If a Chinese supplier has your money and will not refund it, recovery usually turns on four things: which Chinese company actually received the payment, a written record of the refund obligation, whether that company still has assets in China, and the route your contract allows. Get the refund confirmed in writing with a date, check for assets before you warn the supplier, and keep track of your limitation period.
- Find the company that holds the money. Match the name on the bank account you paid to the supplier's registered Chinese name and Unified Social Credit Code.
- A written refund promise is worth more than it looks. It is evidence of the debt, and a debtor's agreement to perform interrupts the limitation period (Civil Code Art. 195).
- No agreement? Terminate and claim restitution. Once a contract is terminated, the supplier must return what it received, and termination for breach does not stop you claiming damages (Art. 566).
- Only a true deposit (定金) is doubled. A supplier that takes a deposit and then fails to perform so that the contract's purpose is defeated must return double; the deposit cannot exceed 20% of the contract value (Arts. 586–587). Most advance payments are simply refundable.
- You have four years, not three, for disputes over an international sale of goods contract (Art. 594).
- If assets may be moving, freeze first. A court decides an urgent preservation application within 48 hours.
1. Why refunds stall
Suppliers rarely refuse a refund in so many words. The usual pattern is agreement in principle followed by delay: the finance department needs approval, the money is tied up in materials, the refund will come after the next shipment. Behind that there is often a real cash problem, or a bet that a foreign buyer will give up once the chats stop being answered.
The delay matters for two reasons. The supplier's cash can move while you wait, and every month without a written, dated demand weakens the record you will need later. The steps below are ordered to protect both.
2. Pin down who holds your money
Before you negotiate, confirm three names are the same company: the company on the contract or pro forma invoice, the company whose bank account received your payment, and the company you are talking to. A Chinese company is identified in law by its registered Chinese name and its 18-character Unified Social Credit Code; the English name on an invoice has no legal status. You can check registration details on the National Enterprise Credit Information Publicity System.
If the payment went to a different company, a Hong Kong affiliate or an individual's account, the claim may need to be brought against someone other than the supplier you know. That is worth establishing before you spend on anything else. The same check should also cover whether the company has existing lawsuits, enforcement cases or changes to its legal representative and shareholders.
3. Turn the refund into a written, dated obligation
If the supplier accepts that it owes you money, get that in writing now. The most useful document is a short refund agreement or confirmation that states:
- the amount to be refunded and the currency;
- the date or instalment dates;
- the account it will be paid to;
- what happens if a payment is missed, for example that the full balance becomes due;
- the supplier's company seal (chop), not just a salesperson's signature.
Even a clear chat message admitting the amount helps. Chinese courts accept electronic data, including WeChat and email exchanges, as evidence. Export the full chat history with dates, not screenshots of single messages.
A written acknowledgment also protects your time limit. Under Civil Code Art. 195, the limitation period is interrupted and starts again when the creditor makes a demand or the debtor agrees to perform. The general period is three years (Art. 188), and four years for disputes over international sale of goods contracts (Art. 594).
4. If there is no agreement: terminate and claim the money back
Where the supplier has not delivered and will not confirm a refund, the legal route to your money usually runs through terminating the contract.
- Grounds. Under Civil Code Art. 563, a party may terminate where the other side delays performing its main obligation and still does not perform within a reasonable period after being asked to, or where its delay or other breach defeats the purpose of the contract.
- How. Termination takes effect when your notice reaches the supplier (Art. 565). A notice can also say that the contract terminates automatically if the supplier does not perform by a stated date.
- What follows. After termination, performance already made can be reversed: the supplier must return your payment, and you keep the right to claim damages for its breach (Art. 566).
If your contract is governed by the UN Convention on Contracts for the International Sale of Goods (CISG), the equivalent steps are to fix an additional period for delivery and then declare the contract avoided if the goods do not arrive. The CISG applies to many contracts between Chinese suppliers and buyers in other Convention states unless the contract excludes it; see how Chinese courts apply the CISG.
Send the deadline notice in a form you can prove was delivered. A notice from a Chinese law firm, in Chinese, with a delivery record, serves that purpose and usually changes the tone of the conversation.
5. Deposit or advance payment: it changes the amount
| Payment | If the supplier fails to perform | Limits |
|---|---|---|
| Deposit expressly agreed as 定金 | Supplier must return double where its failure defeats the purpose of the contract (Art. 587) | Cannot exceed 20% of the contract value; any excess is not treated as a deposit (Art. 586). If a penalty clause is also agreed, you choose one or the other (Art. 588) |
| Advance payment or down payment | Refund of the amount paid after termination, plus damages you can prove (Arts. 566, 584) | Damages are limited to losses the supplier foresaw or should have foreseen when the contract was made |
| Full payment | Same as an advance payment | Same |
Pro forma invoices often say "deposit" in English without any Chinese wording. Whether the double-return rule applies depends on what the parties actually agreed, so do not build a demand on it without checking the documents.
6. The escalation route
| Step | What it does | Typical time |
|---|---|---|
| Direct negotiation in Chinese | Gets the refund confirmed in writing, with dates and the company seal | Days to two weeks |
| Demand letter from a Chinese law firm | A dated, provable demand with a deadline; often ends the stalling | 1–2 weeks |
| Asset preservation | Freezes bank accounts or other assets; urgent applications decided within 48 hours | Days |
| Arbitration or court | Whichever your contract requires; otherwise the court where the supplier is domiciled or the contract is performed | Months |
| Enforcement | Court search and seizure of assets; apply within two years of the judgment's payment deadline | Months |
Two points change the order. If there are signs the supplier is moving assets, such as a new company at the same address or a changed legal representative, prepare the claim and a preservation application before sending any demand. A pre-action freeze must be followed by proceedings within 30 days. And court fees are modest: RMB 13,800 on a RMB 1,000,000 claim, with the preservation fee capped at RMB 5,000. The full breakdown is in how much it costs to sue a Chinese company.
7. When a refund claim is not worth pursuing
- The amount is small compared with legal costs, translation and document authentication.
- The company has already been closed, or is on the list of dishonest judgment debtors with nothing left to seize.
- You cannot show who received the money.
In those cases a negotiated partial refund, a credit against future orders, or writing off the loss may be the better commercial decision. Where the company is an empty shell, check whether its shareholders paid in their subscribed capital before giving up.
When to bring in a China lawyer
Once the supplier has stopped answering, has refused a refund in writing, or appears to be moving money, a Chinese law firm can verify the company, send a formal demand and prepare preservation and proceedings. Our China supplier disputes page explains how we act for foreign buyers; if you have already paid and nothing shipped, see paid a Chinese supplier but no goods arrived, and for the choice of route, how to recover money from a Chinese supplier.
Frequently asked questions
Get the refund confirmed in writing with the amount, dates, receiving account and the company seal, and check which company actually received your payment. If the supplier still does not pay, a demand from a Chinese law firm with a deadline is the usual next step, followed by asset preservation and arbitration or court proceedings if needed.
Only if the payment was agreed as a deposit in the Chinese legal sense (定金). Under Civil Code Art. 587, a supplier that receives such a deposit and fails to perform so that the purpose of the contract is defeated must return double. The deposit cannot exceed 20% of the contract value (Art. 586). An ordinary advance payment is refunded, not doubled.
For disputes over an international sale of goods contract, four years (Civil Code Art. 594); otherwise the general period is three years (Art. 188). The period is interrupted and restarts when you make a demand or the supplier agrees to perform (Art. 195), so keep written, dated records of both.
It is useful evidence, because Chinese courts accept electronic data such as WeChat records. A signed and sealed refund confirmation with amounts and dates is stronger. Export the full chat history with dates rather than relying on screenshots.
If there are signs the supplier is moving assets, yes, consider it. A court decides an urgent preservation application within 48 hours, but you must provide security and start proceedings within 30 days of a pre-action freeze, so the claim needs to be ready first.
Sources
- National Database of Laws and Regulations — PRC Civil Code, Arts. 188, 195, 563, 565, 566, 584, 586–588 and 594 (Chinese text).
- National Enterprise Credit Information Publicity System — company registration details by name or Unified Social Credit Code.
- UNCITRAL — CISG status — contracting states.
- Internal: freezing assets before you win · what it costs to sue · China supplier disputes
This article is general information for foreign companies, not legal advice on any specific matter. Rules and practice change; please take advice on your facts.