Business in China - 003 Get paid early and often

In the nineties the consulting firm that I was a partner in did about 50% of our work in China. One important lesson we learned was to get paid early and often.

All of our contracts included a 1/4 down payment to begin a project. We would have the client sign the very detailed quote for services (knowing that my 002 posting would happen). Often we would get a call or email two weeks later asking if we had finished the initial sketches. We would reply that since the down payment had not been received and the quote had stated we would not begin work until we received it so therefore nothing had happened on the project. after the client realized we were serious we would typically receive the payment by wire transfer very quickly.

An aside - if you are doing business internationally you should supply your banks wire transfer information in your quote.

Also in our quote we had points at which the client was required to pay for work to date. With a good client we would receive the wire transfer a few days before it was due. With bad clients we would again stop working on the project.

From the outside you are typically better off at receiving payment. I have spoken with many consulting firms inside China and some do not get paid on up to 4 out of 5 projects.

new clients, china or domestic, i normally ask for 50% upfront, the rest contingent on meeting phases and/or time checkpoints (whichever comes first).

do you find, particularly, in china that this sort of arrangement (ie. deposit/payment structure) is different in expectations than elsewhere? my understanding is that a 3-3-4 model is more common.



PS. also given #002 of your posts, to what extent do you think the proposal/fee structure is different in china than elsewhere? quote up and negotiate down? quote low and then add on more later? quote fair and build a relationship?..


Good point. The percentages may have changed. When i was doing it the move by Chinese manufacturers to use and pay US designers was new and so we had a lower percentage in order to make new clients more comfortable.

So the percentages are up to you, just get something up front.