There is an increasing trend of fraud by Chinese Suppliers. Incidents involving Chinese scammers are rife as many unwary buyers chase their dreams of sourcing products at low prices from China to earn profits in domestic market. Typical fake suppliers in China scam buyers using registered company, documents under some peasant’s name, website with a professional look and hire a few English speaking sales people (unaware their employer is a scam). When all is set, as soon as they receive around 30-50% deposit from a few clients they disappear. Sometime in case of LC terms or payment against shipping documents, Chinese suppliers send empty container or container loaded with sand or stone.

Prevention is better than cure, so if you’re looking to source products from Chinese suppliers, make sure that you’re dealing with a well established and experienced supplier. Always take due diligence report of your supplier from independent business consultant before making any payment.

Fake or scam suppliers is everywhere however based on public data, it is found that around 70% of all fraud suppliers as reported by victims are situated in Peoples Republic of China against whom cheating related cases are posted on internet.

Most common frauds by Chinese Suppliers

Some of the common frauds in import from China are:

1. Non-existence of company.
2. Supplier is a trading company instead of a factory when importer comes to know.
3. No response from supplier after opening of Letter of Credit.
4. No response from supplier after payment of initial deposit as per contract.
5. Fake Shipping documents.
6. Cargo comes empty or filled with sand or bricks.
7. Product delivered is totally different from product ordered.
8. Delivered product is different from approved sample product and it does not match with your requirement in terms of color, chemical composition, size, length, taste etc.

Dealing with Chinese Suppliers

Further major problem is the language. Owner or manager of the supplier company does not know the English language. Mostly importer deals with sales executives of supplier who are generally girls in China. Many times sales executives are not aware of modus operandi used by the owner. Once you came to know that you are victim of a scam, supplier avoids replying your calls, messages and emails.

Before dealing with Chinese supplier, it is advisable to consult the expert. If you are victim of such trade frauds you can also find a consultant that will help you to recover your money. However, recovery is difficult and rare in such cases.

Guideline while dealing with Chinese Supplier.

1. Find trustworthy supplier who has established factory and office. If possible visit their factory and office before making any payment. You can also hire a consultant who will provide you Due Diligence report of your supplier.
2. Obtain copy of all the business licences, registrations and Identity & address proof documents of supplier. You can send these documents to Consulate, Indian Embassy to confirm its existence.
3. You can also check the company details on website if your supplier is a registered company in China.
4. Draft a clear and valid sales contract mentioning all aspects of import.
5. Agreement is valid only if signed by the authorised person of your supplier company.
6. Before making any payment, ask for copies of all shipping documents. Confirm Bill of Lading and Insurance with issuing company for its genuiness.
7. Track your cargo once loaded.
8. Always keep a reputed third party as inspection agency and their report is very important for quality and quantity aspects of goods.
9. Before making payment make sure that you have received all shipping documents including original sales contract.
10. When good arrives at destination port, confirm its weight and request for first check. First check procedure allows you to inspect the goods before paying duty.