How we discovered the copper wire scrap fraud business in Tianjin

Last Thursday (Nov 10,2016), one of our African customers booked our Business Guide Service in China, asking us to accompany him and audit the suppliers together in Tianjin for his copper wire scrap business. The supplier is a fully registered new exporter from Tianjin according to their Business License and Export License offered, they picked us up at the hotel with a car, took us to their office and warehouse, we checked the goods, discussed the trade terms, price and packages etc, everything seems to be very normal.

However, on the third day (Nov 12,2016), I took the customer to their office without informing the supplier of our arrival.(We were supposed to check their export qualifications in person.). When we reached their office during the work time that afternoon, everything shocked us. At the same address, on the same door, they changed their Company name, Logo and staff within 2 days ! I asked them for Ms Chen (the sales lady) and they said they did not know her! After that I called my colleagues to further investigate this supplier in China, noting that they used fake information in their export license. By then we came to a conclusion that this was a real business scammer in China.

Features of such business frauds are:
1. Fully registered NEW trade company and exporter but disguised as real manufacturers online;
2. Insist on using their own Shipping Agent;
3. Require 30% deposit in advance by T/T;
4. Offer high quality samples for FREE sometimes to gain trust from the clients;
5. Use very low prices to attract the clients worldwide. (Far below the market price in China.);
6. Scammers are normally from North China at present. According to the case-reports from our clients, Shijiazhuang, Zhengzhou, Qingdao, Dalian,Tianjin etc is notorious for such business scams in China.

Source: Verification Team, STIN Group (www.chinabizservices.com)

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
Website: www.dlwhchem.com
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.

Ordered copper wire scraps but received stones, how to get back the losses?

Yesterday (Sep 10, 2014) one of our African clients told me that he was badly defrauded, he received full containers of stones instead of the purchased items and here is the story. In early July, he placed an order with a supplier ( a trade company) from North China without some important Due Diligence work like Supplier Verification and Factory Inspection etc before payment. Although he booked a Loading Process Supervision but it still cannot 100% stop you from professional scammers in China, in early September he received full containers of stones instead of the purchased copper scraps. Please keep in mind that Supplier Verification and Factory Inspection  is the first step for your success in your business in China, especially for large orders. It is always important to know their full registered information in Chinese before formal cooperation as there are many ‘fake’ business licenses in China as well. China is NOT an English speaking country and you cannot even take legal actions against your supplier in such cases if you do not know their full registered information in Chinese.

 

Someone purchased Precious stones but received packs of normal stones, some ordered copper craps but received stones and some other clients ordered chemicals but received salts etc, these are typical contractrual frauds in China these days. Apparently the supplier, shipping agent and trucking companies etc are all suspisous to be the criminal in such cases, they might conspire to commit the crime as it is hard for one party to fulfill it lonely.

 

Are there any chances for you to get back your money during such cases?

I think the answer may result in following actual facts:

1.Whether the supplier is a fully registered an exporter or factory in China or not.

2.Whether the shipping agent is a fully registered forwarder in China or not.

3.Whether the documents received are fake or not.

 

So the first step is to fully investigate the supplier and their shipping agent in China. Then report their bad credit to local officials and apply for official help. Also the client can collect enough business proof, then take a legal action against them in China after a thorough on-site investigation.

 

If you’d like to do safe and smooth business in China, a formal Purchase Contract, a Factory Inspection and Auditing and a Pre-shipment QC Inspection service etc are all very important. Safety, Quality, Price and After-sale services etc play the same role in doing business in China !

 

Tips for you to do safe and smooth business in China....

Doing business in China is profitable but also a challenge for some businessmen worldwide as there are too much trouble involved without enough Due Diligence work. 90% of the Chinese suppliers require 30% deposit before production and 70% of rest balance before delivery in China. Also sometimes the supplier use high-quality samples to attract the order but use worse materials for bulk production, we have witnessed countless trade disputes every year in China and sometimes it is quite risky for a foreign enterprise to purchase directly from a Chinese supplier. Here are the right steps for you to do safe and smooth business in China: 

 

First, if you have not found any reliable suppliers, then you’d better book an On-site Professional Sourcing service from a third-party local service company like:

http://www.chinabizservices.com/service/Suppliers/On_Site_Sourcing_Service/

Sometimes only local experts can find out the truth for you in China. 

 

Second, if you have sourced some suppliers by yourself, before you pay any deposit, you'd better book a third-party Basic Verification or Factory Inspection service like below to fully check out your suppliers.

http://www.chinabizservices.com/service/Verification_and_Investigation/Basic_Verif/ 

Or 

http://www.chinabizservices.com/service/Verification_and_Investigation/Factory_Ins/

The purpose of any verification service is to discover their real registered information and export qualifications etc in order to avoid future trouble. 

Third, if your order is very big, sign a formal Purchase Contract with them before paying the deposit. A formal Purchase Contract both in Chinese and English is very important as China is NOT an English speaking country, local courts only regard Chinese version of contracts as the official ones. 

Fourth, if your order is very big, book a third-party During-production or Pre-shipment QC Inspection service like below before paying them the rest balance.

http://www.chinabizservices.com/service/Management/Pre_shipment_QC_Inspection_Serv/ 

Fifth, book a third-party Loading Process Supervision service to protect your interests after you pay them the rest balance in China.

http://www.chinabizservices.com/service/Management/Loading_Process_Supervision_Ser/ 

Sixth, try to use your own 'shipping forwarder' like STIN in China ( STIN can contact a shipping agent, arrange shipment and clear the customs for you for FREE if you use STIN 'purchasing agent' service in China, by this way you will control everything at your end.)

 

Of course if you need a ONE-STOP business solution service from China, you can simply book a third-party ‘purchasing agent’ service, then they shall act as your own buying office and all above services can be covered in this service. 

http://www.chinabizservices.com/service/Purchasing_Agent_Service/ 

A qualified professional purchasing agent service may help you smooth every step in following aspects in China in person: 

Sourcing new suppliers or factories; 

Sampling; 

Supplier verification and auditing; 

Management of suppliers; Price negotiation; 

Delivery support (Logistics); 

Formal contract documentation support; 

Quality Control management; 

Loading process supervision; 

After-sale Service support; 

Other services may be available upon request. 

A good purchasing agent service is different from a trade company and they can benefit you much more from following two points: 

1. A trade company will protect their own interests at any time during the business in China. They will not allow the clients to buy directly from their verified factories. They will 'buy' from the factories and add their own profit, then 'resell' the products to the clients worldwide, the profit of trade companies is normally 10-50% against invoice value in China, varied in different products. While a purchasing agent service, take STIN (www.chinabizservices.com) for example, will simply act as their own 'assistants, office and eyes 'etc in China, STIN service will protect the customers' interests from the beginning to the end during any business activities in China. All the service charges are fixed and transparent and the commission for STIN service is only around 5%. They only charge a small amount of service fee order by order or case by case, apparently the customer can profit more as they can buy directly from any qualified factory sourced and verified by STIN in China. The client is free to contact the factories for any question related. 

2. Trade companies normally do not have their own team of quality control inspectors, factory auditors and lawyers etc. STIN has a team of professional quality control inspectors, auditors, buyers and lawyers etc in China and apparently STIN can offer better ONE-STOP business solution services for their clients worldwide.