When a Chinese Company Refunds You, Can You Ask For Payment to Another Account?

If I pay a Chinese supplier from my bank account A, can I ask the Chinese company to pay to my bank account B when it refunds me?

The answer is NO.

Refunds can only be given “through the original route”.

There is usually no obstacle if a Chinese company refunds you using its foreign funds. However, if it makes a payment to you outside China using its domestic funds, the payment shall be subject to foreign exchange control of China.

As the Trade Commissioner Service of the Canadian government says, “In China, companies, banks, and individuals must comply with a “closed” capital account policy. This means that money cannot be freely moved into or out of the country unless it abides by strict foreign exchange rules.”

Generally, when Chinese companies export or import goods, they are required to provide the banks with the trade contracts and customs documents, and the banks shall, on behalf of regulators, review their income or expenditure. Such transactions can only be completed after they are reviewed and approved.

When a Chinese company agrees to refund you, which was not mentioned in previous trade contracts, Chinese banks or regulators may view this as a collusion between the Chinese company and you to avoid foreign exchange regulation.

Now, Chinese banks will review the deal in a strict manner. For example,

If the original transaction has been canceled and the trade contract has been rescinded, the bank will review it more closely.

In the case of a refund, the bank will require that it must be given through the original route, i.e. to the bank account originally used by the purchaser to pay for the goods.

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