Everything looks beautiful in the news and reports. More than 95% of settlements between Russia and China are conducted in national currencies. It sounds like a victory. It seems that the problem has been solved, and payments to China are now easy and straightforward.
But anyone who actually works with China knows that this is not entirely true, to put it mildly. The beautiful statistics hide the harsh reality of refunds, blocked accounts, and weekly waits. Let's find out why direct payments in yuan are not a panacea, and which payment methods actually work.
Why don't the big Chinese banks want our money?
Let's start with the main thing. Yes, the Chinese government has not formally imposed sanctions. But large Chinese banks do not live in a vacuum. They work with the whole world. Their business is based on dollars and euros. And the prospect of being subject to secondary sanctions for supporting the Russian economy is worse for them than losing all Russian clients combined.
Therefore, despite all the political statements, in practice they are doing everything to protect themselves. This means making life as difficult as possible for Russian companies.
Compliance, the new scary word
Even if the bank is theoretically ready to accept your payment, it will arrange a check for you, compared to which an interrogation at the tax office will seem like a nice conversation. Compliance in China towards Russian companies is now prohibitive.
They will check your entire background, the founders and the final beneficiaries. And not only your company, but also your Chinese supplier's company. Any connection, even the most indirect one, with the sanctions list, and that's it, the payment is refunded. And their refund is not fast, you can wait for your money for a week or more.
Small banks and Russian branches. Will it help?
Well, what about small regional banks? Yes, they can be bolder. But this is a roulette game. Firstly, not every supplier will want to open an account with some unknown bank for the sake of a single contract. Secondly, the policy of such a bank may change at any time. Today they accept payments, and tomorrow they were advised not to do so.
Then another seemingly obvious option comes to mind — a Russian bank with a branch in Shanghai. It seems that this is the solution. Our bank is located on their territory. But in practice, there are enough problems here.:
- Terms:Transfers can take weeks, even if everything is done perfectly.
- Opacity:You don't understand where your payment is and why it's frozen. The bank gives formal unsubscriptions.
- Limitations:Not all Chinese banks are ready to work even with such a branch, fearing the same sanctions.
It turns out to be a vicious circle.
So what are the alternatives?
Cryptocurrency. Yes, this is a working option. Most often, USDT is used, which is essentially the same dollar, only in digital form. But you need to be a real expert here. You need to understand how to legalize all this, how to get through customs, and how to report to the tax service. It's not for everyone. A mistake at any of these stages can cost you the entire load.
Barter. Theoretically, yes. But in practice it is very difficult. We need to find a partner who is willing to change. We need to involve appraisers to understand how many wagons of your timber one of his machines costs. It's long and expensive. It is not suitable for operational purchases.
The payment agent. The most working option
And so we come to the most effective method for today. This is a job through a professional payment agent.
What's the point? A competent agent has its own international infrastructure and a network of trading companies in different jurisdictions (for example, in China, Hong Kong, and the United Arab Emirates). When you pay through an agent, the following happens:
- You sign a contract with an agent and transfer rubles to him in Russia.
- The agent gives a command to his Chinese company, and it pays your supplier in yuan from its Chinese account.
What does this mean?
- No connection with the Russian Federation.For the supplier's bank, this is a regular internal payment from one Chinese company to another. No toxic Russian traces, no enhanced compliance. The payment takes place in a few hours.
- Flexibility.If the supplier does not want to accept payment from a company from mainland China, the agent can pay from his company in Hong Kong. If the supplier accepts only from certain jurisdictions, the agent will select the appropriate one.
- The exporter's cover.There are cases when a European or American supplier flatly refuses to sell anything to Russia. The agent can act as a buffer company. His European firm will sign a contract with the supplier, buy the product, and then sell it to you. For the supplier, this will be a common transaction within the EU.
In fact, a payment agent is your financial special forces. It solves problems that are almost impossible to solve head-on. Yes, it costs money. But these costs are nothing compared to the risks of losing the payment, disrupting the delivery and damaging the relationship with the supplier.
But there is an important caveat here too. Not all agents are the same. One of them will simply send you payments by email and communicate in a messenger. Another one will provide access to your personal account, where the whole process is visible: here is your application, here it is in progress, here is the payment executed, here are the supporting documents. And it's not just about convenience. It's about transparency and security. When an agent has a well-established digital service, it means that he has not only received money, but also the entire internal process. Such a partner is a priori more trustworthy.
What is the result?
Beautiful headlines about calculations in yuan are one thing, but daily practice is quite another. Direct payments to China today are a lottery with very low chances of winning.
Therefore, businesses have to adapt. And so far, the most effective tool in this new reality is not finding the right bank, but using a professional payment agent. This is not a gray scheme, but a pragmatic response to the prevailing conditions.
This situation is constantly in motion, with new restrictions and new windows appearing. We analyze real cases and share operational information in our Telegram channel.
Author: Dzugaev Bek, Business Support Department, ILC PAY
