you to break the payment into two smaller ones to different accounts. The account was 'recently changed' via email — this is the email-hijack pattern. Any one of these turns a standard 30/70 into fraud.
How to structure the T/T for maximum protection
Bilingual sales contract with specs, tolerances, delivery date, and remedy clauses. Pro forma invoice referencing the contract. Payment references the PI number. Bank name and SWIFT match the licence's registered city. Add a pre-shipment inspection clause to the contract — the balance is due only after a passing inspection report.
If the T/T has already gone out and you now have doubts
Call your bank and request a status update; the wire takes 1–3 business days to arrive. If it hasn't landed, you can request a recall. After it lands, you have negotiation leverage only if you haven't paid the balance. Book a factory audit or a third-party inspection ($250–$600) before you release the rest — this is the single highest-ROI check in international sourcing.
The 30-minute pre-wire checklist
Business licence verified. GSXT record cross-checked. Court records clean. Bank account name matches the licence exactly. Contract signed, chopped, in both languages. Pre-shipment inspection budgeted. If all five green, T/T is normal and fine. If any red, delay the wire until you fix it.