SUPPLIER RISK
What to Check Before Paying a Deposit to a Chinese Factory
Use this pre-deposit checklist to confirm a Chinese factory, bank beneficiary, product specification, payment terms, inspection plan and recovery options.
Verify the counterparty and factory relationship
Identify the Chinese legal entity signing the order and compare it with the business licence. If a sales company, export company or trader is involved, document which entity operates the factory and which entity is responsible to you.
Confirm the beneficiary account
Compare the beneficiary name with the contracting seller. Investigate third-party or personal accounts and independently reconfirm last-minute changes. Keep a dated record of the confirmation.
Freeze the product specification
Attach drawings, materials, colours, dimensions, performance criteria, packaging, labelling and approved-sample references. Define tolerances and prohibited substitutions. “High quality” is not a measurable specification.
Agree on quantity, schedule and milestones
State the order quantity, acceptable over/under delivery, production start condition, completion date and consequences of approved changes. Ask what material or capacity the deposit is intended to secure.
Link payment to evidence
Avoid making the balance payable solely because the supplier says production is complete. Define the required evidence, such as a production update, passed inspection, corrected defects, packing list or loading documents. Payment terms should reflect order risk, relationship history and bargaining position.
Define inspection and defect handling
Specify inspection timing, sampling standard, defect classifications, acceptance criteria and who pays for reinspection. State what happens if goods fail: rework, replacement, price adjustment, delayed shipment or another agreed remedy.
Confirm compliance and shipping feasibility
Check destination-market requirements before production. Certificates, testing, labels, batteries, chemicals, wood packaging, trademarks and restricted goods can affect both production and export.
Keep a final pre-payment file
Keep the signed contract or PI, business licence, verified bank details, specification pack, approved sample record, inspection plan, communication log and payment evidence in one order file. No checklist eliminates commercial risk, but a clear file makes misunderstandings visible before they become expensive.
Want the company, account and proposed deal checked before deposit? Start a MORENICE supplier verification.