8 Red Flags in a Chinese Supplier’s Quotation or Invoice

The quotation and the proforma invoice are the last two documents you see before money leaves your account. Most payment problems with suppliers in China are visible on those two pages, if you know where to look.

A proforma invoice, or PI, is the supplier’s formal offer: who sells, what, at what price, on what terms, and where to pay. Once you pay against it, it is the closest thing you have to a contract.

Here are the 8 Chinese supplier red flags I look for first. One of them does not prove a supplier is dishonest. Each of them is a reason to stop and ask a question before you pay.

1. The bank account is not in the seller’s name

The beneficiary of the bank account should be the same company that appears as the seller on the PI and on the business licence. If the account belongs to another company, ask how the two are related and ask for documents. If it belongs to a person, do not pay. A real exporter has a company account.

2. The account is somewhere unexpected

A company in Zhejiang with a bank account in Zhejiang is ordinary. Many Chinese exporters also use a Hong Kong account, and that can be legitimate, but the account holder should still be a company you can connect to your supplier on paper. An account in a third country with no explanation is a reason to pause.

3. The price is far below every other quotation

Suppliers of the same product buy the same steel, motors and parts. Their prices fall in a range. A quotation 30% under that range usually means a lower specification, something left out, or a price that will rise once the deposit is paid. Ask what exactly is included before you celebrate.

4. The specification is vague

“Packing machine, 1 set” is not a specification. The PI should state the model, capacity, materials, voltage, main component brands and anything customised. If it is not written down, you cannot claim it later. Whatever arrives will match the description, because the description matches anything.

5. The price term or port is missing

A price without a term such as EXW, FOB or CIF is half a price. EXW means you pay everything from the factory gate. FOB includes delivery to the named Chinese port and export clearance. The difference can be hundreds or thousands of dollars per shipment. The PI should name the term and the port.

6. Full payment in advance, and a hurry

For a first order, around 30% deposit with the balance before shipment is common. A demand for 100% upfront on a large first order puts all the risk on you. Add pressure, such as a price that is “valid for three days only”, and you have the two things that most often come before a loss: a big payment and no time to check.

7. The names do not line up

Read the seller’s name on the PI letter by letter. Compare it with the business card, the business licence and the company stamp on the document. Small differences matter. “Ningbo ABC Machinery Co., Ltd.” and “Ningbo ABC Machinery Trading Co., Ltd.” are two different legal entities. A PI with no company stamp and no registered name is a draft, not an offer.

8. The bank details or the email address change

This is the one that costs buyers the most. You have been writing to one address. Then a message arrives from an address that is almost the same, or from the same address after it was hacked, saying the company has a new bank account. The invoice looks perfect because it is a copy of the real one.

Never act on changed bank details by email alone. Call the person you know, on a number you already had, and confirm. A real supplier will not be offended.

What a clean proforma invoice contains

• Seller’s full registered name and address, with company stamp
• Buyer’s name and address
• Product description with model and full specification
• Quantity, unit price, total and currency
• Price term and named port
• Packing details
• Lead time and what date it is counted from
• Payment terms: deposit share, balance and when it is due
• Bank details, with a beneficiary name that matches the seller
• Warranty and price validity

If you find a red flag

Ask, and ask in writing. “Why is the beneficiary a different company?” is a normal business question. Honest suppliers have an answer and a document to support it. The ones who get angry, go quiet or offer a discount to skip the question have answered it too.

Want a second pair of eyes before you pay?

Send me the supplier’s details and the quotation or PI. For USD 99 I check one supplier and one quotation: the company and licence, the names, and the price, payment and delivery risks. You get a written answer in 2 working days: proceed, proceed with caution, or avoid.

• Canton Fair Supplier Check
• See a sample report
• Or ask for a free first look

Related guides:

• How to verify a Canton Fair supplier before paying a deposit
• Factory or trading company? How to tell at the Canton Fair
• After the Canton Fair: a 14-day supplier follow-up checklist

FAQ

Is it normal to pay a Chinese supplier’s Hong Kong bank account?

It is common and can be legitimate. Check that the account holder is a company, and that the supplier can show you how it is connected to the company you are buying from.

Is a 30% deposit normal when buying from China?

Yes. A deposit of about 30% with the balance before shipment or against shipping documents is a common arrangement for a first order. Terms vary by product and order size.

What is the difference between a quotation and a proforma invoice?

A quotation is an offer of price and terms. A proforma invoice is the formal version you pay against, with the seller’s registered name, full order details and bank information.

Maggie Yue, Hangzhou Zhenbao Trading Co., Ltd. This service is independent and is not affiliated with the Canton Fair.