I am seeking help and advice in recovering my money from a cheating company. We have been scammed $8400 in a cash deposit just before Chinese Holidays when visited China and meet the seller for a second time.
My bank issued LC to this company but canceled after seller’s disappearance next day after deposit was paid. We have a hard copy signed contract as you seen, PI, seller s ID card photos, seller s full bank details under his company name, Business reg. copy, export permit copy.
We have Penalty conditions in the contract enforceable in CCPT in Wuhan-Hubei.
They are not contactable any more by phone, mobile, Skype, but I know they are a fully legitimate and registered company, with current bank account under the same name in Bank of China.
Will the Embassy help me and what are my options?
You can try to contact the Chinese embassy in your country, but in every case I have witnessed in the past 15 years, they will give some excuse why they are too busy or why they aren’t the right people to help you. Basically, they are so overwhelmed with requests like yours that they can’t possible get involved unless the loss is massive, like in the millions of USD. So they will suggest you contact the police in China and the police in China will most likely say they can’t help you or maybe they will ask you to file a report, which must be done in person. That means you fly to China or appoint somebody. If the seller has not disappeared and is a real company with real assets, you may have a chance to work with the police and/or have a local lawyer issue a demand letter.
Your Embassy in China
Depending on what county you are from, your Embassy in China may be a bit more helpful than the Chinese Embassy back home. I’m sure they also get lots of mail from companies in situations like yours. Most of the time they will suggest you contact the police and they may give you a list of lawyers and some English speaking Chinese government offices that are in theory supposed to help you. So it can’t hurt to contact your Embassy. But unless your loss has political implications or is very large, I would not expect the Embassy staff to lead the charge to get your money back.
In China you can sue for lost revenue caused by supplier’s poor performance. In most countries you can only sue for direct damages. Your case will be strong because you have a contract in place, but the seller simply stole your money and didn’t ship. I have witnessed buyers in similar cases issue a demand letter (in Chinese, from a real China lawyer) for the full amount of lost revenue to shock the seller into negotiating a settlement such as replacement products or a refund. So you go in asking for a big number, and then negotiate down to something that is still acceptable.
But there is one potential road block. If the seller is a scam, meaning not a real business with no license…just some guys pretending to be a company, then a demand letter doesn’t have much impact. The supplier needs to be legit with assets to lose for a demand letter and fear of the law to have effect. In your notes you did the due diligence and confirmed the seller was a legit company. That’s positive for you.
This link will explain the typical steps and cost structure to issue the demand letter: http://asiabridgelaw.com/dispute-resolution-negotiations-demand-letters-litigation/
If you are sure the seller is a real company, then you can skip the initial due diligence. But if you are not 100% sure, then I would recommend the initial due diligence first before spending money on the letter.
Regardless of which option you select, please register this company ASAP at www.SupplierBlacklist.com to expose their poor performance and warn other buyers. At least you can get some emotional satisfaction now, even if it takes some time to get your money back and catch these crooks.
Thanks for the message and detailed options. I took your advice and I received from Australian High Commissioner in China the following feedback. Please read what he said and let me know if this changes your suggested steps or procedure in that situation.
Dear Mr. XXX
We have completed our enquires on your behalf and can advise that the Chinese company that you have been dealing with has been previously identified by the Wuhan Commerce authorities as conducting fraudulent transactions and has been suspended from their register.
We have also contacted the local police in Wuhan concerning the matter. Unfortunately, we are advised that your only recourse in this matter is to file a formal complaint with the local police. In order to do this, you must physically attend or appoint an in-country representative under a power of attorney to file this complaint on your behalf – again, this must be done in person in Wuhan. Complaints cannot be lodged by email or any other remote means. Your complaint must also be lodged in Mandarin. We have been advised that only when a complaint is made in this way will the local police investigate your complaint.
As you can see, this is far from an ideal process and will involve a large effort and further expenses on your part.
Going forward this is clearly now a legal matter for you to consider.
Commissioner – Greater China
Thank you for the great news. I am glad to see your government working for you.
Can you ask the Embassy to confirm if the Chinese company is a “real company” scamming buyers or if it is a fake company? If it is a real company, then I could introduce and affordable English speaking lawyer in China to serve as your appointed representative to coordinate local police and issue a demand letter if needed. If it is a fake company, then your options are limited.
Wishing you successful China sourcing!
About the author: 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.