In my more than ten years of foreign trade career, clients who have lost money and goods from time to time come to me for help. The reason for coming to me for help is that they suspect that they have encountered a liar! You might be thinking: Liar? No, I found his contact information from large B2B platforms such as Alibaba or Made-in-china! Or, he has been in contact with me, and sent me photos and videos of the factory, the goods, and himself. Too real to be fake. However, the actual situation is that there are many customers who have paid for the transaction after checking the qualification of the supplier, and these Chinese suppliers have disappeared. The result is that the company cannot be found, the people cannot be contacted, the money cannot be recovered, and the goods cannot be obtained. These buyers are beginning to be suspicious of Chinese businessmen.

Today we will analyze the most common scams that buyers will encounter when purchasing from China.

To Summarize the customer’s situation, they are roughly divided into the following categories of losses including money and cargo.

Case A: The buyer paid the full amount of the invoice and the supplier shipped the goods, but after receiving the goods, it was found that the goods were not correct, and the value of the goods was lower than the price of the purchased products. When the buyer ask the supplier to resent the right cargo, but the supplier refuses to provide after-sales service.

This kind of situation may appear in the sample stage of products with high cargo value, and the two parties are the first to cooperate. CASE STUDY, in 2021, An Australian client came to me for help verifying that one of his TV providers was real. So first I ask what is the specific situation. The customer said that he paid a sample fee of several thousand dollars for a 55-inch TV to a supplier located in Longhua, Shenzhen (which happens to be in my city), but after receiving the sample after more than a month, he found that the received cargo was a 32-inch TV, it was not 55inch TV and not the style he purchased. Also, he sent me the supplier’s business license number, contact details (company name, address, and WhatsApp number and some selfies (it’s a big beauty and it looks like a lady living a very wealthy life). It sounds like the customer has been very cautious, and even checked the supplier’s business license number. But many buyers may have made mistakes in this process.

Back to the topic, to confirm whether the customer has encountered a scammer, then I must first confirm whether the company exists, and can we find the contacts in the company, and the last thing, if they can re-send the product under order.

According to this idea, first, verify the company information of this supplier. In China, all legally registered companies have business licenses issued by the Industrial and Commercial Bureau. According to the above numbers, you can check whether they are legally registered in the national industrial and commercial information database. According to his licence numbers, I checked it, I found that there was no industrial and commercial registration number in the industrial and commercial registration information database of Guangdong Province. Then I came to the conclusion , the registration information of this company is fake. Since the license number does not exist, there is about 90% probability that the company is fake.

Next, check the company’s website information, and search in Google according to the supplier company name given by the customer. I found that there is no website that exactly matches the name of this company. Some websites have overlapping keywords. After clicking on it, I found that the products in it are machinery, not home appliances such as TV or related products. Here again verifies the conclusion that this company is probably a liar.

The next step is to find the corresponding contact. I called according to the WhatsApp number, and it was prompted that the number does not exist, which proves that the phone number has been canceled and no one is using it. Because normal company salesmen have been engaged in this work, it is impossible to cancel all numbers, and they must use long-term stable numbers to contact customers. This aspect proves again that 99% of this supplier is a liar.

I couldn’t find anyone on the phone, so I went to the company address shown on the invoice. As a result, when I went to the site, there was no company at all. The company is also empty, so the goods on the order cannot be reissued. Till now, it is confirmed that my customer has encountered a liar. Client money is lost. However, my customer was lucky enough to receive a 32-inch TV, lucky than did not receive anything.

Case B, after the deposit or full payment is paid, the supplier modifies the price, or needs to add money for various reasons (such as what customs inspections, deductions, etc.)

Just this year, an regular customer in South America that I cooperated with for many years came to me and said that his son purchased a batch of mobile phones from China. After they paid the balance, the supplier did not delivered the goods. They urged the supplier many times, but the supplier told him that the goods were confiscated by the customs, and they needed to pay the customs for more than 7,000 US dollars to get the cargo. He anxiously asked me if his son had encountered a liar, and could we help him to confirm whether the goods were in customs and to get the cargo.

This situation is a not-so-obvious excuse for fraud. More often situation is that , suppliers say that the price of goods needs to be increased for various reasons, such as package, labor costs, and raw materials cost increase. Those who often purchase in China must encounter these situations. In this case, the buyer needs to be very familiar with their own industry and find an alternative supplier to verify whether it is true. If it is true that labor and raw materials have generally increased in prices, it is critical to assess whether the increase in suppliers is reasonable. Note here that generally speaking, for a sample, the supplier will basically not go to the customer to ask for the price difference. You need to be vigilant if the new supplier keeps asking you to increase the price after paying for the samples.

The full payment has been made at the time of purchase, but the supplier has extended the delivery time indefinitely and delayed delivery. Or the supplier claims to have shipped the goods, but has not provided shipping documents to prove that the goods have been shipped.

Delayed delivery is another very obvious excuse. For example, the raw material supplier delayed the delivery, the factory was in peak production period, the factory was cut off by the government, the factory was closed due to the epidemic, and the factory was on vacation, etc. These are commonly used by suppliers for delayed delivery. Of course, it does not mean that all those who mention these delayed deliveries are frauds or deceptions. A simple way to judge whether it is deception is to make videos calls based on the production progress and suppliers to confirm the actual production situation and avoid losses.

It may be normal for the delivery delay to be extended. However, if the supplier says that the shipment has been shipped, but cannot provide the shipping bill of lading or the tracking number of the courier bill, it is likely that the shipment has not been delivered, and you need to be vigilant.

In the last case, after the full payment was made, the person disappeared, the phone was not answered, and the person could not be found. This kind of deception should be the easiest to identify, because when you have paid the payment and go to the supplier to ask them to deliver the goods, you will find that the supplier cannot be contacted, the phone number used to contact is unanswered, the email is not retplied, and you do not know where to find suppliers. In this case, it is impossible to request delivery at all. Buyers can only accept money and goods loss.

How to avoid losing money when purchasing from China?

Tip 1, Verify Company Information

• Check the company information method 1- Check whether all the information matches from the company information searched through the B2B platform, Google, and other channels. Whether there is any inconsistency. For example, if you find a supplier from the B2B platform and plan to make a deal with him. Then before payment, follow the contract issued by the supplier or the company name and address on the invoice, and check whether the company name obtained on the B2B platform and Google, SNS platform match, and whether it is consistent. If not, be careful.

• Check the company information Method 2, and confirm the legal business license of the supplier. Although the business license is in Chinese, you can ask the supplier to issue it to you, and then you can find other friends who have experience in purchasing from China to confirm, or you can ask for a supplier or friend who you have good relationship with to help you check whether it is a real and legal company. Basically, all Chinese people are very enthusiastic to help you. If even Chinese friends can’t find a specific confirmation of legality, try to avoid cooperation with such suppliers. It’s too risky.

• Check the company method 3 – Check the website – whether the website is presenting related products, such as what he sells you is a TV, but the website is making mechanical products, then you have to be careful to find the supplier to verify the reason. Usually speaking, similar if the website is presenting products similar to the purchased products, it is normal, but if it is completely irrelevant, it is likely to be a scam. In addition to looking at the product, you also need to look at the website owner’s name, whether it is exactly the same as the supplier’s name. Note that it must be exactly the same, not a single letter can be different. In the Chinese importer and exporter registration, names with different letters are identified as different enterprises. (but upper and lower case is ignored.)

Tip 2, Verify that the contact is really working for the company

This means that sometimes the company is right, but the people are wrong. The communication cycle for international purchase orders is long, and sometimes the person you are in contact with has left the company, but still receives orders in the name of this company. This will lay hidden dangers on whether it can be shipped normally in the future and whether it can safeguard your interests. A simple step to avoid this problem is to have the supplier stamp the company stamp on the issued Invoice. In China, a company seal is more effective than a personal signature.

Tip 3, To verify the company name on the invoice

Before payment, it is necessary to verify whether the company name and information of the beneficiary account on the invoice or sales contract are consistent with the verified company information.

For example, the name of the company that signed the contract with you is SHENZHEN ABC TECH CO.,LTD. But the name of the payee company on the invoice is HK ABC CO., LTD or ABC CO., LTD. The two names are two companies if any letter disagrees, If you pay to HK ABC CO.,LTD or ABC CO.,LTD, the result will be that the actual company you want to deal cannot receive the payment. So you won’t receive the goods you paid for. Be especially careful when making payments.

Tip 4: Pay to the corresponding company account

• The foreign exchange paid to the company’s account is subject to the foreign exchange control of the People’s Bank of China. The money is supervised by the bank and does not directly reach the company, and the company cannot directly withdraw the money. The bank will authorize the payment to the exporter only when the Chinese exporter provides legal documents such as the invoice, contract, packing list and export declaration form of the corresponding goods. As for the export declaration form mentioned here, the customs will issue the export declaration form only after the goods have been sent to the customs supervision warehouse and a correct and legal export declaration has been made. In China, once the goods enter the customs supervision warehouse, they can only be exported, and can not return to the exporter. So, this guarantees that the goods will definitely be exported and shipped to the buyer on the contract.
• If the exporter fails to provide customs documentation within a reasonable time, the money will be returned to the payer. In case the Chinese supplier fails to declare or ship the goods as required, the exporter will not be able to get the money you paid. Therefore, payment to the company account is the safest way, because the Chinese government guarantees the safety of your goods and payment.

Tip 5: Never pay to a private account!

Sometimes the supplier will say that the sample payment cannot be credited to the company account, the foreign exchange is not easy to receive, and you need to pay to the personal account. Be careful in this situation, because the export unit in China is an enterprise rather than an individual. Individuals are not qualified. If the amount of goods is small, you can try. If the amount is in the thousands of dollars or more, never pay to a private account.

Tip 6: Pay attention to the terms of the trade!

Under the different trade terms of CIF, FOB, EXW or FCA in international trade, different terms affect the price, and the buyer and the seller need to be responsible for different content. For example, under the FOB terms, you generally use your own supplier, and the sea freight price is The advantage, and being able to control your own cargo, is relatively safe.

Tip 7: Find a third-party sourcing company

If it is impossible to control the risk, it is recommended to find a third-party procurement/sourcing company to avoid unnecessary risks.

There are many third-party procurement companies in China. They are familiar with the whole process of international procurement, have quality inspection capabilities, and can avoid these capital risks. It saves your energy and trouble.

Of course, most Chinese businessmen are still legitimate and very honest. As long as they understand all aspects of foreign trade and check each link strictly and prudently, these losses can be avoided. If you have any other scams, please come and talk to me.