Sourcing glossary
Letter of Credit
Also known as: L/C, LC, documentary credit
A bank's written commitment to pay a seller once they present shipping and other documents that comply exactly with the terms of the credit, usually issued subject to the ICC's UCP 600 rules.
With a letter of credit, the buyer's bank pays the Chinese supplier only against documents such as the commercial invoice, bill of lading and, if you require it, an inspection certificate. Banks examine documents, not goods, so adding a third-party inspection certificate is how you link payment to quality.
L/Cs involve bank fees and detailed paperwork, so they are mainly used for large orders or new supplier relationships. See how to pay Chinese suppliers.
Related terms
Guides that use this term
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How to Write an RFQ Chinese Suppliers Will Actually Answer
What to put in a request for quotation so a Chinese supplier can price it: the fields, the specs by category, a copy-paste template and a WhatsApp first message.
Updated 2026-10-19 · 7 min read
Compliance
Is Your Order Too Small to Import from China? A Break-Even Test
Why 20 units or a US$100–500 budget rarely pays to import from China: per-shipment fixed costs, a simple break-even test, and six options for small buyers.
Updated 2026-10-19 · 7 min read
Suppliers
China Sourcing Agent: What They Do, What They Cost and When You Need One
What a China sourcing agent actually does, the four types you will meet, typical fees, when an agent beats buying direct, and a checklist to vet one before you pay.
Updated 2026-10-14 · 8 min read
Compliance
Importing from China to Peru: SUNAT Duties, IGV, Thresholds and the FTA
How a Peruvian importer clears goods from China: the US$200 and US$2,000 thresholds, ad valorem 0/6/11%, IGV and IPM, IGV perception, customs agents and the China FTA.
Updated 2026-10-14 · 6 min read
Compliance
Import Taxes from China to Mexico: Duty, IVA, DTA and the 33.5% Courier Rate
What a Mexican importer pays on goods from China in 2026: IGI by tariff line (5–50% since January), 16% IVA, DTA, antidumping quotas, the 33.5% courier rate, an example.
Updated 2026-10-14 · 7 min read
Shipping
Shipping Small Orders from China to Latin America: Brazil, Mexico, Peru
Courier, air or sea for a first order from China to Latin America, the customs thresholds and taxes in Brazil, Mexico and Peru, and how consolidation works.
Updated 2026-10-10 · 8 min read
Part of Incoterms & Payment.