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Scams and tricks to look out for when sourcing In China

Scams and Tricks to look out for in China

What are Some of the Scams and Tricks to look out for in China? China Sourcing Conference 2015

Mike shared on common scams and tricks in China. Mike also gave invaluable tips, tools and best practices to prevent such things from happening to you. The common scams in China have gained a name for themselves. These include The Classic Scam, The Peekaboo, Milking the Cow, Shanghai Surprise and The Zhejiang Screw Job. The Classic Scam involves scam artists with a nice website that takes orders and asks for a deposit but does not ship anything. In addition, they might not even have a factory making running away easier. The Peekaboo is a scam where the scam artist is good at negotiating. They try to get as much payment as possible with reasons like your order is customized. They will lure you in by providing assurance that your order is done by showing you shipping documents. Although it is true that there are things being shipped out but the actual items might not be the items that you had ordered but other items such as bricks. By the time you have received the “bricks”, the scam artists would have gotten the money. Milking the Cow involves scam artists who collect deposits and act like they have sent out the orders on time when in actual fact, nothing or “bricks” were sent out. The scam artists will act like there are delays in the delivery even though they sent it out on time due to things such as export processing fees, which they require the customer to reimburse. They milk the customer for any reason until the customer realize it is a scam, and they will do the classic run away. The Shanghai Surprise and The Zhejiang Screw Job are essentially the same as both are done by hackers, but The Zhejiang Screw Job has an inside man aiding or instructing the hacker. The hacker will hack e-mail accounts to convince the buyer that they are the newly appointed sales manager and ask them to send payment to a new account for whatever reason. And this communication persists through e-mail instead of the phone and when the actual company did not receive the payment, and the buyer has not received the order, only then do they make calls or pay a face-to-face visit.

Generally, tips to determine if a situation is a scam is that if it is too good to be true, it probably is. Others include sloppy quotes given by suppliers is a big red flag and if the supplier’s website has no Chinese language, it will mean that the website is designed for a foreign audience which is unlikely because most factories in China also have Chinese customers. Some of the tools to mitigate the risk of encountering scams are through a five-step process. Step one requires the definition of what you are looking for such as proximity to the port, production experience, number of employees, etc. Step two is to go online to find potential suppliers for the product you want to be produced. The problem isn’t finding a supplier because there’s too many. The important question is finding the right supplier. Step three is to narrow down the number found in step two to 2 or 3. Step four is to perform audits and due diligence for all the companies in step three. After which, step five is to perform a test order.

He concluded with two main takeaways, where firstly, the seller’s name should be the same name whether it is on the contract or the bank account or the front wall of their factory. The second main takeaway is if you don’t have the budget or desire to do some basic auditing, inspections, lab testing, you should probably not source from China. Wait until the business gets a little larger before making a run into China.



Mike Bellamy

Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). Author of “The Essential Reference Guide to China Sourcing” and founder of PassageMaker Sourcing Solutions. Mike is co-founder of CSA, the China Sourcing Academy.


7 thoughts on “Scams and Tricks to look out for in China

  1. Syed Ameer Abbas Zaidi

    any of the chinese person or govt officials can help me to find out that rotten eggs or help me to my money back i shall be very thankful.
    Syed Ameer Abbas ZAidi

  2. Syed Ameer Abbas Zaidi

    From this platform if anyone help me i shall be very thankful.
    Thanks
    Syed Ameer Abbas Zaidi
    Madni Traders
    Pakistan

  3. Syed Ameer Abbas Zaidi

    My name is Syed Ameer Abbas Zaidi and my company is Madni Traders from Pakistan
    I have a complaint against a chinese company named XXXXXXXXXXXXXX

    remainder of posted removed by admin

  4. laxingnous

    i have meet some many Internet thief as i call them, but i have make up my mine that i can’t paid money online especially on china companies because too many scams there on their site.

  5. Mike BellamyMike Bellamy Post author

    Hi John,
    sorry to learn of your problems with China. But here are a couple of ideas.
    1. list these jokers to http://www.SupplierBlacklist.com and get some emotional satisfaction of exposing them.
    2. if the target company is real, consider a demand letter. http://Www.AsiaBridgeLaw.com is affordable and my recommendation. But if the subject company is a scam with no real business or assets, then i am afraid the 2200 was an expensive lesson in China business.

    BTW, check out http://www.ChinaSourcingAcademy.com for ways to avoid those kind of scams.
    Let me know how things work out for you.
    best regards,
    Mike

  6. John Kilby

    I seem to have fallen for a ‘peekaboo’ I ordered an injector pump from a company called CN Diesel Injector Co Ltd and received a worthless metal hinge into Queensland. The company seems quite legit and this mongrel has used their website and logo to fool me into thinking he was real. All this was sourced through a website called ‘Gasgoo’. I have sent emails to both parties with no response. $2200 down the drain.

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