How to Get a Refund From a Chinese Supplier: Deposits, Defective Goods and Non-Delivery

Quick Answer: To get money back from a Chinese supplier, start with the payment route you used, not with a lawsuit. Card, PayPal and platform payments such as Alibaba Trade Assurance have their own dispute windows, often counted in days or weeks. For bank transfers, the route is a written demand, then CIETAC arbitration or a PRC court, using the right to terminate and claim restitution under CISG Articles 49 and 81 or PRC Civil Code Articles 563 and 566. Check one detail early: if your contract calls the payment 定金 (earnest money), PRC law may let you claim double the deposit back.

First, Identify How You Paid

Most foreign buyers start by asking whether they can sue. The faster question is how the money left your account, because each payment route has its own recovery mechanism and its own deadline.

How you paid	First recovery route	What to watch
Alibaba Trade Assurance	Open a dispute on the platform	Short claim window; platform evidence rules apply
Credit card or PayPal	Chargeback or payment dispute	Deadlines set by the card scheme or PayPal, usually weeks or months
Letter of credit	Refuse discrepant documents before payment	Once the bank pays against compliant documents, the L/C route is largely spent
T/T bank transfer	Written demand, then arbitration or court	No chargeback; recovery depends on the contract and the supplier's assets

If you paid by T/T, which is the norm for factory orders, there is no button to press. Your leverage comes from the contract, the evidence file and a credible next step.

Do You Have a Legal Right to a Refund?

A refund is the result of ending the contract and unwinding what was paid. The legal basis depends on which law governs.

Under the CISG, which applies to many sales between a Chinese seller and a buyer in another contracting state unless the contract excludes it, a buyer facing non-delivery can fix an additional period of reasonable length for the seller to perform (Article 47). If the seller does not deliver within that period, or says it will not, the buyer may declare the contract avoided (Article 49). For defective goods, avoidance requires a fundamental breach. Once the contract is avoided, the buyer can claim restitution of the price paid (Article 81), and the seller must also pay interest from the date the price was paid (Article 84).

Under the PRC Civil Code, the buyer may terminate where the supplier delays its main obligation and still fails to perform within a reasonable period after being urged, or where the breach makes the purpose of the contract impossible to achieve (Article 563). After termination, the buyer can request restoration of the original position, which means getting the money back, and claim damages (Article 566).

In practice, both routes reward the same discipline: a dated written demand that sets a clear deadline, followed by a clear written notice that the contract is terminated if the deadline passes.

[PRACTICE NOTE] One of the most common mistakes in the supplier disputes brought to China Legal Hub is a buyer who keeps negotiating new delivery dates for months without ever sending a formal deadline. Each informal extension makes it harder to show that the supplier was given a reasonable period and failed to use it. A short, firm demand letter in English with a Chinese translation usually does more than twenty WeChat messages.

"Deposit" Is Not Always a Deposit

Pro forma invoices often say "30% deposit" in English. Under Chinese law, the word that matters is the Chinese one.

• 定金 (earnest money). If the party that received the 定金 fails to perform, or performs so badly that the purpose of the contract cannot be achieved, it must return double the amount (Civil Code Article 587). The 定金 cannot exceed 20% of the contract value; any excess is treated as an ordinary payment (Article 586).
• 订金 or 预付款 (advance payment). These are prepayments. They are returned when the contract is terminated, but there is no doubling.

If the contract has both a 定金 clause and a liquidated damages clause, you choose one of them; and if the 定金 does not cover your actual loss, you can claim the excess (Article 588). The double-return rule is a real negotiating lever, but only if the Chinese wording supports it.

Steps to Take This Week

1. Stop further payments. Do not pay the balance to "release" goods you have not inspected or that have not shipped.
2. Identify the legal entity. Get the supplier's registered Chinese company name and unified social credit code, and check its status in China's National Enterprise Credit Information Publicity System. A sales manager's WhatsApp name or a trading company's English name is not enough to enforce a claim.
3. Collect the evidence file. Contract or PI, payment records, delivery dates promised in writing, inspection reports, photos, and every refund promise or excuse.
4. Send a written demand. State the breach, the amount to be refunded, the bank details for repayment and a firm deadline. Send it to the addresses used in the contract and keep proof of delivery.
5. Check your deadlines. Platform and card windows are short. For litigation or arbitration over an international sale of goods, the PRC limitation period is four years (Civil Code Article 594), generally counted from when you knew or should have known of the loss.
6. Decide on the forum. The dispute clause decides whether you go to CIETAC, another arbitration body or a Chinese court. If the supplier may move its funds, ask a lawyer about asset preservation early; it usually requires security.

[PRACTICE NOTE] Suppliers who are short of cash often agree to refund "in installments" and then stop after the first one. If you accept a payment plan, put it in a signed settlement that states the total, the dates, what happens on a missed payment, and that your original claims revive if the plan is not honoured.

When It Is Worth Bringing in a Lawyer

For a few thousand dollars, a precise demand letter and a firm deadline is usually the economically rational step. For larger amounts, or where the supplier has stopped responding, a fixed-scope assessment answers three questions before you spend more: which forum controls, how strong the evidence is, and whether the supplier has assets in China worth pursuing. Our China supplier dispute cost guide explains what each route typically involves, and our China supplier dispute service starts from a fixed-fee assessment from $800.

If the goods arrived but are defective, read defective goods from a Chinese supplier first; inspection and notice deadlines under CISG Articles 38 and 39 can decide the case before the refund question is reached.

Frequently Asked Questions

The supplier says the factory has closed. Can I still get my money back?

Check the company's registration status first. A company that is still registered can be sued or taken to arbitration, and an apparently "closed" factory often keeps trading through the same or a related entity. If the company has been deregistered without a proper liquidation, recovery becomes harder but not always impossible, as shareholders may in some cases be held liable. The public register shows the company's status, its legal representative and its shareholders; before pursuing the claim, a fixed-fee dispute assessment looks at whether the supplier has assets in China worth going after.

Is a refund promise on WeChat or email binding?

It is evidence. A written promise to refund a specific amount helps show both the breach and the agreed sum. Save the full conversation with dates and the sender's identity, not a cropped screenshot, and keep it with the contract and payment records.

Can I claim more than the amount I paid?

Yes, where you can prove the loss. Under CISG Article 74 and the PRC Civil Code, damages can cover foreseeable losses caused by the breach, such as replacement costs or lost resale profit, on top of the refund. The evidence burden is on the buyer, so keep records of replacement orders and customer cancellations.

Should I sue in my own country instead?

A judgment from your home court is often hard to enforce against assets in China. If the supplier's assets are in China, an arbitration award or a Chinese court judgment is usually the more practical route. Check your contract's dispute clause before choosing.