Payment Methods & Counterfeit Products from China Part.1
Here is how we answered a question about importing cognac from China, but the answer is applicable to a wide range of products, so I decided to blog about the Q&A.
I am interested in ordering Hennessy cognac, for which I found several supplies online – however, they are asking for Western Union as the payment method. How can I find a proper supplier for this product, with which I can arrange a secure payment method?
Dear Cognac Connoisseur,
There are some big red flags in this short question. Let’s unpack each issue 1 by 1:
- My first concern is that the cognac you wish to purchase is not an authorized product. Most likely a gray channel and perhaps even a counterfeit product. An unauthorized product in a highly regulated category like cognac has a high risk of being confiscated at either the China border or with the customs department in the final destination. You would be crazy to purchase ExW or even FOB China without seeing a proven track record. And even if the seller “checks out” as legit, you may want to start off with a few small orders before spending big bucks!
- My 2nd concern is in regards to the payment method. Legit sellers are willing to use Letters of Credit, bank transfers and such that have transparency and traceability. Western Union is almost as dangerous as bitcoin!
If you are finding pricing from China that is below what you can find back home, be very careful. Scam artists on the internet prey on foreign buyers who think they are getting a great deal on genuine products. It is not uncommon for these sellers to disappear with your deposit. And if they do ship goods, it is not a genuine product.
I met a French woman in Dubai who wanted to purchase 100K USD worth of iPhones from Hong Kong. I told her she was crazy and at great risk. But she was so caught up in the sirens’ song of low price that she went ahead with the purchase convinced that she would easily double her money. Thinking she was smart, in order to protect herself, she negotiated a “great” payment plan where she “only” paid 60% up front and had the safety of paying the final 40% upon provision of shipping documents. She thought that if the goods ship, the trade must be real.
Imagine the tears when she opened the container load to find a load of iPhon (missing “e”) which were poorly manufactured clones of next to no value. By the time she called me to try and track down the seller, they had disappeared with the money. Her so-called supplier was a guy and a computer in an instant office just trolling online for somebody dumb enough to accept his payment terms and believe they could get genuine Apple products in China at such a low price.
Read more about it…
Here is an article I wrote for Global Sources regarding payment options: https://www.smartchinasourcing.com/paying-chinese-suppliers/
This blog post answers the question “what are reasonable payment terms for small orders”: https://www.asiabridgelaw.com/2017/05/china-sourcing-reasonable-payment-terms/
During the Covid pandemic there was an “epidemic” of fake PPE flooding the international market. While Cognac and PPE are very different products, buyers of either product should be concerned about quality and counterfeits. Here is an article on PPE that even buyers of Cognac will find of interest: https://www.asiabridgelaw.com/2020/06/ability-to-export-the-ppe/
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.
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