Chinese Supplier Not Shipping After Payment? How to Seek a Prepayment Refund
المقالات متاحة حالياً باللغتين الإنجليزية والصينية.
Paid a Chinese supplier, but the shipment still has not left? A payment receipt is an important starting point. A refund claim also needs a clear account of who promised delivery, when that obligation became due, and how the buyer ended—or agreed to end—the contract. Repeated messages asking for an update may leave those questions unresolved.
This guide concerns a business purchase where a supplier in mainland China has not delivered the goods. Partial deliveries, defective goods already received, and contracts dominated by services require a separate assessment. The practical objective is to turn a stalled order into a documented decision: require delivery, agree an exit, or exercise a legally available termination right and claim repayment.
1. Establish what has actually become overdue
Build one chronology from the contract, purchase order, specifications, payment records and later messages. Distinguish an agreed shipment date from an arrival date, a production estimate or a date conditional on sample approval. Check whether the buyer still had to supply drawings, approve a sample, nominate a carrier or make another payment. A supplier’s production photograph does not by itself establish that the contracted goods were delivered; equally, goods not arriving overseas does not by itself establish a failure to deliver under the agreed terms.
| Question | Records to compare |
|---|---|
| Who is the seller? | Full Chinese company name, registration information, contract signature or seal, and the identity behind the trading name. |
| Who received the advance? | Bank confirmation, beneficiary details, invoice and any instruction authorising an affiliate or agent to collect. |
| What delivery was promised? | The controlling order, specifications, delivery term and place, agreed date and any prerequisites. |
| Was the date changed? | The complete exchange proposing and accepting—or rejecting—an extension, including attachments and timestamps. |
If the payee and seller differ, preserve the collection instructions and the seller’s acknowledgment of payment. Do not assume that every recipient, factory or related company owes the same refund. Identifying the proper respondent is part of the legal assessment.
2. Identify the applicable sales law before drafting the notice
The United Nations Convention on Contracts for the International Sale of Goods (CISG) may govern an international goods sale where the parties have their relevant places of business in different Contracting States. Its scope exclusions, the transaction date, declarations and any effective exclusion by agreement must be checked. The buyer’s nationality alone is not the test. China has been a Contracting State since 1 January 1988 and has a declaration concerning Article 1(1)(b); a transaction involving a non-Contracting State therefore needs particular care. See the official CISG status table and Articles 1–6 of the Convention.
A general choice of Chinese law should not be treated, without examining the wording and circumstances, as an automatic exclusion of the CISG. Where Chinese domestic contract law governs the relevant issue, the Civil Code must instead be considered. The Supreme People’s Court’s treaty-application interpretation, Fa Shi [2023] No. 15, effective 1 January 2024, addresses treaty priority and permitted contractual exclusions. These are separate analyses, not a menu from which to combine whichever remedy seems most attractive. Official interpretation; SPC Guiding Case No. 107 on choice of domestic law and CISG application.
3. Choose a delivery demand or an exit on a supported legal basis
Under the CISG: Articles 47 and 49(1)(b) provide a specific route for non-delivery. The buyer may fix an additional period of reasonable length for performance. If the seller does not deliver within that period, or declares that it will not deliver within it, the buyer may declare the contract avoided. During the additional period, Article 47(2) generally restricts other breach remedies unless the buyer receives a notice of non-performance; a possible claim for delay damages remains available. There is no universal seven-day or thirty-day period.
Fundamental breach can also support avoidance under Articles 25 and 49(1)(a), without relying on the additional-period route. A missed date is not automatically a fundamental breach. The importance of timely delivery, the resulting deprivation of the buyer’s contractual expectation, and foreseeability require assessment. In this context, “avoidance” means ending the contract for breach; it does not mean that the contract was invalid from the outset. CISG Articles 25, 47 and 49.
Where the PRC Civil Code applies: Article 563 includes delayed performance of a principal obligation that remains unperformed after a demand and a reasonable period. It also recognises other grounds, including breach that defeats the contract’s purpose. A valid contractual termination clause or an agreed termination may provide another route under Article 562. The agreement and facts must support the route selected. Civil Code Articles 562–563.
4. Keep the demand and the termination decision clear
A delivery demand should identify the order, payment, outstanding obligation, agreed deadline and exact additional deadline, including the time zone. Explain what performance is required and why the period is reasonable. Request reliable delivery evidence, use the contractual notice channels and preserve the complete message, attachments, dispatch records and any receipt or acknowledgment. Review any proposed extension before accepting it.
If the relevant conditions are then met, a separate, explicit termination or avoidance notice can make the decision easier to prove. It should state the contract and legal basis, the facts relied on, the decision to end the relevant obligations and the repayment requested. A request saying only “please refund” may instead be understood as a proposal to negotiate an exit.
The notice rules differ. CISG Article 26 requires a declaration by notice; Article 27 generally protects a properly dispatched communication sent by means appropriate to the circumstances against transmission delay, error or failure to arrive, subject to the Convention’s exceptions. Civil Code Article 565 ordinarily connects termination to the notice reaching the other party; it also addresses a conditional termination notice and a termination claim made directly in litigation or arbitration. A notice cannot create a substantive termination right that does not exist. Avoid assuming that a deadline automatically cancels every contract, and have the applicable rule and wording checked. CISG Articles 26–27; Civil Code Article 565.
5. Separate the advance from interest and additional losses
After effective CISG avoidance, Article 81 permits restitution of the price paid; Article 84(1) requires interest from the date of payment where the seller must refund the price. That provision does not specify a numerical interest rate. Under the Civil Code, Article 566 addresses restitution and other consequences of termination. The applicable law, agreement and evidence determine any additional interest or funding-loss claim; a familiar domestic rate should not simply be inserted into every cross-border demand.
Prepare a claim schedule separating the advance, amounts already returned, interest basis, and each additional loss. Keep replacement quotations and purchases, customer cancellation records, extra logistics costs and evidence of efforts to limit the loss. CISG Articles 74 and 77 and Civil Code Articles 584 and 591 address compensable loss, foreseeability and mitigation. A lost customer order does not automatically establish recoverable lost profit. Avoid counting the same loss twice. CISG restitution and damages provisions; Civil Code termination and damages provisions.
6. Test recovery in China before extending negotiations again
Review the agreed dispute clause, the proper respondent, available company and asset information, and the route for any urgent preservation request before filing. Terminating the sale does not by itself remove the dispute-resolution clause: CISG Article 81(1) expressly preserves it. A repayment promise, judgment or award also does not establish that funds are available for collection. If a settlement is proposed, identify the debtor, amount, currency, due dates and consequences of default, and consider when any release should take effect.
For an initial assessment, prepare the contract and dispute clause, the supplier’s Chinese name, the amount and date paid, the promised delivery date, any extensions, and the latest response. Preserve original emails and chat exports alongside translations; screenshots alone may omit context. The related guide on Chinese supplier contract clauses addresses prevention for future orders.
Need help with a specific undelivered order? Use the consultation page or email panjianxing46@gmail.com with a short chronology, the supplier’s name, payment amount and dispute clause. The initial review can focus on the notice, refund basis and available dispute route. See also cross-border business legal services.
Legal sources checked: 21 September 2026. The Civil Code took effect on 1 January 2021; the treaty-application interpretation took effect on 1 January 2024. Treaty applicability must also be assessed at the relevant transaction date. This article provides general information, not advice on an individual contract.
Author: Jianxing Pan, Partner, Beijing Chang’an Law Firm. Practice areas include commercial dispute resolution and cross-border transactions.
Cover: AI-generated conceptual illustration, not a photograph of an actual client, case or shipment.
