Once a while, we will get inquiry from our clients looking for help to get their money back, most of the time, the supplier disappeared once the deposit was paid, or the whole payment was made, however, they found there are a huge shortage in the delivered products or the products are just trash!
So what’s the trick to not getting scammed?
The most important thing is to make sure that you’re actually dealing with a registered Chinese company. At least half of the time when an oversea company is scammed by a “Chinese company,” the company is either not Chinese at all or they are not registered with Chinese corporate authorities.
The information they show in E-commerce platform, their website, they email address or their business card is probably not true, it’s something they make up to cheat people.
To verify that you’re dealing with a real Chinese company, you should ask for a copy of its business license and have someone who speaks Chinese and understands Chinese business licenses examine it ( If you know need more information, please check our previous post: What Can We Learn from a Business License?). Look for information on the license such as the year the company was formed, its location, and the scope of its business.
Another way to check their authenticity is to ask them to provide all these information, and compared all these with the information you found through check it yourself, if there are discrepancies in the information provided, it’s a red flag and you should walk away.
Another issue we want to specifically explain is: A HK registered company is probably a shell company, which more than often, is a tool to do fraud.
Before the opening- up policy of China, many HK registered company is a real trading company, they sell products they buy from Mainland of China. After the opening-up of China, some Chinese factory choose to open HK company to sell their products directly to overseas market. However, there are a lot of HK company are incorporated with a vicious purpose–cheating money.
If you know the HK company’s history, that’s fine. If the HK company is opened by a factory located in Mainland of China, it’s highly recommended that you sign the contract directly with the factory. Why? Because even if the business is real, the HK company has no assets at all. Once there is any dispute, you can’t enforce the judgement even if you win the case. Sign the contract directly with the factory instead of the HK company, and provide the jurisdiction is in Mainland of China and the applicable law is law of the PRC.
If you are uncertain of the identity of the HK company, just go away.
