Small buyer, high risk & E-buyer beware! Don’t fall into a scam trap!
When is it likely that you will fall into a scam trap?
You’re highly likely to fall into a scam trap if you meet the criteria as a small buyer or an e-buyer. So if this describes you, be very careful.
Two types of common buyers that fall into a scam trap:
- You’re a small buyer, meaning you place small orders—a couple thousand bucks or lower.
- If you’re a so-called e-buyer, meaning you like to do all of your transactions online without meeting people in person or having an independent verification of their production facility.
Probably most important, if you buy products that are high-value small size, you have a big risk. For example, SD cards or watches or electronics. Things that are high value but fit into a small package. The reason the scam artists target those types of products is because often they go via FedEx or UPS or express mail, and there’re so many express mail come in and out of China that the government doesn’t bother to open them up and check what’s inside. So you can ship a lot of perceived value in a small package when it’s a very small electronics and such. SD cards and USB drives, those are really dangerous industries.
I wrote in the first article of the scam series that there are 2 types of scams and I believe our client’s experience belongs to manipulation scam. The client asked for help from Asia Bridge Law for dispute resolution because he sourced more than 3 thousand smart/GPS watches in China. But the watches delivered to the client based on their report and images have massive quality defects like the bracelet is falling apart and that make the watches unsellable in their market.
Client’s experience with a scam trap:
The supplier has supplied faulty watches. All bracelets were breaking the same way. The supplier was notified about such fault before the last delivery, but ignored such info. Then they have not been responding to a claim until 1 year had passed – then they said there is no warranty any more – but we have correctly claimed all watches for massive fault. So they have been again postponing whatever saying that it is due to their partner in China who manufactured the bracelets and finally, after 2 years and the huge erosion in price of such goods, they refuse to accept the return of goods (would they react quicker it could be solved other way – now after 2 years we need them to return the money as prices of GPS watches are less than half compared to when we claimed manufacturing fault).
- They have never delivered working applications iOS & android which shall have been part of the deal.
- They have not eliminated all bugs in firmware or missing parts of firmware (indoor swimming).
- They have not delivered 100% of goods nor returned prepaid money.
How bad is the scam trap problem?
You will not just loss money but your customers and the brand reputation also. That’s why you need to be very careful the suppliers you are working with. The client’s experience above tells that he is working with middlemen. If you haven’t read the middlemen series, you may want to visit this link.
You have a higher risk of encountering scam trap problems if you:
Also, if you think you’re buying famous western brands—Apple, Samsung, whatever—from China, think again. We’ll going into details. You’re also going to run into problems if you’re what I call a sloppy buyer, meaning that you don’t present yourself in a professional way to the sellers, so they know “this buyer really doesn’t know much about China sourcing. Let’s take him for all his worth”. If you don’t use purchase orders, you don’t audit factories, you don't do any due diligence, you have a higher risk of encountering problems.
Don’t worry. Even if you fit those criteria above, we’re going to talk about how to protect yourself and the Truth about sourcing famous international brands in the last series of this scam topic.
ABL Blog: Sr. Editor and Primary Content Creator: 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).
1. Hire a professional help
Hire a reputable service agency to handle every aspect of China and also understands your products, goals, and your expectations.
2. Perform Due Diligence
Many foreign companies end up being scammed because they fail to perform adequate due diligence on the Chinese supplier. I've written a blog why you need to consider due diligence on every company you are dealing with, you may check on this link.
3. Write bilingual contracts
It’s best interest to consult attorney in China to help you draft and perhaps negotiate the contract for you. You may click this link for further information why it is very important to consult with Chinese attorney and help you write solid bilingual contracts.
