Monday, 18 January 2016

The latest China chemical business fraud

Mr. Petr from Czech Republic confirmed that following Chinese supplier is a professional scammer, they lost more than 8700 USD for plastic raw material business (HDPE):
Dalian Wanhao Chemical Co, Ltd
Add: NO. 6 Gangwan Streed, Zhongshan District, Dalian, P.R. China
Tel: +86 411 39836210
Mobile: +86 131 0983 0862
Contact: Mr. Morry Kin (fake name)

Here is their story:
Communicated with the company since November 2014
Placed an order for LDPE Virgin Granula for USD 8760,- on January 5, 2015
No material was shipped.
Last communication from the company was on February 14, 2015
Until today, no other communication took place and no material was shipped
The company is still active on the internet possibly cheating other companies

Following evidence could be available upon request:
Invoice from the Dalijan Wanhao Chemical Co., Ltd.
Confirmation of the invoice payment
Confirmation from our bank that the Dalijan Wanhao Chemical, Ltd did receive the payment of USD 8760,
E-mail communication with Dalian Wanhao Chemical Co, Ltd.
Copy of passport ID of Mr. Morry Kin, who claimed to be Dalijan Wanhao Chemical Co. Ltd. representative and held all the communication with me
Business License of Dalijan Wanhao Chemical Co., Ltd.
Credit Certificate of Dalijan Wanhao Chemical Co., Ltd. with a name
Export License
Submitted pictures of the company from Mr. Morry Kin
Tax certificate of Dalijan Wanhao Chemical Co., Ltd.

How to check out similar business fraud in China ? A basic Company Checkup service or an on-site Factory Inspection and Auditing service would be a key in China.

Features of Chinese L/C Business Fraud

Several L/C business fraud cases in China have been witnessed among our clients worldwide, here are the features of those cases.

1.Chinese L/C business fraudsters - actually located in North China: Shijiazhuang, Zhengzhou, Qingdao, Dalian, Tianjin - create a new trading and export company, usually for one year and pretend to be manufacturers online but they will never put on their Business License and other certificates on their website.

2.Their websites are rent for one year from non traceable hosts (Korea, USA etc.) and composed of standard-modules, all the websites have an absolutely identic layout with the same functions. Also they will use ‘fake address’ or non-exist address on their website.

3. They do not present their complete set of documents and licences for due diligence with different kinds of trivial excuses:
a. Company / Business Licence (they will offer fake licenses sometimes)
b. Bank Account Licence (and the complete bank coordinates and contact data of the bank officer)
c. Foreign Trade Registration / Export Licence
d. Copy of Tax Registration
e. ISO Certificates
f. Copy of the ID-card of the company owner and general manager
g. Coordinates of the Insurance Company and the contact person
h. Coordinates of the Shipping Company and the contact person
The range of their different (rotten) excuses is nearly unlimited...

4. If you ask for the direct phone number and the direct email address of the director of the company or the general manager, you will never get, indifferently how many times you ask for. They normally use a mobile phone number or a single emailbox to contact the buyers. No fixed office number is available.

5. If you ask them to accept local third-party‘on-site factory auditing or inspection’services, they will decline or disappear suddenly. Normally the big importers will use professional auditing services to protect their interests in China, especially when they know nothing about Chinese. Only local experts can find out the truth for them in China sometimes.

6. They insist on their own shipping agency and on the fact that they will do by themselves the quality and quantity control. Some professional scammers will be able to change the items in the container during the transportation in China, say, from the factory warehouse to the port yard.

7. Payment:
(a.) they insist on a pre-payment/deposit of usually 30% TT, but do not give any guarantee for the countervalue

(b.) they do not accept a Bank Guarantee or a deferred LC

(c). if the accept LC, then only an irrevocable, confirmed, non divisble, non transferable LC 100% at sight

8. They offer big quantities of commodities (non ferrous metals) for prices which are far below the world market prices (even the manipulated LME prices).

9. After they have sent their offer, you get ’bombed‘ by their standard emails every day:
?Hello, my dear friend, how are you? When will you open the LC for us? Please tell me again the name and coordinates of the issuing bank.“

10. They will sign with you any kind of agreements and issue whatever document you want and ask for (Working Agreement - IMFPA - Guarantee of Price and Delivery etc.), because they know from the very beginning, that they will disappear and never keep the agreements.

11. They use a 'fake’identity card or‘steal’a real identity card to register a company.

12. Conspiracy with their shipping agent:
(a.) they change the goods inside the container on the way to the yard with a fake seal number (or they even dismantle the container door without breaking the seal number.)

(b.) they issue a falsification/fake of a real, existing, official BL; they get the original BL number from their contact person from the shipping agency

13.After they have got the money, they disappear - they do not answer your mails. The phone line is 'dead’, the fax (if they have... usually they use only one number for phone and for fax) does not connect; they disappear from Skype as well... There is no possibility to get into contact with them.

Please read here to know how to cope with such cases in China.

Source: STIN Verification Team and Dr. Harald Dasinger,a sourcing expert from Germany

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

Saturday, 2 January 2016

Top 10 best cities for business on Chinese mainland

Thanks to its comprehensive strength, especially its advantage on passenger transport and freight index, Guangzhou topped the list of best cities for business on the Chinese mainland in 2015, according to a report recently released by Forbes China.

Among the top 10, Beijing climbed the highest, up three spots compared to last year when it ranked 7th. The result is due to excellent performance in many fields such as urban size index and labor index.

On the other hand, Wuxi dropped the most. However, its labor index remained high because it absorbed many talents with preferential policies, including nine Nobel Prize winners.

The 2015 ranking still saw a strong presence of cities located in the eastern region.

Developed regions, including the Yangtze River Delta, Pearl River Delta and the Beijing-Tianjin-Hebei region, claimed 48 spots in total.

According to the report, this year's ranking was the 12th of its kind and evaluated 100 cities on the Chinese mainland based on eight business criteria, including labor index, urban size, spending power, passenger transport, freight, private economy, operational cost and innovation capacity.

The following are the 10 best cities for business on the Chinese mainland in 2015.

No 1 Guangzhou

No 2 Shanghai

No 3 Shenzhen

No 4 Beijing

No 5 Hangzhou

No 6 Nanjing

No 7 Ningbo

No 8 Wuxi

No 9 Qingdao

No 10 Chengdu

Source: Chinadaily

Top 10 news events of China in 2015

1. Deadly stampede tragedy in Shanghai

The stampede happened on the last night of year of 2014 as tens of thousands of people assembled on Shanghai's historic riverfront walk to see a new-year skyline show in the Pudong financial area on the opposite side of the Huangpu River.

36 people were killed from a 12-year-old to a 37-year-old among whom 34 were residents of the Chinese mainland, 1 was from Taiwan and one was a Malaysian citizen.

Shanghai and other big cities soon cancelled big gatherings and rolled out safety regulations on crowd control after the accident as the government was caught in the backwash of criticism for not putting in place effective preparation measures to cope with the crowds that flocked to the Bund.

2.Unfortunate shipwreck
The Eastern Star cruise ship sank on the Jianli section of the Yangtze River on June 1, killing 442 passengers and crew on board the ship as only 12 survived.

The Eastern Star, with 403 tourists, 46 crew members and five travel agency employees aboard, was on a 11-day trip along the Yangtze River when it was overturned by a tornado on the night of June 1.

The 76.5-meter vessel had been in service for nearly 20 years and could carry up to 534 people. It underwent annual maintenance in late 2014 and was certified to cruise until April 25, 2016.

Search and rescue operations have ended on June 13 and the investigation result released on Dec 30 says the reason for the shipwreck was the heavy storm during freak weather.

3. Stock market rollercoaster

The A-share market suffered a free fall from June to August in 2015 when the market regulator tightened leverage norms. Funds panicked, a selloff ensued, and even global markets shivered, worried over further slowdown in the world's second largest economy.

The benchmark Shanghai Composite Index crashed 45 percent in less than two months. The rout wiped out $5 trillion of market value and prompted the regulator to launch an unprecedented rescue.

The plunge delayed reform of the Chinese stock market, prompting the regulator to intensify crackdowns on market manipulators and insider trading. Several senior executives of CITIC Securities, the country's largest brokerage, were investigated for alleged insider trading.

4.Tianjin blasts
Catastrophic explosions happened at midnight on Aug 12 in Tianjin where large amounts of toxic chemicals were stored in warehouses including around 700 tons of sodium cyanide.

162 people died including 96 firefighters, 11 policemen and 55 residents nearby. The eleven missing include eight firefighters and three residents. Hundreds remain in hospital.

People are shocked to know how dangerous the neighborhood they lived in was as few people even knew about the existence of the hazardous chemicals before the blasts.

5.V-Day parade

China held a V-Day military parade on Sept 3 for the first time in Beijing to commemorate the 70th anniversary of the end of World War II and the victory of the war of China's resistance against the Japanese invasion.

Twenty-three heads of state and government leaders and over 100 foreign VIPs or relatives of wartime heroes attended the parade to share the moment with China.

President Xi Jinping also announced to cut China's troops by 300,000 by the end of 2017 to show the nation's resolve to sticking to the path of peaceful development.

12,000 troops and 1,000 foreign troops from 17 countries participated in the parade.

6.CPC Fifth Plenary Session

China is about to march into its 13th Five-Year Plan from 2016, a plan that was proposed and adopted during CPC Fifth Plenary Session from OCT 26 to 29 amid China's new normal of slower economic growth.

The plan shifts China's focus on raising energy output and improving its energy supply structure with specific wind, solar power, and oil exploration targets.

The second child policy and the goal to alleviate poverty drew much attention worldwide.

7. Xi-Ma meeting

President Xi Jinping and Taiwan leader Ma Ying-jeou met and had face-to-face talks in Singapore on Nov 7.

The meeting is the first between the leaders from both sides of the Straits in 66 years since 1949, hailed as a milestone for cross-Straits relations and a breakthrough in leaders' communication.

It gained much attention from the world though they weren't expected to sign any agreement nor deliver a joint communique but merely exchanged views on promoting peaceful development of cross-Straits relations.

8. Landslide in Shenzhen

A landslide buried 33 buildings at the Hengtaiyu industrial park in Shenzhen City on Dec 20, leaving seven people dead and 75 missing.

It was later proved to be a work safety incident-- the result of the collapse of waste construction material used for landfill --rather than a geological disaster.

The local government apologized to victims and 12 people who were involved are being detained. 52-year-old Xu Yuan'an, chief official who approved the waste dump site, fell to his death.

The Supreme People's Procuratorate announced it would investigate the case for suspected malpractice crimes while the search is still on.

9. AIIB starts operation
The Asian Infrastructure Investment Bank, the first international financial institution proposed by China, was formally set up in December 2015.

The AIIB mainly focuses on supporting infrastructure construction projects in the Asia-Pacific region as China looks to strengthening economic ties with the neighboring economies.

The bank has garnered the approval of 17 countries including China, Australia, the United Kingdom, South Korea and Germany.

10. Smog depresses the northern cities

Several alerts of smog attacks during the winter destroyed the general impression that air pollution is improving when severe smog blanketed the cities for days.

Some cities like Beijing started practicing regulations such as limiting the number of vehicles and suspending school on days with severe air pollution.

Source: Chinadaily