How a Letter of Credit (LC) Works for Importing from China

For larger orders from China, Bangladeshi importers most often pay through a letter of credit. An LC protects both sides of the deal, but the process can feel complex the first time. Here is a plain-language explanation.

What Is a Letter of Credit

A letter of credit is a guarantee from your bank that the supplier will be paid once they ship the goods and present the agreed documents. It gives the seller confidence they will be paid and gives you confidence that payment is only released against proof of shipment.

How the LC Process Works

• You and the supplier agree terms, then you apply to your bank to open an LC
• Your bank issues the LC to the supplier’s bank
• The supplier ships the goods and submits the required documents
• If the documents match the LC, the banks release payment
• You receive the documents to clear and collect your cargo

LC vs TT (Telegraphic Transfer)

For smaller or trusted orders, many importers use a TT — a direct bank transfer, often part in advance and part on shipment. A TT is faster and cheaper but offers less protection, while an LC suits larger deals or new suppliers where security matters more.

Documents an LC Requires

An LC is settled strictly on documents, so accuracy is everything. The usual set includes the commercial invoice, packing list, bill of lading and certificate of origin. Any mismatch can delay payment and release.

DE International helps importers structure payments and manage sourcing, shipping and clearance from China to Bangladesh. Talk to our team to plan your next order.