It is true that most Chinese companies casually change the payment schedule, when they hold all the financial leverage they have little motivation to adhere strictly to the contract terms. Therefore, people should take 3 factors into consideration when it comes to payments:
- Make the terms of payment as concise and clear as possible: This is really for the benefit of both parties. In addition, the calendar should show a given date, a project phase has been completed, or a prototype has been delivered.
- Demand a nontrivial amount upfront, and confirm payment before they even lift a finger: It’s not only a show of good faith by the Chinese side; but also to prove that the Chinese side can in fact make a payment on the contract.
- Add 10% to their charge and include it as a final payment due after delivery: Due to the fact that Chinese companies insist on receiving delivery in full before making the final payment – and then never make that final payment.
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