Avoid fraud in China: Guidelines and recommendations to import successfully

China has long been one of the countries with the greatest progress in international trade. There are many companies that operate there or that carry out transactions or imports. But no matter how many controls exist, there are still many companies subject to scams and bad practices. How to avoid fraud in China? What is the best way to do business safely?

At IBMH we offer you relevant information and recommendations to prevent and avoid fraud in China.

Recommendations and guidelines to avoid fraud in China

A leader in exports, China has also become the world’s leading supplier in all markets. However, many of the companies that look for suppliers in that country end up being subject to fraud. Following these tips will avoid possible risks.

+ When doing business in China verify the origin of the contact

One of the most common frauds could be avoided just by verifying the origin of our contact. Ideally, this contact should have been achieved through other trusted contacts, in person or through trade fairs.

If not, it will be necessary to verify your identity through an inspection or by seeking customer reviews.

+ To prevent fraud in China, check the supplier’s data

Once the origin of the contact has been verified, we will verify the identity of the partner. For this we can search web pages and analyze all the information that appears. If it lacks a physical address, telephone, or contact email, or on each page a different thing is detailed is that something is not right.

+ Is there a commercial register? Does it have the export license?

On the other hand, it does not hurt to look at its existence in the Mainland China Commercial Register or the Hong Kong Commercial Register. Thanks to this data we will obtain information about the initial registration of the company, its domicile, or its corporate purpose, etc.

Every Chinese partner or supplier must have an export license. In addition, it must be verified that he also has all the licenses and certifications necessary to export a type of product.

 + Analyze if payment methods are secure

To prevent scams in bank transfers, it is recommended to contact the supplier by telephone to check all the data detailed on the invoice, as well as to confirm that the payment will be made by a specific means.

The biggest risk would be to make the full payment before receiving the goods. Therefore, it is usual to make an advance of 30%. The second payment should be made after having inspected the quality of the goods.

The safest payment methods are documentary credits, it is a form of payment with high payment guarantees, and payments by PayPal, your Business Account offers a full refund if the merchandise does not arrive in the agreed conditions.

+ Quality control is key to preventing fraud in China

At this point it would be best to have a company specialized in quality control of products from China. They will not only be responsible for carrying out a control of the product prior to the shipment of the merchandise. But they could also do a supplier inspection.

+ Carefully read the law applicable to contracts

The contract will detail which is the applicable law, with the European law being the most recommended. In case of dispute, the competent courts where the registry is located will be responsible for mediating between the parties.

In turn, in this contract they will have to agree on the delivery conditions through the Incoterms.

Avoid fraud in China: Other things to consider

In addition to what has already been said, we will be suspicious if…

  • We see offers that are too attractive or too low prices.
  • Full prepayment is requested.
  • If a request for extra payment is made to release merchandise that has supposedly been trapped in the customs office of origin.
  • It would also be necessary to be suspicious if the bank account number is in the name of a natural person instead of a company.
  • If the data you provide only appears in one language instead of Chinese with its corresponding translation.

It can be overwhelming to be aware of all aspects to avoid fraud and scams in China. That is why the general recommendation launched by the experts is to have a trusted partner resident in China. And that is precisely what IBMH offers you, with its import management service for furniture and construction hardware from China. Not only will you avoid setbacks, but you will have the guarantee of success you are looking for. Contact us today and we’ll tell you everything we can do for your business!