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Basic ways to find out Chinese business fraud before payment
China is not only the largest exporter but also the largest importer for lot of general commodities on the globe, suggesting that 99.99 % of the Chinese businessmen are quite honest and reliable enough. However, scammers do exist everywhere on the globe, as a professional auditor and sourcing expert in China, I’d like to share some basic skills on how to find out the Chinese business fraud before payment: 
 
1. Homepage/Website/Full contact ways
 
Scammer and cheater usually rent an internet domain from an American or Chinese host for one year. After one year, the homepage does not exist any longer - as well as the company. No email-address, no phone-/fax-number works any more. The contact person (usually it is only one or two !) disappears completely and can not be reached by any means any more.
 
The homepage in each case is from the same ‘mold’ or ‘standard’- it means a  ready-made/pre-manufactured one. Layout, design, functioning etc. of the site are almost the same in all cases - only the name of the company, phone number, email address, name of contact person are different. 
 
90% of these scammers do not use a fixed office phone number, they just listed out a mobile phone number online. They used ‘fake ID card’ to buy a SIM card and get a mobile phone number, which could be disappeared at any time in China. 
 
It is always mentioned on these sites only one single contact person, only one email-address, only one number which is phone and fax at the same time. There is no real, serious company presentation - only generalities which in all cases coincide to 90%. 
 
There is nothing telling about the company history, company values, employee/staff, and management etc. They may know little English, or just use machine to translate or employ a young girl to work for them. 
 
There is nowhere on the site mentioned any official registration number, tax number etc. as well as the contact data of the official governmental authorities where it can be proved that this company really exists and has all necessary legal licences. There are nowhere mentioned the bank coordinates, so that the company can be proved about its credit and reputation. 
 
100% of the scammers use ‘fake’ or ‘none-exist’ addresses in China, they just created an address online and it cannot be reached at all. With a simple ‘on-site inspection’ you can find out the truth, especially when the order is large enough. 
 
2.Too low prices
Check the market price in China first before you IMPORT !
China is well-known for the ‘cheap or low’ prices for most of the items on the globe. However, please bear in mind that China is also the largest consumer for lot of luxury and high quality products. Almost every factory has different quality level products, catering for the importers from Europe, US, Middle-East and Africa, if you pay more, the quality will be good, and vise versa. 
 
The scammers normally trap the importers with extremely low prices, far beyond the market prices. You have to check out market price and their export qualifications first before further discussion if you are offered a very low price. 
 
3.Payment terms and bank account 
Scammer and cheater always ask for pre-payment, usually 30%TT in advance. It seems to be normal in the international business as they need cost to prepare the raw materials, however, the importer should have their registered information or export qualifications first before payment, especially when the order is very large.  
 
LC 100% at sight is also not 100% safe now. Some professional scammers will use ‘fake documents’ to get the money, please read here to know more about such cases. They do not issue a PB of 2% - because they do not have the money and they are not credit worthy. Of course, the best solution is that you can use little money to employ local verification or auditing service to solve these troubles in China. 
 
Another important thing is the bank account. We have witnessed several cases that some professional scammers use ‘UK, Dubai or HK offshore company’ to receive the money in China. For example, they can register an offshore company in Hongkong or UK or Middle East, the company name is exactly the same with a big company name or well-known company name here in China. Then the client is required to pay to their offshore trade company account (which does not exist in Mainland China), they will disappear after they get enough money and repeat the scam story again and again. In this case, company bank account verification is also very important now, espcially for large orders. 
 
4.Licences and export qualifications
In China, every factory or exporter must have their own Business License, from their official Business License, you can find out their authorized business scopes in China, you can also find out whether they are a real factory or not in China. In this case, a basic verification service is very important before payment if you know nothing about Chinese. 
 
Scammer and cheater are not able to present a business licence - not a company licence, not an export licence, not a production licence, even if they state, that they are direct producers/manufacturers. Some used a ‘fake’ license to trap you. If they present one, it is only in Chinese and no European buyer will understand what kind of licences it is and what it is written in this licence.  
 
Except for the business license, some other certificates or licenses are very important as well in doing international business in China, say, Export License, Export Quota (for some special items), CE, SGS, UL, Halal, ISO certificate etc. Do not forget to check out their export qualifications and bank credit before payment ! A formal purchase contract, on-site factory auditing or inspection service, pre-shipment QC inspection and loading process supervision service etc play a very important role in doing safe and smooth business in China !
 
Source: STIN Verification Team and Dr. Harald Dasinger, a sourcing expert from Germany
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