Protect Your Business from China Exporter Scams and Fraud

Importing from China presents promising opportunities, but it also poses various risks and challenges.

One common concern is the possibility of encountering scams and fraudulent activities from exporters:

Non-delivery scams

This is a common scam where the Chinese seller takes the payment but never delivers the goods.

 

To avoid this, always verify the credibility and legitimacy of the Chinese seller before wiring any payment.

Quality scams

In this scam, the Chinese seller provides samples that meet your quality standards, but the actual products delivered are of substandard quality.

 

To avoid this, ask for references and samples from previous customers and conduct quality checks before finalizing the order.

Bait-and-switch scams

This is where the Chinese seller offers a specific product at a low price but substitutes it with a different, lower-quality product.

 

To avoid this, always ensure that the product description and specifications match the samples and invoices.

Intellectual property theft

This is a growing concern, where the Chinese seller copies or counterfeits your products or brand.

 

To avoid this, always register your trademarks and patents in China as early as possible.

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Legal Q&A

What are some common types of scams or fraudulent activities that buyers may encounter when purchasing products from Chinese exporters?

Some common types of scams or fraudulent activities that buyers may encounter when purchasing products from Chinese exporters include:

  • fake or counterfeit products
  • misrepresentation of product quality or quantity
  • hidden or unexpected fees
  • fraudulent shipping arrangements
  • phishing or other forms of online fraud

How can buyers verify the legitimacy of a Chinese exporter before making a purchase?

Buyers can verify the legitimacy of a Chinese exporter by engaging a local lawyer to conduct due diligence at the beginning of cooperation as well as on a regular basis.  Due diligence should at least include:

  • registered company name and registration number
  • date of registration and domicile
  • registered capital and paid-in capital
  • scope of business
  • authorized signatories
  • shareholders information,
  • bankruptcy record (if any)
  • major pending litigations (if any)

Trustiics offers a quick 72-hour legal due diligence service.  It has been welcomed by North American small businesses and online merchants that import from the Chinese market.

What legal recourse do buyers have if they fall victim to a scam or fraudulent activity by a Chinese exporter?

If a buyer falls victim to a scam or fraudulent activity by a Chinese exporter, they may have legal recourse under Chinese or international law, depending on the circumstances. Possible legal remedies may include:

  • breach of contract claims
  • fraud or misrepresentation claims
  • filing of civil lawsuits
  • reporting of potential crimes

What steps can buyers take to minimize their risk of being scammed or defrauded when buying products from China?

Buyers can minimize their risk of being scammed or defrauded when buying products from China by

  • conducting thorough due diligence on potential exporters
  • using secure payment methods and shipping arrangements
  • requiring written contracts and agreements
  • staying alert for warning signs of fraud or scams by having a regular follow-on due diligence once a while, e.g. every 6 months

In the event of a dispute with a Chinese exporter, what is the process for resolving the issue through legal channels, and how can buyers best prepare for this possibility?

The process for resolving a dispute with a Chinese exporter through legal channels may vary depending on the specific circumstances and the applicable laws and regulations.  It is important to agree on the dispute resolution method in the Sales Contract or other agreement to be signed with the Chinese exporter. 

However, buyers can best prepare for this possibility by

  • documenting all communications and transactions with the exporter
  • seeking legal advice early in the process
  • being prepared to negotiate or pursue legal action if necessary
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