r/alibaba
First bulk order from Alibaba supplier, samples approved, but supplier wants payment to HK export company bank account. Is this normal?
User seeks advice on paying a bulk order via a supplier's HK bank account outside Alibaba Trade Assurance after sample approval.
Hi everyone,
I’m about to place my first bulk order with an Alibaba supplier and I’d love to hear from people who have experience importing from China, especially through Alibaba or offline Chinese suppliers.
Context:
We ordered samples from this supplier already. The samples arrived promptly, were well-packaged, and the quality was approved by our buyers. Communication has also been very good so far.
Now we are moving to a bulk order of 32 units. The supplier says their main business is offline and Alibaba is only a small/new part of their business. For the bulk order, they are asking for:
- 50% deposit to their company bank account registered in Hong Kong
- 50% balance before delivery/drop-off to our freight forwarder in China
They said they will provide an authorization letter showing that the export company is their nominated export company. They also suggested creating a payment order on Alibaba only for the inland transportation fee and attaching the PI there to show that there is an order.
My questions:
- Is it common for Chinese factories to use a nominated export company or HK company bank account for bulk orders?
- How risky is it to pay outside Alibaba Trade Assurance after samples have already been approved?
- Would an authorization letter, business license, signed/stamped PI, and bank proof be enough protection?
- Should I ask for client references or redacted shipment records from previous overseas buyers?
- Would it be worth flying to China to visit the factory before paying, especially since this could become a long-term supplier?
- What payment terms would you recommend for a first bulk order? 30/70? 50/50? Alibaba Trade Assurance only?
I want to be fair to the supplier because they’ve been great so far, but I also want to protect our company properly before sending a large payment.
I am also considering flying to China to visit/check their factory before proceeding, since this could become a long-term supplier relationship. I’m also thinking of creating a legally binding contract for this transaction, with the supplier/export company details, payment terms, specs, warranty, delivery terms, and inspection rights clearly documented.
Would really appreciate any advice, red flags to watch for, or due diligence steps from people who have done this before.
Thank you for any help.
I work in banking and also understand them culturally, I can tell you a few things that it is normal for some of them may want to trade through Hong Kong, due to Hong Kong’s position historically as a financial hub, meanwhile china mainland has some monetary restrictions. I think it would make sense for them to get paid for whatever amount needed to pay for their work and clearance fees and logistics, and perhaps the extra money to be kept in Hong Kong for whatever needs, maybe easier for them to use that money to trade with other international customers.
Having said all that, I’m not sure any documents will ever help you if they are indeed bad actors, unless you do this trade through Bank’s trade finance which they will ensure all that financial guarantees for you at a charge.
If situation allows, pay them a visit first, if everything is legit then im sure you will have a very good experience, they like to meet face to face and you will have a different level of communication with them afterwards.
Good luck!
I’m not sure any documents will ever help you if they are indeed bad actors – no help
Depends. If it's a REAL HK company it's very normal, actually obvious.
If it's a shelf company, which is VERY common, it has some level of warning. Is it a company account or a personal account? What is the address of the company? If there are 500 other companies registered at the same address then it's a shelf company - still, quite common. Even personal accounts happen - yet another warning level.
You can visit the factory to get a vibe what's going on.
During the visit observe if the contact person really knows the company, has a desk there, discourages name card exchange...
From what you write seems risk is low. BTW, I suggest you get your own forwarder from YOUR country - that will report to YOU and not to the factory.
In general it is not a red flag as many companies set-up a Hong Kong company.
Basically they are trying to avoid paying tax, it might be fine but where you will have a issue is if the contract is with the Mainland China Company but not the Hong Kong entity.
Also as they are using a HK entity it is likely the export is being done through their nominated freight forwarder as generally their Mainland entity will not be 'linked on paper' as the exporter.
In terms of how safe it is and if you should use trade assurance, in the scheme of things good samples don't mean anything. Until you do high value transactions, you won't have any idea how a supplier really is. So, caveat emptor, trust your cut but be prepared with the potential risk.
A third-party sourcing agency may be helpful for you.
we are ordering some kitchen equipment and stainless stel products.. we want to have a long term partnership with them
tell me the company name，let me do some research
Hello again, there is a huge exhibition in Shanghai at the moment 26-29 for Kitchen and Bath,- list it next year. I have found a few suppliers. For companies in the South of China, Guangdong area, is normal to have accounts in HongKong and for some products that do not have VAT refund, however, they have both Chinese and HK accounts. You may visit them and others, you can't put all your eggs in one basket, is always good to have more options.
It is not about the bank accounts, it's the quality of the people behind these accounts. I charge 150US$ to go visit them, will tell you a lot.
Since it's your first bulk order with them, tell them you need to keep 100% of the transaction on Alibaba via Trade Assurance to protect your company. A 30/70 split on the platform is completely standard. If they are legit, they'll accept it (even if you have to eat the transaction fee). Always cover yourself first!
Oof, yeah, don't do that. That is a classic workaround. If you pay the deposit to their offline HK account and only run the 'inland shipping' through Alibaba, Trade Assurance is only going to protect that tiny shipping fee. If the bulk order arrives messed up, you have zero recourse on the actual product cost.
跟谁签的合同，付款就读给谁，当心资金安全。
If they are a long-term supplier, then visiting their factory in China is worthwhile. Additionally, if possible, collaborate with a Chinese agent to inspect the quality of goods before shipment.
If it is a large amount of money and you are using a logistics company with customs broker use a letter of credit from a bank, do not pay in advance. The seller will be paid once the goods are inspected at the port of departure and shipment is verified.
It’s normal if the names match… our china and hk companies and overseas companies all have the same name.
?
Paying through a HK company is not automatically a red flag, but I would not rely only on the approved samples.
The key is whether the full paper trail matches: supplier legal name, HK receiving entity, authorization letter, stamped PI, bank account name, export documents, and who is responsible if inspection fails.
If the order value is meaningful but not large enough for you to fly to China, a local factory/company visit before deposit can be a good middle option. Someone can check whether the company actually exists, whether the contact person is connected to the factory, take real photos/videos, and confirm the basic documents before you send a large payment.