Too good to be true, rings true, whether buying or selling in China

When I wrote blogs about protecting yourself while sourcing in China, I got a call from an overseas client who was trying to sell his wine to China.  He told me he would fly to China to sign a contract with his buyer.  The buyer approached the company selling in China and asked to buy seven containers of wine from him.  It seemed like a good thing, however “too good to be true, so he wanted to consult with me after the meeting with his buyer.

A Couple days later, my client came to me with the signed contract, “It seems we are safe, because we will not send over any goods before we are fully paid.” However, no one orders seven containers of wine for the first order, unless wine has sold very well already.  I reviewed the contract with my suspicion. The buyer will pay 30% deposit, and then the balance before the goods are delivered, so my client wouldn’t supposedly suffer any loss.  However, according to the contract, the contract should be notarized by a local notary officer in order to be valid.  Since it’s an international sales contract, both parties must pay for the notary fee fifty/fifty.   The Chinese buyer said, my client doesn’t have to go to the notary office in person, they can let the buyer to do the notary, as long as my client pays his share of the notary fee, which is equal to 6% of the amount involved in the contract.

The Chinese buyer provided a sample of power of attorney together with their bank account.

However, I pointed out that:

  1. Once the parties signed the international sales agreement, the agreement will be valid and enforceable.  No notary is required by the law;
  2. If notary is necessary, then both parties have to show up in the notary office to sign the agreement in the officer’s presence.  No proxies are allowed!

It’s a trick.  Its aim is not to get your goods (almost everyone’s aware of that), it scams you by asking you to pay a government fee.  If you don’t know about Chinese business rules, it seems reasonable. But as I said, no one is willing to pay for seven barrels of wine for the first order, there must be something unusual!

Too Good to Be True ... Lessons from Selling in China

So, still the same words, “too good to be true.”  Whether you are selling in China or buying, do some research, or consult with local expert before you make the final decision.

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About the Author: Michael J. Bellamy

About the Author: Michael J. Bellamy

Originally from Upstate New York, Mike moved to Asia in 1993 and is a China business advisor to both Fortune 500 companies and small businesses.  Recognized as an expert on doing business in China, he has been interviewed by WSJ, CNBC, FT & Bloomberg.

A featured presenter on China issues at seminars, trade shows and corporate events across the globe.

Learn more about Mike and AsiaBridge Law at
https://www.asiabridgelaw.com/business-advisory-services/

Mike is the author of “The Essential Reference Guide to China Sourcing
(available on Amazon).

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