• Matthew Grandage

Three Scams To Watch Out For When Trading with China

These three scams, or variations on them, could occur when doing business anywhere in the world. I’ve had to assist UK businesses regarding all three of them recently, with regards to communications they’ve had with China. Read on…

1.Notarisation of contracts

Imagine that you're a manufacturer or supplier and you receive an unexpected enquiry from China. How exciting! You develop the enquiry over several weeks, and get to the point where you’re both ready to sign a contract. Then the customer announces that the contract will not be valid until it is notarised in China – and you are asked to send money to pay the notarisation fee. What should you do?

The answer – walk away. It’s a scam. Business contracts do not need to be notarised in order to be valid in China.

And related to it…

2.Come here to sign

This is similar – you’ve already been enticed by the prospect of a sale. Note that this sale could be goods for export, or a service, even a service delivered in your own country (such as the provision of training to a delegation that will come from China). But then they tell you that you must come to China in order to sign the contract. They may claim this is for an official “signing ceremony”, or something like that.

Once again, don’t fall for it.

You might be wondering, “If I travel to the far side of the world at my own expense, surely the only risk is the cost of my travel and time?” But that’s not quite true. Because once you have made that journey, will you really be willing to walk away with nothing? This is when the scammer starts to ask for more – money to host the signing celebration, a big discount on the purchase price, a “notarisation fee” or whatever it might be.

If you travel to China, make sure it’s for reasons that you decide, and not in order to sign a contract.

3.Changed account details

This one is a bit different, because it relates buying rather than selling. It can even occur with a long-standing supplier. Imagine that you buy goods from a supplier on a regular basis, then one day you get an email from your contact in their accounts department informing you that their bank account details have changed. How should you respond?

The answer, get the change verified by someone else at that company – a person of your own choosing!

Note that there are two possibilities that you are trying to protect against in this situation. The first is that your contact at the supplier company could be trying to divert funds into an unauthorised account. The second is that their email account has been hacked, and the hackers have substituted their own account details for the correct ones. Both are possible, and both happen!

There are plenty of other things to watch out for, but these are just three that I’ve seen recently. Keep vigilant and, if in doubt, please get in touch and ask us.

[I originally wrote this for Chamber International, and it's reproduced here with their permission, and with minor edits. It first appeared in their blog on 25 September 2018]

#trade #legal #law #export #business #risk #SME