Be wary of these two types of scams when sourcing in China
I’d like to share the various types of scams that you might possibly encounter if you are not vigilant. Even in this pandemic, other people might take advantage of the situation. This new series of blog articles will help you be aware and how to avoid these types of scams in China.
Actually, China offers an extensive variety of products at amazing prices and foreign buyers are tempted to make the most out of these opportunities. Unfortunately, there are various kinds of scams that foreign buyers often fall easily and we will discuss that in the next blog post about scams. So if you are doing business with the Chinese supplier now or in the middle of negotiation, be very careful and cautious.
We received a lot of complaints from the foreign buyers regarding the various scams they have experienced when they source from China. In my sourcing experience in China for how many years, I think there are two types of scams out there.
What are the two types of scams?
1. Scam artist
Not real company and they’re just out there to steal money from you.
2. Manipulation Scam or an Opportunity Scam
These are perpetrated by legitimate factories or legitimate sellers with a real business, but because the buyer is sloppy or makes mistakes, the seller can manipulate the situation to their advantage and extract more money out of the buyer. That’s a manipulation scam or an opportunity scam.
But for this session, let’s talk about the traditional scam where it’s not even a company, it’s two guys operating out of an online website or fake warehouse, and taking money from buyers. Let’s cover how to avoid those types of characters:
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.
Unfortunately, until this day a lot of foreign buyers end up being scammed and the best way to detect these types of scams is to perform additional verification. In the next article in our Scams series we will discuss … When is it likely that you will fall into a scam trap?
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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).