Experts have reported problems with direct payments for goods from China.

According to Asia Import Group, in June several small Chinese lending institutions began working with the Russian Federation, but this only slightly helped transfer funds for cargo and its transportation from China to Russia.

The situation with payments to China improved after Russian President Vladimir Putin’s visit to Beijing. Small banks began to work directly with Russian companies, which were not afraid of US sanctions, as they did not cooperate with counterparties from hostile countries. However, in July it again became difficult to pay for goods directly.

“Chinese suppliers are not allowed to open new accounts in such regional banks. Moreover, it is difficult to understand what the reason for the refusal is. According to our Chinese partners, credit institutions simply report that they are not ready to open an account. Perhaps the reason is a large flow of applications that cannot be handled,” Asia Import Group said.

Small banks set minimum amounts that can be transferred from Russia to China, and they are different for each one. For example, Jilin Bank began accepting payments from the Russian Federation without any problems in mid-June, but the minimum amount must be 500 thousand rubles and payments must be made within two weeks.

“500 thousand rubles can be a large amount if you need to transport a small batch of inexpensive goods,” the company explained.

Due to the fact that there are fewer and fewer channels for sending funds, it is now quite difficult to transfer funds directly to China for Chinese goods and their transportation, the company said. Russian companies have to resort to the services of counterparties from other countries. Increasingly, payments for goods from China and their transportation are made through foreign counterparties from other countries.

“The increased number of stages in the payment process, and the resulting increase in the number of conversions and various commissions, means that the cost of goods and their transportation from China, according to our company’s calculations, automatically increases in price by 7-10%. This is due to the fact that the transfer of funds is not carried out directly,” the company explained.

Daria Mushta, co-founder and CEO of VM Partners, a consulting company for working with China and Southeast Asian countries, and an expert in the field of building business with China, said that some banks began to refuse to work with the Russian Federation in July.

At the moment, there are very few Chinese banks willing to accept direct payments; some that were once working are starting to refuse. For example, the Agricultural Bank refused to work with Russia as of July 1, Mushta gives an example.

“The number of banks working with the Russian Federation is decreasing. There are several other banks, such as Chouzhou Commercial, Rural, etc. But each bank has its own characteristics. Somewhere there is a high commission, somewhere there is a very unpleasant exchange rate for converting the ruble into yuan, somewhere there are high commissions for transfers,” the expert said. For example, credit institutions charge a percentage for transfers from VTB. The cost of transactions, even if it is a direct payment, to such banks is at least 1.5%, and sometimes even 4%.

Due to the problems, the main work is done with payment agents, which are mainly non-resident companies registered with Russian banks.

“The most efficient work is now being done with them. Financial logistics to China now costs between 2% and 5-6%, depending on the amount. That is why working through third countries is currently the safest possible in terms of speed and reliability of payments,” Mushta said.

The expert added that it is possible for payment agents to disappear along with the money, so it is important to pay attention not only to the percentage of the transaction, but also to the reputation of the partner.

“What will happen next with payments? Last week, Jilin, Xingye and Longshang banks announced that they were ready to open accounts for Russian owners of Chinese companies. But for now we are not sure that they will accept payments from Russia,” concluded Daria Mushta.