Chinese Supplier Failed to Deliver After T/T Payment: What Can a Buyer Do?

Paying a Chinese supplier by T/T bank transfer is common in international trade. However, serious problems may arise when the supplier receives the buyer’s payment but fails to manufacture or ship the goods.

The supplier may repeatedly postpone delivery, claim that production is still in progress, request additional payments, stop responding, or promise a refund without actually paying it.

When a Chinese supplier fails to deliver after receiving T/T payment, the buyer may have several possible remedies, including demanding delivery, requesting repayment, terminating the contract, claiming damages, sending a lawyer’s demand letter, or commencing litigation or arbitration.

The appropriate strategy depends on the contract, the identity of the actual supplier, the payment records, the agreed delivery terms, the communications between the parties, and whether the supplier has recoverable assets in China.

What Is T/T Payment?

“T/T” means telegraphic transfer, usually referring to an international bank transfer. In a typical transaction, the foreign buyer transfers money from its bank account to a bank account designated by the Chinese supplier.

Common T/T payment arrangements include:

• 100% payment before production or shipment;
• 30% deposit and 70% balance before shipment;
• 30% deposit and 70% balance after inspection;
• payment against a proforma invoice;
• payment against a purchase order;
• payment to the supplier’s corporate bank account;
• payment to an account belonging to an individual or another company.

The fact that payment was made by T/T does not determine whether the buyer has a legal claim. The key issue is whether the supplier received the money under a valid sales or manufacturing agreement and then failed to perform its contractual obligations.

What If the Chinese Supplier Received the Money but Never Shipped?

If the supplier received payment but did not deliver the goods, this may constitute a serious breach of contract, especially where:

• the agreed delivery date has already passed;
• the supplier has not provided a credible explanation;
• the supplier has not started production;
• the supplier has requested additional payments without a clear contractual basis;
• the supplier has sold the goods to another buyer;
• the supplier has promised a refund but has not paid;
• the supplier has stopped responding to messages and calls;
• the supplier’s business appears to have closed or moved.

Failure to deliver does not automatically establish fraud. The problem may result from production difficulties, cash-flow problems, disputes over specifications, shipping problems, or intentional misconduct.

The buyer should first establish the facts and preserve evidence before deciding whether to pursue a civil claim, arbitration, litigation, or another remedy.

Step 1: Identify the Actual Chinese Contracting Party

The first step is to determine exactly which company or person entered into the contract and received the T/T payment.

Many foreign buyers communicate with a salesperson, factory representative, trading company, or online platform account. However, the person communicating with the buyer may not be the legal contracting party.

Check the following information:

• Chinese company name;
• Unified Social Credit Code;
• registered address;
• legal representative;
• company bank account name;
• name shown on the commercial invoice;
• name shown on the purchase order or contract;
• name of the company chop;
• name of the entity appearing on the supplier’s business license;
• name of any intermediary, exporter, or trading company.

It is important to distinguish between the factory that manufactures the goods, the trading company that signed the contract, the company that received the payment, and the salesperson who communicated with the buyer.

These parties may be different. A claim against the wrong entity can create serious problems, particularly if the company named in the lawsuit did not sign the contract or receive the payment.

Step 2: Review the Contract and Related Documents

The buyer should review all documents relating to the transaction, not only the formal contract.

Important documents may include:

• sales contract;
• purchase order;
• proforma invoice;
• commercial invoice;
• quotation;
• technical specifications;
• product drawings;
• sample approval records;
• production schedule;
• inspection agreement;
• shipping instructions;
• refund agreement;
• emails and messaging records;
• bank transfer confirmation.

Pay particular attention to:

• the agreed products;
• quantity and specifications;
• total contract price;
• deposit amount;
• balance payment terms;
• delivery date;
• delivery location;
• shipping method;
• inspection requirements;
• refund provisions;
• liquidated damages or delay penalties;
• governing law;
• arbitration clause;
• jurisdiction clause;
• force majeure clause;
• termination clause.

A purchase order, invoice, email exchange, or online message may also help establish the parties’ agreement, even if the buyer does not have a long formal contract.

Step 3: Determine Whether the Supplier Is in Breach

Not every delayed shipment has the same legal significance. The buyer should identify the exact contractual obligation that the supplier failed to perform.

The Supplier Missed the Delivery Deadline

If the contract specifies a delivery date and the date has passed, the supplier may be in breach.

The buyer should determine:

• whether the delivery date was fixed or estimated;
• whether the buyer provided all information required for production;
• whether the buyer made the required balance payment;
• whether the supplier gave a valid contractual reason for delay;
• whether the buyer agreed to extend the delivery deadline;
• whether the contract contains a grace period;
• whether the delay defeats the commercial purpose of the transaction.

The Supplier Has Not Started Production

If the supplier received a deposit but did not begin production, the buyer should request evidence of the production status.

Depending on the product, useful evidence may include:

• production photographs;
• factory production records;
• raw material purchase records;
• assembly photographs;
• quality-control records;
• testing reports;
• shipping or booking documents.

Photographs provided by the supplier may not be sufficient by themselves. They may relate to another order or another customer. Independent verification may be necessary where the amount involved is significant.

The Supplier Requests Additional Payment

A supplier may request additional payment after receiving the deposit. The buyer should not automatically pay more money without reviewing the contract and understanding the reason.

Possible explanations include:

• raw material price increases;
• changes requested by the buyer;
• unexpected production costs;
• currency fluctuations;
• shipping cost increases;
• cash-flow problems;
• an attempt to obtain additional money from the buyer.

If the additional payment is not supported by the contract or a subsequent agreement, the buyer should carefully consider whether making another payment would increase the risk of loss.

The Supplier Promised a Refund but Has Not Paid

Sometimes the supplier admits that it cannot deliver and agrees to refund the buyer. The supplier may then repeatedly promise to pay “next week” or “after receiving money from another customer.”

A written refund promise can be important evidence. The buyer should preserve:

• the exact refund amount;
• the agreed refund date;
• the supplier’s admission of non-delivery;
• any repayment schedule;
• any acknowledgment of debt;
• any proposed installment arrangement.

A promise to refund does not guarantee that the supplier has sufficient assets to pay. The buyer should consider legal action and asset investigation if the supplier continues to delay.

Step 4: Preserve All Evidence

Evidence is often the most important part of a Wuxi supplier dispute. Foreign buyers should preserve the evidence before the supplier deletes messages, closes its online account, changes its company name, or becomes unreachable.

Contract and Order Evidence

• signed contract;
• purchase order;
• proforma invoice;
• commercial invoice;
• quotation;
• product specifications;
• technical drawings;
• approved samples;
• delivery schedule;
• inspection requirements;
• refund agreement.

Payment Evidence

• bank transfer receipt;
• SWIFT confirmation;
• bank statement;
• beneficiary information;
• payment reference;
• payment date;
• amount and currency;
• bank account name;
• correspondence confirming receipt of payment.

The bank transfer record should be preserved in its original form. A screenshot may be useful, but an official bank document is generally more persuasive.

Communication Evidence

• emails;
• WhatsApp messages;
• WeChat messages;
• Alibaba.com messages;
• Made-in-China.com messages;
• voice messages;
• call records;
• meeting notes;
• messages confirming delivery dates;
• messages acknowledging the refund obligation.

Where possible, preserve the complete conversation rather than only selected screenshots. The surrounding context may affect the meaning of a message.

Evidence of Non-Delivery

• absence of shipping documents;
• absence of a bill of lading;
• absence of an airway bill;
• absence of container information;
• absence of inspection records;
• supplier messages admitting that production has not started;
• freight forwarder confirmation that no shipment was booked;
• warehouse confirmation that the goods do not exist.

Evidence of Financial Loss

The buyer should also preserve evidence of losses caused by the supplier’s failure to deliver, such as:

• replacement purchase costs;
• additional freight costs;
• customer cancellation records;
• lost resale contracts;
• storage costs;
• inspection costs;
• bank charges;
• documented penalties payable to the buyer’s customer;
• other foreseeable and provable losses.

Step 5: Send a Clear Written Demand to the Supplier

Before commencing formal legal proceedings, the buyer may send a written demand to the supplier.

The demand should clearly identify:

• the contract or purchase order;
• the payment date and amount;
• the agreed delivery deadline;
• the supplier’s failure to deliver;
• the buyer’s required remedy;
• the deadline for response;
• the consequences of non-compliance.

The buyer should avoid emotional accusations and unsupported statements such as “you are a criminal” or “you have committed fraud.” Such statements may make settlement more difficult and may create unnecessary evidentiary or reputational issues.

A practical demand may require the supplier to do one of the following:

• confirm a realistic shipment date;
• complete delivery by a specified deadline;
• refund the payment in full;
• sign a written repayment agreement;
• provide documents proving production and shipment status.

The buyer should usually set a specific deadline instead of accepting indefinite promises such as “soon,” “shortly,” or “next week.”

Step 6: Consider a Lawyer’s Demand Letter

If the supplier ignores the buyer’s demand or continues to make unreliable promises, a formal lawyer’s demand letter may be appropriate.

A China lawyer may send the demand letter to the supplier’s registered address, business address, legal representative, or other relevant contact address.

A lawyer’s demand letter may:

• identify the legal contracting parties;
• summarize the contractual obligations;
• identify the supplier’s breach;
• require delivery or repayment;
• request supporting documents;
• reserve the buyer’s rights to claim damages;
• require the supplier to preserve relevant evidence;
• propose a settlement deadline;
• warn of possible litigation or arbitration.

A demand letter is not a court judgment and does not guarantee payment. However, it may demonstrate that the buyer is serious and may create an opportunity for settlement before additional legal costs arise.

Step 7: Evaluate Whether Settlement Is Practical

Settlement may be appropriate where the supplier is still operating and appears to have the ability to perform or repay the money.

Possible settlement structures include:

• full refund by a fixed date;
• installment repayment;
• partial refund with immediate payment;
• delivery of completed goods;
• replacement goods from another factory;
• delivery after an independent inspection;
• refund secured by a guarantor;
• settlement agreement with an agreed payment schedule.

The buyer should be careful with installment promises. A supplier who has already failed to deliver may also fail to comply with a repayment schedule.

Where appropriate, the settlement agreement should include:

• clear acknowledgment of the debt;
• exact payment dates;
• bank account details;
• default consequences;
• interest or agreed compensation;
• security or guarantees where available;
• governing law;
• dispute resolution provisions;
• language and execution requirements.

Step 8: Consider Termination of the Contract

Depending on the contract and applicable law, the buyer may have the right to terminate or avoid the contract after the supplier’s serious breach.

Termination may be considered where:

• the supplier has clearly stated that it will not perform;
• the delivery deadline has passed and the delay is substantial;
• the supplier has failed to perform after an additional reasonable deadline;
• the supplier has stopped communicating;
• the commercial purpose of the transaction has been defeated;
• the supplier’s performance is no longer useful to the buyer.

Termination should be handled carefully. The buyer should review the contract and applicable law before sending a termination notice.

In some circumstances, an improperly worded termination notice may create arguments about whether the contract was validly terminated or whether the buyer itself breached the contract.

A termination notice should normally state:

• the contract being terminated;
• the supplier’s specific breaches;
• the legal or contractual basis for termination;
• the effective date;
• the repayment demand;
• the buyer’s reservation of rights to claim damages.

Step 9: Consider Litigation or Arbitration in China

If the supplier refuses to deliver or refund the payment, the buyer may need to consider formal legal proceedings.

The available procedure depends on the contract and the applicable dispute-resolution clause.

Chinese Court Litigation

If the dispute is subject to Chinese court jurisdiction, the buyer may consider filing a civil lawsuit against the supplier in China.

A claim may request:

• delivery of the goods;
• repayment of the purchase price;
• termination or avoidance of the contract;
• compensation for delay;
• compensation for additional purchase costs;
• compensation for other provable losses;
• interest where legally available;
• litigation costs where recoverable.

The competent court cannot be determined solely by the fact that the supplier is located in China. The analysis may depend on:

• the contract’s jurisdiction clause;
• the contract’s governing law;
• the supplier’s registered location;
• the place of performance;
• the type of transaction;
• whether the defendant is a company or an individual;
• whether an arbitration agreement exists;
• whether the dispute involves an international sale of goods.

Where there is no valid arbitration clause or exclusive jurisdiction clause, the supplier’s domicile may be an important jurisdictional starting point. However, the proper court should be confirmed after reviewing the transaction documents.

Arbitration

If the contract contains a valid arbitration agreement, arbitration may be required or available instead of court litigation.

The buyer should check:

• the name of the arbitration institution;
• the seat of arbitration;
• the arbitration language;
• the applicable rules;
• the scope of the arbitration clause;
• whether the clause covers the actual contracting parties;
• whether the arbitration clause is enforceable.

Do not assume that a supplier’s online platform account automatically creates an arbitration agreement between the buyer and the supplier. Platform terms, platform dispute procedures, and the underlying sales contract may have different legal effects.

Step 10: Consider Asset Investigation and Preservation

Winning a judgment or arbitration award does not automatically mean that the buyer will recover the money.

The supplier may have:

• bank accounts;
• factory equipment;
• vehicles;
• real estate;
• inventory;
• receivables from other customers;
• shares in other companies;
• other assets subject to enforcement.

The supplier may also have significant debts, enforcement records, lawsuits, or restrictions on its business activities.

Before commencing expensive proceedings, the buyer should consider whether the supplier appears to have recoverable assets.

Depending on the circumstances, a lawyer may evaluate whether to apply for:

• property preservation;
• bank account freezing;
• asset preservation before litigation;
• asset preservation during litigation;
• enforcement measures after judgment;
• investigation of related companies or guarantors.

Asset preservation is subject to legal requirements and may require security or other supporting materials.

What Remedies May Be Available?

Depending on the facts and applicable law, a buyer may seek one or more of the following remedies.

Delivery of the Goods

The buyer may request that the supplier complete production and deliver the goods.

This remedy may be useful where:

• the goods are custom-made;
• the buyer cannot easily purchase replacements;
• the goods are urgently needed;
• the supplier has already completed most of the production;
• the contract remains commercially useful.

However, specific performance may be impractical where the supplier no longer operates, the goods do not exist, or the buyer has lost confidence in the supplier.

Refund of the Purchase Price

The buyer may request repayment of the deposit, full purchase price, or other amounts paid to the supplier.

The buyer should calculate the amount carefully and distinguish between:

• the principal amount paid;
• bank charges;
• agreed interest;
• contractual penalties;
• additional losses;
• amounts already refunded.

Termination or Avoidance of the Contract

Where the supplier’s breach is sufficiently serious, the buyer may seek to terminate or avoid the contract and request repayment.

The legal requirements depend on the governing law and the contract. The buyer should not assume that any delay automatically permits termination.

Damages

The buyer may be able to claim damages caused by the supplier’s breach.

Potential losses may include:

• the difference between the contract price and replacement purchase price;
• additional shipping expenses;
• inspection costs;
• storage costs;
• documented customer penalties;
• reasonable transaction expenses;
• other foreseeable and provable losses.

Claims for lost profits or indirect losses may face additional legal and evidentiary difficulties. The buyer should prepare clear evidence showing that the losses were caused by the supplier’s breach and can be legally recovered.

What If the Supplier Says the Deposit Is Non-Refundable?

Chinese suppliers sometimes state that a deposit is “non-refundable.” This wording does not automatically determine the result of the dispute.

The legal effect may depend on:

• the wording of the contract;
• the purpose of the deposit;
• whether the supplier began production;
• whether the supplier purchased special materials;
• whether the buyer caused the cancellation;
• whether the supplier itself breached the contract;
• whether the deposit clause is enforceable;
• whether the supplier suffered actual losses.

If the supplier failed to deliver without a valid contractual or legal reason, it may not be able to retain the deposit simply by labeling it “non-refundable.” The buyer should obtain a legal assessment of the actual clause and transaction history.

What If the Supplier Claims That the Goods Are Ready?

A supplier may claim that the goods are ready but refuse to ship until the buyer pays an additional amount.

The buyer should request:

• current photographs and videos;
• production records;
• packing lists;
• inspection reports;
• product serial numbers;
• warehouse address;
• shipping booking information;
• evidence that the goods belong to the buyer;
• an explanation of the additional payment request.

The buyer should avoid sending additional money merely because the supplier provides photographs. If the amount is substantial, independent inspection or verification may be appropriate.

What If the Supplier Stops Responding?

If the supplier stops responding, the buyer should not continue sending informal messages indefinitely.

The buyer should consider the following steps:

1. preserve all existing communications;
2. verify the supplier’s registered status;
3. check whether the company has changed its address or legal representative;
4. check whether the supplier is involved in lawsuits or enforcement proceedings;
5. send a formal written demand;
6. consider service through registered business addresses;
7. evaluate litigation or arbitration;
8. consider asset preservation where appropriate.

Silence does not necessarily prove fraud, but it increases the importance of timely evidence preservation and legal action.

What If the Payment Was Made to an Individual’s Bank Account?

Payment to an individual account may complicate the dispute, but it does not necessarily eliminate the buyer’s claim.

The buyer should determine:

• why payment was made to the individual;
• whether the individual was authorized by the supplier;
• whether the individual was the salesperson or legal representative;
• whether the company confirmed receipt of the payment;
• whether the invoice named the company;
• whether the individual made the contractual promises;
• whether the individual personally guaranteed repayment.

The correct defendant may be the company, the individual, or potentially more than one party, depending on the evidence and applicable law.

What If the Supplier Is a Trading Company Rather Than a Factory?

Many foreign buyers believe they are purchasing directly from a factory, but the contract may actually be with a trading company.

This distinction matters because:

• the trading company may be the contractual seller;
• the factory may not be legally responsible to the buyer;
• the trading company may have subcontracted production;
• the payment may have been transferred to another entity;
• the trading company may have different assets and liabilities.

The buyer should identify the contractual seller rather than relying only on the factory’s website, Alibaba profile, or salesperson’s statements.

What Can a China Lawyer Do?

A China lawyer may assist with the dispute from the initial evidence review through settlement, litigation, or enforcement.

Possible legal services include:

• reviewing the contract and payment records;
• identifying the actual Chinese contracting party;
• checking the supplier’s registration information;
• reviewing the supplier’s legal representative and registered address;
• assessing the supplier’s contractual breach;
• evaluating jurisdiction and dispute resolution clauses;
• preparing a legal strategy;
• sending a formal demand letter;
• communicating with the supplier;
• negotiating a refund or repayment agreement;
• preparing a termination notice;
• filing a lawsuit in China where appropriate;
• commencing arbitration where appropriate;
• applying for asset preservation;
• assisting with evidence preparation;
• obtaining and reviewing Chinese company documents;
• assisting with judgment or award enforcement.

A lawyer should first evaluate whether the supplier is identifiable, whether the claim is legally supportable, and whether recovery is commercially realistic.

Common Types of T/T Supplier Disputes

Should the Buyer Contact the Bank?

The buyer may contact its bank promptly after discovering the problem, particularly if the transfer was recent.

The bank may be able to explain whether:

• the transfer has been completed;
• the payment is still pending;
• a recall request is possible;
• the beneficiary bank can be contacted;
• the payment details contain an error;
• the transaction may involve fraud indicators.

However, an international bank transfer is not normally reversible simply because the supplier fails to deliver. A bank recall may be difficult after the funds have reached the beneficiary account.

The buyer should contact the bank promptly but should not rely on a bank recall as the main recovery strategy.

Should the Buyer Report the Supplier to the Police?

A failure to deliver is not automatically a criminal case. Many supplier disputes are contractual and must be pursued through civil or commercial procedures.

However, criminal reporting may be considered where there is credible evidence of intentional deception, forged documents, fraudulent identity, multiple victims, or other conduct that may constitute a criminal offense.

The buyer should obtain a careful legal assessment before making criminal allegations. A civil breach of contract and criminal fraud are not the same issue.

How Long Does a Wuxi supplier dispute Take?

The time required depends on the supplier’s cooperation, the complexity of the transaction, the amount involved, the available evidence, the dispute-resolution procedure, and the supplier’s assets.

Possible stages include:

• initial document review;
• supplier identity and registration investigation;
• written demand;
• settlement negotiations;
• preparation of litigation or arbitration;
• service of legal documents;
• trial or arbitration;
• judgment or award;
• enforcement.

A negotiated refund may be completed relatively quickly if the supplier is cooperative. Litigation or arbitration may take considerably longer, especially if the supplier contests jurisdiction, disputes the contract, or has no readily recoverable assets.

What Should a Buyer Do Immediately?

A buyer facing a Chinese supplier’s non-delivery should consider the following checklist:

• stop making additional payments until the situation is assessed;
• save the complete contract and purchase documents;
• download all emails and online messages;
• save bank transfer records;
• identify the exact beneficiary of the payment;
• confirm the supplier’s Chinese legal name;
• check whether the supplier is still registered and operating;
• record every missed delivery promise;
• request a clear written explanation;
• send a formal demand with a fixed deadline;
• consider a lawyer’s demand letter;
• evaluate the supplier’s assets and enforcement history;
• review the jurisdiction and arbitration clauses;
• consider litigation, arbitration, or asset preservation where appropriate.

When Should You Contact a China Lawyer?

You should consider contacting a China lawyer promptly where:

• the supplier has received a substantial deposit;
• the delivery deadline has passed;
• the supplier refuses to provide a credible production update;
• the supplier requests additional payment;
• the supplier has promised a refund but failed to pay;
• the supplier has stopped responding;
• the supplier’s company status is unclear;
• the payment was made to an individual account;
• the supplier may be transferring or hiding assets;
• the buyer needs to terminate the contract;
• the buyer is considering litigation or arbitration;
• the claim amount is large enough to justify formal recovery action.

Early legal review may help the buyer avoid paying more money, sending an ineffective demand, suing the wrong entity, or missing an important procedural deadline.

A Practical Recovery Strategy

In many cases, the most practical approach is to proceed in stages.

1. Confirm the facts. Identify the contracting party, payment recipient, contract terms, and actual delivery status.
2. Preserve evidence. Save contracts, payment records, communications, and evidence of non-delivery.
3. Assess recoverability. Check whether the supplier is registered, operating, solvent, and capable of paying.
4. Send a formal demand. Require delivery or repayment by a clear deadline.
5. Negotiate only on clear terms. Avoid indefinite promises and undocumented extensions.
6. Prepare legal action. If the supplier does not comply, consider litigation, arbitration, or other available remedies.
7. Consider enforcement from the beginning. A legal claim is more useful when there is a realistic recovery plan.

The best strategy is not always to file a lawsuit immediately. In some cases, a well-prepared demand letter and asset investigation may encourage settlement. In other cases, delay may allow the supplier to transfer assets or become more difficult to locate.

Legal Assistance for Chinese Supplier Non-Delivery Disputes

When a Chinese supplier receives T/T payment but fails to deliver, the buyer may still have legal options. The buyer may be able to demand delivery, obtain a refund, terminate the contract, claim damages, or commence legal proceedings in China.

However, the outcome depends on the actual contract, evidence, legal entity, applicable law, dispute-resolution clause, and the supplier’s ability to satisfy a judgment or settlement.

Lyu & Associates provides lawyer-led legal services for foreign buyers involved in disputes with Chinese suppliers, including:

• Chinese supplier identity and contract review;
• T/T payment and non-delivery disputes;
• deposit and refund recovery;
• formal demand letters;
• settlement negotiations;
• China litigation and arbitration assessment;
• asset investigation and enforcement strategy.

If a Chinese supplier has received your payment but failed to deliver, the first step is to review the transaction documents and determine the most realistic recovery strategy.

Legal Contributors

Legal professionals contributing to this article and related legal analysis.

Qiang Lyu

Attorney-at-law (PRC) ｜ Cross-Border Dispute Resolution

Qiang Lyu focuses on cross-border commercial dispute resolution, China supply chain disputes, international trade litigation, and foreign-related debt recovery matters. He has represented and assisted clients from the United States, Japan, South Korea, and Europe in disputes involving Chinese manufacturers, suppliers, and international business transactions.

His practice also includes China company law, intellectual property matters, and commercial contract disputes involving foreign-invested businesses and cross-border commercial activities.

Email: lvqiang_at_lyuandassociates.com Please replace "_at_" with "@" before sending your email.

Tel / WhatsApp / WeChat: +86 187 9542 8064