How to Pay a Chinese Sunglasses Factory Safely

The Payment Terms Every Factory Actually Offers (And What They Mean)

There are five payment structures you will realistically be offered by a Chinese sunglasses supplier. Each one moves the risk to a different place, and understanding who is exposed at each moment is the whole game. Not one of them is universally right. They are tools, and the order size, the supplier relationship, and whether the frame is custom all decide which tool fits.

1. 30/70 T/T — The Industry Default

Telegraphic transfer, which everyone just calls T/T, is a plain bank wire. The standard split is 30% deposit before production, 70% balance against a copy of the bill of lading. That last phrase does a lot of work, so read it carefully: you pay the balance once the goods are produced and loaded onto the vessel, and the factory sends you a copy of the B/L as proof. The original documents — the set you need to actually collect your cargo at the destination port — are only couriered to you after your balance clears.

That is an elegant piece of risk balancing that took the trade decades to settle on. At the moment of your balance payment, the factory has already spent all its money on your order and the goods are on a ship it no longer controls. You, meanwhile, cannot lose the cargo, because without the original B/L nobody can release it to anyone. Both parties are exposed for roughly the same short window. That symmetry is why 30/70 became the default rather than any other split.

Where buyers get careless is agreeing to "70% before shipment" instead of "70% against a copy of the B/L." They sound similar. They are not. The first means you pay before the goods leave the factory floor, which removes your only real deadline pressure on the supplier. Insist on the B/L wording.

2. Letter of Credit at Sight — The Bank as Referee

With an L/C, your bank promises to pay the supplier once the supplier presents a specific set of documents that match your terms exactly — bill of lading, commercial invoice, packing list, and whatever certificates you specified. The supplier is not trusting you; they are trusting your bank. You are not trusting the supplier; you are trusting a document set.

The protection is genuinely strong, and it is also genuinely bureaucratic. I have seen payment held up for three weeks because a consignee address on an invoice read "Street" where the L/C said "St." Banks are not being difficult when they do this — an L/C is a promise to pay against exact compliance, and exactness is the whole product. More on when the cost is justified in section three.

3. D/P — Documents Against Payment

D/P sits between T/T and an L/C. The factory ships the goods and hands the document set to its bank, which forwards it to your bank; your bank releases the documents to you only when you pay. No bank guarantees anything, so it is cheaper than an L/C, but the seller carries real risk: if you simply refuse to pay, the cargo is sitting at a foreign port with a factory that has no buyer for 10,000 pairs of frames with your logo on the temples.

Because that risk falls on the supplier, D/P is usually offered only to buyers with a track record. If a new supplier offers you straight D/P on a first order, that is not generosity — it is a hint that they may be a trading company with no production costs sunk into your order.

4. Alibaba Trade Assurance — Escrow With Limits

Trade Assurance is escrow: Alibaba holds your money and releases it to the supplier after you confirm, with a defined dispute window in between. For a first order under roughly $20,000 with a supplier you have never met, it is a reasonable way to cap your downside, and I have no complaints about buyers who ask for it.

Understand precisely what it protects. It enforces what the order contract says. Shipping date, quantity, and any numerically stated specification are all enforceable. Vague quality language is not. A dispute over "the lenses feel cheap" goes nowhere, because there is nothing to measure. A dispute over "lens transmittance must be UV400 compliant per EN ISO 12312-1, verified by test report" is a dispute you win. The escrow is only as strong as your spec sheet.

5. PayPal and Credit Cards — Fine for Samples, Wrong for Bulk

For a sample order of $50–500, PayPal is excellent. You get chargeback rights, it is instant, and the 4–5% total cost of the transaction is irrelevant on that amount. Use it freely at the sampling stage.

For a production order it stops making sense. On a $30,000 order, 4.4% plus currency conversion is over $1,300 that comes straight out of somebody's margin — and it will come out of yours, because the supplier will simply quote higher. Most established factories also refuse it outright for bulk, not out of stubbornness but because a chargeback 90 days after shipment against goods already in your warehouse is an unmanageable risk on their side.

Why 100% Upfront Is Always a Red Flag

I want to explain this from the inside, because "never pay 100% up front" is advice you have read a hundred times without anyone telling you why a real factory does not need it. Once you understand the cash-flow mechanics, you can spot the problem yourself instead of memorising rules.

What a Factory's Money Actually Does

When your 30% deposit arrives on a 10,000-pair order at $1.75 — call it $5,250 — here is where it goes in the first week. Acetate sheet or TR90 pellets and the metal components: the bulk of it. Lens blanks: a chunk. If your frame is custom, the mould and tooling: $300–1,500 depending on complexity. Materials and tooling together are typically 45–55% of the unit cost, and every bit of it is spent before a single finished frame exists.

Note what is not in that deposit: labour, electricity, my overhead, and my margin. Those are funded out of the factory's working capital and recovered from your balance payment. That is the point. A functioning factory has working capital precisely so it can carry a job from cut to polish to assembly without asking the customer to bankroll the payroll. Access to that working capital — a credit line, retained earnings, a bank that knows the business — is one of the clearest signals that you are dealing with a real manufacturer.

So when someone demands 100% before production, they are telling you they cannot fund three weeks of their own operation. Either they genuinely cannot, which means they may not finish your order, or they have no operation to fund. Both answers should end the conversation.

The Trader Tell

There is nothing wrong with trading companies as such — some are excellent, well-organised, and worth their markup, particularly for small mixed orders across several factories. The problem is a trader pretending to be a factory, because you end up paying factory-direct prices for an extra layer of margin and an extra layer of distance from the production line.

Payment terms expose them faster than any other question. A trader has no materials to buy and no tooling to cut; their cost is simply what the real factory charges them. If the real factory wants 30% from the trader, and the trader collects 100% from you, the trader is running your order on your money with zero exposure. That is why unusually aggressive upfront demands cluster around intermediaries. Ask a simple follow-up: "What is the deposit specifically covering — materials, tooling, or both?" A factory answers in thirty seconds with numbers. A trader gets vague.

The Payment Requests That Should End the Conversation

Some requests are not negotiating positions, they are exits. Treat every one of these as a hard stop:

Western Union, MoneyGram, or any cash-transfer service. These exist to move money to people, irreversibly, with no recourse. No legitimate manufacturer needs them for a commercial order. This one is not a judgement call.

A personal bank account instead of the company account. The account name on the wire instructions must match the company name on your invoice and contract. When it does not, you have no paper trail connecting your payment to any corporate entity, which means no arbitration, no legal claim, and nothing your bank can trace. Occasionally a supplier will explain this away as a "tax arrangement." It is your money at stake, not their tax.

Cryptocurrency. Irreversible, unregulated, untraceable. There is no scenario where this is in your interest on a first order.

A sudden change to the bank details mid-order. This is the most expensive one, because it usually is not the supplier at all — it is business email compromise. Someone monitoring the email thread sends you "updated" bank details just before your balance payment. Verify any change of account details by phone or video with a person you have already spoken to, on a number you already had. Never verify by replying to the email that requested it.

When a Higher Deposit Is Legitimate

To be fair to my own side of the table, there are honest reasons a factory asks for more than 30%. A fully custom frame with new moulds and a new colour development might justify 50%, because the sunk cost before production is genuinely higher. A very small order below normal MOQ can justify 50–100%, because the setup cost dominates and the factory is effectively doing you a favour. A rush order requiring bumped priority and overtime can justify more too.

The difference between a legitimate higher deposit and a red flag is a specific reason tied to a specific cost. "50% because the mould is $1,200 and the pantone development is $400" is a real answer. "100% because that is our policy" is not an answer at all.

Letter of Credit vs T/T: When the Extra Cost Is Worth It

Buyers ask me about letters of credit far more often than they should, usually after reading that an L/C is the "safe" way to pay. It is safer in a specific sense, and it is also slower, dearer, and more fragile than most first-time importers expect. Here is the honest arithmetic.

What an L/C Really Costs You

Your side of an L/C at sight typically carries an issuance fee of 0.1–0.25% of the value (with a minimum of $100–200 at most banks), a commitment or negotiation fee of another 0.1–0.5%, a courier and documentation charge of $50–100, and an amendment fee of $50–100 every time anything changes — and something always changes, usually the shipment date. Add the advising bank charges that get passed back to you. All in, budget 0.8–1.5% of the order value.

Then add the cost nobody puts in the spreadsheet: your bank will normally require the L/C to sit against your credit line or a cash deposit for its whole life. On a $60,000 order with a 60-day validity, that is $60,000 of your borrowing capacity locked up for two months. If your business is growing and credit is your constraint, that is often the real expense, not the fees.

Compare that with a T/T: two wires, $30–60 total, money leaves when you decide it leaves. The gap in cost is not marginal. On a $20,000 order, an L/C costs roughly $200–300 against $40 for wires — five to seven times more, for protection that mostly duplicates what an inspection clause already gives you.

The Order-Size Threshold

My rule of thumb after years of both: under $50,000, use 30/70 T/T with an inspection-linked balance. Above $50,000, consider an L/C. Above $100,000 with a supplier you have not worked with, use one.

The logic is that an L/C protects you against a large, structural failure — the supplier never ships, or ships something documentably different from the contract. It does not protect you against the failure that actually happens most often, which is goods that arrive on time and are mediocre. Below $50,000, the money you would spend on L/C fees buys you several third-party inspections instead, and inspections address the likelier risk. Above $50,000, the absolute downside gets big enough that structural protection earns its keep on top of inspection, not instead of it.

The Paperwork Traps

If you do use an L/C, know where they break. Roughly half of all first presentations under an L/C contain a discrepancy, and every discrepancy hands the initiative back to the bank.

Dates that do not line up. The latest shipment date and the L/C expiry date must leave the supplier enough room to actually present documents — usually 21 days after shipment. Set the expiry too tight and the supplier ships on time but cannot get paid.

Description mismatches. The goods description on the invoice must match the L/C wording. Not mean the same thing — match. If your L/C says "Acetate sunglasses, model EV-2201, 10,000 pcs" and the invoice says "Sunglasses acetate EV2201 10000pcs," expect a discrepancy notice.

Documents you asked for and nobody can produce. Buyers sometimes require an inspection certificate issued by a named agency, or a certificate of origin in a specific format, without checking that it is obtainable in that timeframe. Every document you list is a condition the supplier must satisfy exactly; list only what you will genuinely use.

Partial shipment and transhipment silence. If the L/C does not explicitly permit partial shipment or transhipment, both are prohibited. Sunglasses often move on routes with a transhipment leg through Singapore or Busan, and I have watched a clean shipment turn into a three-week payment fight over exactly that omission.

The Middle Path Most Experienced Buyers Take

Here is what buyers doing real volume with us actually settle into, and it is neither pure T/T nor an L/C. They run 30% T/T deposit, then 70% by T/T released only against a passed third-party inspection report plus a B/L copy. Cost: two wire fees and $250–350 for the inspection. Protection: they never pay the bulk of the money until an independent party has physically opened cartons and measured the goods against a numeric standard.

That structure targets the risk that actually materialises, at roughly a fifth of the cost of an L/C, with none of the document fragility. Reserve the letter of credit for when the sum at stake genuinely justifies bringing banks into the room.

Protecting Yourself: Escrow, Inspection-Linked Payment & Contract Clauses

Everything above is about choosing a payment method. This section is about the thing that matters more: what you write down. A payment method decides how money travels. A purchase order decides what has to be true before it travels. I would rather sell to a buyer with a sharp PO and a plain bank wire than to one with a letter of credit and a vague spec sheet.

Tie the Balance to an Inspection You Control

This is the single most effective clause available to you, so I will give you the wording:

"The balance payment of 70% becomes due only upon the Buyer's receipt of a passed pre-shipment inspection report, conducted by a third-party inspection agency appointed and paid for by the Buyer, applying AQL 2.5 for major defects and AQL 4.0 for minor defects per ISO 2859-1. Goods failing inspection shall be reworked or replaced at the Seller's cost, with re-inspection at the Seller's cost."

Three details in there are doing the heavy lifting. Appointed and paid for by the Buyer means the inspector works for you, not the factory — a "factory-arranged inspection" is a different product entirely. AQL 2.5 per ISO 2859-1 replaces opinion with a defined sampling plan and a defined accept/reject number, so "acceptable quality" stops being a conversation and becomes a calculation. And re-inspection at the Seller's cost removes the incentive to send a marginal batch back through and hope you get tired of paying inspectors.

SGS, TÜV, Bureau Veritas and QIMA all cover the eyewear clusters in Guangdong, Zhejiang and Fujian, and a day of inspection runs $250–350. On a $20,000 order that is 1.5% for physical verification of everything you are buying. I have never understood buyers who skip it and then ask for an L/C.

Write Specs as Numbers, Not Adjectives

Escrow, arbitration, and inspection all enforce the same thing: measurable statements. Adjectives are unenforceable everywhere. So convert every quality expectation into something a stranger with a caliper and a test report can check.

"UV protection" becomes "UV400, transmittance below 1% at 280–400nm, verified by test report per EN ISO 12312-1." "Polarized" becomes "polarization efficiency ≥ 99%, tested per batch." "Good hinges" becomes "stainless steel barrel hinge, 10,000-cycle open/close endurance, no loosening." "Correct colour" becomes a Pantone number plus an approved physical sample retained by both parties. "Nice packaging" becomes carton dimensions, print colours, and a pouch material with a weight in grams per square metre.

The signed golden sample is worth calling out on its own. Have the factory produce a pre-production sample, approve it in writing, and have both sides keep a sealed unit. When a dispute arises — and on a long relationship one eventually will — that sealed sample is the only reference that settles it without argument.

The Clauses Worth Adding to Every PO

Late delivery penalty. Something modest and real: 0.5% of order value per week late, capped at 5%. The purpose is not the money, it is that a dated penalty makes your delivery date a commitment rather than an aspiration when the factory allocates line time.

Named payee, fixed. State the exact company name and account, and add that any change requires a signed amendment plus verbal confirmation on a previously known number. This is your cheapest defence against email interception, and it costs one sentence.

Governing law and arbitration venue. CIETAC in China or HKIAC in Hong Kong are both practical and enforceable. Naming your own home court feels reassuring and is usually useless — a judgment you cannot enforce against a Chinese entity is decoration.

Tooling and mould ownership. If you paid for the mould, say in writing that you own it and may take possession. Otherwise your custom frame quietly becomes the factory's catalogue item, and possibly your competitor's product.

IP and exclusivity. Your logo, your design, your artwork — stated as yours, with a clause barring the factory from selling your design to anyone else. If your frame is a genuine differentiator, this matters more than the price you negotiated.

Build Trust in Stages

The most reliable protection is not a clause at all — it is sequencing. Start with a paid sample order at $100–300 through PayPal, and judge the samples and how they communicate about problems. Then run a small production order at or near MOQ under Trade Assurance or 30/70 T/T with an inspection. Then scale, and negotiate better terms from a position of demonstrated history.

By the third or fourth order, terms loosen naturally in both directions. Our long-standing buyers get 30/70 with the balance 30 days after B/L date, which is effectively a credit line from us, because five years of clean payments is worth more than any contract clause. That trust is earned in both directions, and it is earned in that order — samples, small order, scale.

One last thing, from the factory side of the table. A buyer who arrives with a clear PO, numeric specs, a named inspection standard, and a defined payment trigger is not a difficult customer. They are the customer we quote most carefully and schedule most reliably, because they are obviously going to be around in three years. Professionalism reads as intent to stay, and every real factory prices that in.

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