Do you want to how to avoid scams while importing from China?
Are you worried about being a victim of scams?
Then this article is just for you because here we have combined the most common scams that are likely to happen and also will teach you the strategy to avoid them. This chapter will really help you to be more confident when you decide to source products from China.
Sourcing products from China can be very challenging and time-consuming, but once you are able to understand the right way, it becomes a very interesting experience and helps you to source profitable products from China which enables your business to grow.
However, one should be always aware of the various scams while importing from China that may happen. We do not say that these scams will happen frequently, but learning about them will surely help you to protect yourself from any big loss.
Let’s discuss each scam one by one and understand how to avoid them.
1) Supplier is not a Manufacturer but a Trading Company or Middlemen
When you search for a supplier online let’s say from Alibaba.com Some of them may show themselves as they are the manufacturers but in reality, they are not. You can be scammed into believing that they are manufacturers and that they have all the capability to produce the product as per your requirements.
However, since they are not the manufacturers, firstly they can handle your product requirement as a manufacturer can. Secondly, since they are the middlemen that will result in the price increase because they will add their own margin on the factory price.
How to avoid this scam while importing from China?
1. When you search on Alibaba, you need to make sure that the supplier is listed as a manufacturer. But you shouldn’t just be satisfied with this. You need to follow further steps to ensure that the manufacturer is really a manufacturer.
2. Make sure that they have placed their factory pictures on Alibaba, business license, office pictures. This provides you more information on the supplier.
3. Contact someone from the company; ask them to provide you their business license, their company name in Chinese, and their business card. With this information, we can do some research on the supplier.
4. Use their Chinese name and search on Baidu. You should be able to get their official information like the legal representative’s name, their office address. Compare the office and factory address with the company’s business card and make sure they match. Visit the official website of the company and compare the addresses.
5. Ask for their factory address and use Baidu maps or Google maps to check out the reallocation of their factory. You can use satellite images to ensure that it is really a factory that is located over there.
6. Don’t be shy to ask for a video call randomly with the company representative and ask him or her to show you around. This will also ensure their legitimacy. A real manufacturer will never be shy to consider such requests from a client. They will go out of the way to show you whatever you need to see to satisfy yourself before making the order.
7. Try to find some contacts in the city where the factory is located or nearby that city. This can be a friend or a 3rd party who can do a factory audit. However, be aware that the 3rd party charges will be high. If you do have a friend in China, ask him to visit the factory to ensure that the supplier is a real manufacturer.
8. Usually, a real manufacturer will use the same name on the factory entrance, same on a business card, website, and on Alibaba.
9. If it is feasible for you, the best tip we can give you is to visit China yourself and visit all the factories personally. This is by far the best method to make sure that the supplier is the real manufacturer.
10. Always remember, working with a real manufacturer have its own benefits, however, it does take a lot of time and effort. One can always hire a sourcing company to do suppliers audit and 3rd party inspections to have peace of mind knowing that the goods you will get are of high quality.
2) Sending fake Branded Goods
Sometimes the supplier may send you a fake product. It means that the product is either an exact replica of a branded product and it is not a real one. Many people will buy such goods without knowing that they are not original and later on when they sell them, they get a lot of problems because the online websites where they sell it have blocked their account or take that item down from the listing.
These products may include categories like,
Designer Clothing, Footwear (Famous brands like Nike, Adidas, etc.), Electronics, Cosmetics, Fragrances, etc.
How to avoid this scam while buying from China?
Do not buy branded products from Alibaba. The best way to buy a branded item is to first contact the official brand through its website. Ask them to provide you their authorized distributor’s contact or if you can buy the products directly from the brand.
Normally one has to buy a license from the Intellectual property holder giving him rights to sell those products.
If you ever want to buy a branded product, make sure that the supplier can provide you all the documentation of that product from the original brand proving that he has the right to sell that product. This will ensure that it is a real product.
Also, an important point to note is that here we are not talking only about the western brands. Some Chinese manufacturers may copy products from other Chinese manufacturers.
So that’s why it is very important to get in touch with the brand owner first and ask whether the company you are dealing with is an authorized re-seller of their goods.
3) Supplier disappears once the Deposit is made
Sometimes once you have made the deposit to the supplier, the supplier stops responding to your emails, messages, or the worst of all, completely blocks you from any communication. This results in a huge loss of your time and money. It gives a bad image of Chinese manufacturers to foreign buyers.
How to avoid this scam
You need to do proper research on the supplier before placing an order. Make sure that the payment always goes to the company account if it is a company. If it an individual small business, make sure they are located in the wholesale market or have a physical presence so that you can ensure they will not disappear in one night.
Also, try to get references from someone you trust about suppliers. Someone who has worked with them before. So that you can have a good level of trust before paying money to the suppliers. However, in the case of the supplier being a company, all you need is to have a very strong contract with the supplier and always transfer money into the company account.
A strong contract means that the terms in the contract should cover each and every aspect of your order, so that in case if the supplier makes any problem, you can always follow the legal course of action.
4) Receiving Money into Personal Bank Accounts
When it is time to make payment for your order, the supplier informs you that their company bank account has got some problems and will request you to send money to another account or will say that it is their boss account. This means it is a personal account and in international trade sending money to a personal account for importing goods from one country to another is considered illegal. Refrain from it because it will not provide you any protection for your order.
How to avoid this scam
The reason that suppliers will use this way is that they want to avoid paying taxes to they tend to receive money into their personal accounts. It doesn’t matter if the supplier is legitimate or not, sending money to personal accounts is highly risky.
If the seller receives money and disappears there is nothing you can do legally to get it back.
5) Asking for Additional Payments for Customs Clearance
Sometimes, the suppliers provide you a quotation for your order. You check it out and agree on the product price and shipping price and give the supplier deposit to go ahead with the production.
Someday later the supplier asks you to make an additional payment and the reason is to cover the customs fees. If you disagree to make this payment he will not ship the goods. You may also be provided with fake courier tracking numbers or tempered documents showing that your goods a really held by customs.
How to avoid this scam
First of all, all the fees are known to the suppliers at the beginning of the order. Therefore there is no question for such fee arising later on in the process. There are no such hidden customs fees that you need to pay when exporting goods from China. So if you get such a response from the supplier it already means that you are being scammed and it is highly unlikely that the supplier may not ship the goods to you.
Make sure that when you sign the contract, you can put this term in it that once the order is finalized there will be no further price changes or additional payment requests by the suppliers. So in that case, if the supplier still asks for extra payment, you can take the matter to the court.
6) Refusing to send Samples and asking to make Full Payment before Production
When you source any product from China, before finalizing the order, one always asks to get the samples to check the quality and to ensure that the final product is the same as the sample.
However, sometimes the suppliers may refuse to provide you a sample. Either they will say that they have no samples or that they only deal in bulk orders. This is totally false. If they are a manufacturer, making a sample should be no problem for them. In fact, they should already have stocks for samples for the customers.
How to avoid this scam
In such a situation, do not place the order under any circumstances. If they are not able to provide samples to you, this should be a red flag for you. We should point out here, that it is not necessary that this situation is a scam while importing from China.
But it is very likely it may be. But under any situation, working with a new supplier demands that you always get the samples. If they are not providing samples, means something is dodgy over there.
A genuine supplier will have no problem is sending samples, which sometimes they also ship without any charges if the product is low priced. You can always look for another supplier in such a situation.
7) Only accepting payment via Western Union
You receive the invoice from the supplier and it mentions that the payment must be made by western union. This clearly means that the supplier is not genuine. Why the supplier does not even have a bank account. Western union payment transfers do not require any bank accounts. This may mean that a supplier is an individual person just trying to rip you off your money.
How to avoid this scam
Ask for a bank account. That too a company bank account. So that you really know that the money is going to a company rather than an individual. Money can be easily tracked to the original receiver through bank accounts but by western union, it goes to an individual person who can be anyone and can disappear in one night.
If you found the suppliers from Alibaba, you can always try to use Alibaba Trade Assurance. What it does is that Alibaba will keep your money until the goods are produced and shipped. This is basically an escrow account. Once you are satisfied with the quality of goods, only then Alibaba will make payment to the suppliers.
You can also use PayPal. It is an instant transfer and in case of any issue, you can open dispute resolution with PayPal to get your money refunded.
8) Samples Quality was very good, but the Bulk Order was Poor Quality
The supplier provided you the sample and the quality was good. You inspected the sample and were satisfied and you planned to place the order. But once the supplier produces the bulk order and ships it to you, upon inspection you found out that the quality of the products from bulk orders do not match with the sample product.
How to avoid this scam
This is the result of a bad inspection from the buyer’s side. Once the goods are produced and ready, you need to have pre-product, mid-production, and post-production inspection before you finally ship the goods shipped.
You must either inspect the goods yourself on the factory floor before shipping or hire a 3rd party to do it for you. Because when the goods are in China, any issues can be solved easily. But once the goods leave China, it will be very costly to even solve any issue. Therefore make sure you perform the quality inspection and ensure that the products manufactured meet your standard.
9) Using Fake Certificates to Prove the Product Fulfills the Requirements of your Country
For some products, the buyer needs to acquire the certifications in order to clear the customers in their country and sell those products. These certifications require a good amount of money and time for the manufacturers to acquire and some may not be so willing to get them.
Therefore some suppliers may temper these documents and make fake ones by digital editing. You may think these are original documents but they are not
How to avoid this scam
You need to make sure that you inspect all the certifications very carefully. Each certificate must have serial numbers of reference numbers and the name of the governing body on them. Contact that governing body via their website or email.
Most of them provide authentication checks on their websites directly where you can put the serial number in the website and it will confirm whether the certificate is genuine or not.
Another way is to email them the scanned copy of the certificate and wait for their response regarding the authenticity of the certificate.
10) Sourcing Agent taking Kickbacks from the Supplier
Sometimes the sourcing agents will provide you a very low price. You will be tempted to place an order with them because the price is very low.
But have you thought about why they are providing such a low price? What about the economics of a factory. The rent, the electricity, the labor cost. There are so many costs a factory needs to cover and then earn a decent profit to sustain them.
Do you think it will be possible for a manufacturer to sustain its business at such a low cost? No, it is hardly possible.
So it is very likely that they are taking kickbacks from the factory. Kickbacks mean that the agent or the middleman who is between the manufacturer and the buyer is asking the manufacturer to put his profit in the product cost.
For example, the cost of the product is 10$, and the agent is taking just a 2% commission from you as a buyer. However, he may also be taking a 3% kickback from the factory. Why the factory will provide him with this kickback. Because he will keep bringing orders to that factory and if the factory refuses to do so, he may go to another supplier and place the order there.
How to avoid this scam
Make sure that if you are working with a sourcing agent, try to talk to the supplier directly and use the sourcing agent to do the quality control and shipping for you.
Do your own research first and then compare various suppliers’ prices according to your product. Then contact a sourcing agent, so at least you already have an idea of the price of the product and can compare the price of the sourcing agent as well.
11) Avoid Scams by Hiring a Sourcing Company in China
To avoid all the scams while importing from china and make your sourcing experience a pleasant one, you can hire a professional sourcing company that is reliable and they will bear all the sourcing risk. In that case, you will not have to worry about any of these scams while importing from China, just place the order and wait for your goods to arrive. The sourcing company will take care of all your sourcing needs, like finding the right product for you, under the right price, and by the right delivery. They will ensure that you do not have to worry anymore about importing from China and you can completely focus on your sales. This ensures that your business can grow faster.
There is a saying that if something looks so good to be true, it must be fake. Like impossibly low prices, do not fall for this trap. Do your thorough research before placing any orders.
Make a decision once you have done your homework and make sure that you know all the legal ways to pursue if the contract is not followed by the supplier.
Risks are part of the business. So take it as a learning lesson for you and try not to repeat similar mistakes in the future.