The Chinese manufacturing industry has seen massive growth over the last decade –– to such an extent that it is now viewed as the world’s number one manufacturing hub. For e-commerce brand owners looking to source products for their online stores, Chinese manufacturers listed on AliExpress, Alibaba, may be their top choices in supplying goods. Additionally, it has never been easier to send money to China from the UK.
For accounts teams, barriers to trade with Chinese businesses have broken down significantly in recent years. You no longer need to open an account with a Chinese bank and hold funds in CNH –– or wait several days for a Chinese payment to be processed.
This article will explain how to send money to China from the UK and outline how the WorldFirst relationship management team can help accountants and their clients build closer ties with Chinese suppliers.
Trading in renminbi reduces currency risk
One of the critical areas where accounts teams need to minimise risk is currency conversions. China has two currencies, both of which are known colloquially as renminbi (CNY and CNH). CNY is used for domestic transactions, whereas CNH is used for international trade. You can find out more about why China has two currencies here, but for the scope of this article, all you need to know is CNH and CNY trade one-for-one –– so it won’t affect your business’s profits.
Using CNH to pay a Chinese supplier can alleviate transactional currency risk in your supplier agreements. You can purchase goods for a set price, and your suppliers won’t have to negotiate an exchange rate buffer when they quote you. Accounts teams can also agree on Forward Exchange Contract terms should you need to make a large supplier payment on a set date.
Sourcing suppliers from reputable marketplaces
There are a couple of well-known online marketplaces where international e-commerce brands can find reputable Chinese manufacturers, including:
These platforms provide accessible communication channels between buyers and sellers, reassuring international brands that they can verify a supplier’s export licenses and customer satisfaction scores. We would always recommend going through one of these platforms to minimise the risk of getting scammed.
Please note: Accounts teams still need to make sure manufacturers comply with Chinese business regulations before signing any deal.
Each of the above marketplaces mentioned accepts several forms of payment from international brands. However, some methods may be easier to access than others.
Options for sending money to Chinese suppliers
There are multiple options for sending money to China, and some can be costlier than others.
Telegraphic Transfer (T/T) is a method for making international payments to Chinese suppliers. But, the service carries a significant amount of risk to e-commerce buyers. For example, suppliers may ask you to pay a deposit, which may affect a company’s cash flow and, therefore, not be the best option for smaller brands. Furthermore, intermediary fees can be higher than using a money transfer service. There may be the opportunity to find a better exchange rate elsewhere.
International credit/debit cards
It is possible to pay for goods with an internationally accepted credit or debit card. In the case of paying Chinese suppliers, very few companies will take this payment method. Accepting card payments may open suppliers up to fraud or chargeback requests. Processing fees can also be expensive and the costs are likely to be passed on to the buyer.
Using WorldFirst and Alipay to send money to China from UK
Alipay is a preferred payment method on many Chinese supplier marketplaces. To set up an Alipay business account, you have to sign up to their website and provide various business documentation and ID. It takes two to three days for your account to be approved.
By topping up your Alipay business account with CNH, you can make direct payments to suppliers through the platform.
If you are looking for an easy way to top up your Alipay account, transferring funds from the WorldFirst World Account could be your best option, as well as the quickest. We can make same-day currency transfers, provided you meet our payment cut-off deadlines. WorldFirst also tracks up-to-the-minute FX rates to provide customers with the best deal on exchanging currencies.
Make WorldFirst your international payment gateway partner in all foreign transactions
With WorldFirst, you can get full support in setting up with financial hedging instruments like Forward Exchange Contracts (FECs) and minimise currency exchange risk to international brands. We can offer you affordable rates on spot and forward contracts and give accountants access to live FX data to help you make informed economic decisions for your client’s business. By signing up to World Account you’ll be able to access same-day and next-day payments in many cases, and be able to keep track of transactions in your financial statements, through the WorldFirst Xero integration.