I was recently contacted by a reader from Australia, who was scammed by a Chinese supplier. She gave me a lot of details, so I suggested that she writes what happened to her (including any suspicious signs she should have noticed).
The content of her email is pasted below. I inserted some comments along the way.
The company name is Coke Tex Co. Ltd. and they say they produce Bamboo Baby products like bamboo cloth nappies, bibs, baby clothing.
That’s a wide range of products. Obviously they don’t produce it all by themselves. And, with a company name like this, it is very probably an intermediary.
Only after we sent them the deposit ($3,600) back in October 2012 and there was no action from their side to start up the order, I started to look for suspicious signs.
Due diligence should start before an order is given.
The discussion for this order started in April 2012. I was pleased with lightning fast answers to my emails and requests for quotes, fabric details, etc.
Easy communication does not mean serious company. When things are too polished, it is nearly a suspicious sign in China…
Finally I decided to pay 40% deposit that they requested so they start working on my order, which they promised to finish and I expected to receive here in Melbourne, Australia, before Christmas.
A 40% deposit? The norm is 30%.
To this day, we have not received even initial fabric swatches to approve the fabric production, not talking about products samples.
Among few of suspicious signs I could mention:
– asking us to pay to their personal card rather than company’s account to avoid taxes
That’s a huge red flag!
– after checking, we’ve found the company has about 5 different mobile and land line numbers on different web directories. The same with addresses – different address appeared on different website directories of their company’s profile
A bit of due diligence might have uncovered this.
– after few months of discussion, they asked us to increase the order amount stating that their minimum order amount should be $10,000 (obviously, wanted larger initial deposit being sent by us)
Suppliers often change the conditions when they feel the buyer has invested a lot of time with them and is “locked in”. Not necessarily the sign of a scam, but not a good sign.
– Comparing to another Chinese factory we’ve been working for 4 years with now, Coke Tex Co. Ltd. did not have registered business shipping account (DHL, FedEx, etc. ). Serious factory can’t operate without the one if they regularly send samples to their clients around the globe
True. That’s also a red flag.
– there has never been any replies to our phone calls: before or after sending the money across
One more red flag.
– their website is not developed
Not necessarily a bad sign.
– started to discuss the order from April 2012, paid deposit in October 2012, i remember being constantly pushed to pay so they start the order quickly
Not necessarily a very bad sign.
– no replies after the initial deposit has been received by them
Obviously too late to react.
Looking for serious supplier to engage into trustful business relationship, our partner travelled to Shanghai to meet with Coke Tex Co. Ltd.
Mr. Liu (presumingly the owner and negotiator with us via emails, his email is liu@coketex.com) met him. He explained that their office is far away from their factory so he’d better take him to visit the factory as they can’t do both. I have great suspicions that our partner was taken to their own factory at all. He was taken to some factory to be impressed and earn our trust.
Yes, very likely.
From our experience, we want to warn any small business owners to take the time (and spend the money if possible) to do a very thorough check up on Chinese partner’s business before engaging into any relations: sending your products designs, money, etc. Fast replies to your emails and great communication, even meeting them personally, – don’t prove, unfortunately, that the business is legible and trustful to work with. Before even engaging into correspondence, wasting your time – do check on them first whether they’re worth your time or not.
Absolutely.
Our mistake was also that we wanted to quickly place the initial trial order and paid without the contract.
Yes, that’s often what makes the scammers’ job much easier.
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Hopefully some prospective buyers will search for that company’s name and will find this article, before they send a deposit…
If you were scammed, or deceived in any way, in the past and you have an interesting story to share (with lots of details), please let me know!
I feel for this buyer who got scammed. It stinks seeing that happen. I think as it’s become so much more competitive, with so many “suppliers” (b/c of the internet), many smaller buyers since the economic collapse and more smaller buyers trying “their hand at China” – these types of scams are more and more prevalent.
Buyers need to wisen up and do due diligence. As they saying goes, most folks in China don’t trust each other – why would an overseas company trust them, especially when they have to wire money? …not sure if that’s an actual saying…that may just be how people in the import industry talk 🙂
Have a great weekend, Renaud and thanks for sharing that.
You seem to think there are more and more scams. That’s also my feeling, and it might well be due to the higher number of small unprofessional buyers and to websites like Alibaba.
You are right. It’s funny how someone from Guangzhou won’t trust someone from Shantou, and yet foreign companies wire deposits and authorize shipments without checking anything…
As a Chinese supplier,i hate this kind of behavior.But I think if customer can find the person in China,we can get back the money for you.When you choose a supplier,pls always do like this way:
1.only send money to company account,not personal account.
2.Never choose those companies with account no. in Hongkong or offshore account.
3.Most Chinese suppliers have city or province name before the company.Like the company name mentioned in the article,it should be an offshore company
Tommy, actually it is really hard to get the money back in these cases. But your advice is valuable, thanks.
So if it is offshore company, is it always scam to stay away from? Can anyone clarify this pease.
No it’s not. There are a lot of legitimate Hong Kong-based suppliers.
But when someone in the mainland pretends to be a manufacturer and requires payment in a Hong Kong bank account, the buyer should ask for explanations (and “it’s for avoiding taxes” does not cut it).
Hi Tommy, Whats your company called. i want to come to china and look for suppliers. thanks
The story continues, i received notification from shipping company that the cargo is waiting fro me in port melbourne. It took two weeks to call all my suppliers, email everyone trying to find whose cargo that was. Coke Tex finally replied telling they were sorry for delay with production and said they shipped the order partially so to avoid being blamed they did nothing at all. asking to pay the rest 60%. I thought it was scam and didn’t want to pay. Storage charges accumulated. Liu deceased the value to $1,200. I finally paid it and cleared the cargo, paid for storage…..and received the boxes full of plastic. No products. Total waste of time and money – over $7,000.
Ouch… That hurts… They are really professional scammers!
Hi I am from USA
This is my story…There is a company name TOOMLY don’t purchase from them its a fraud one.
They will send an email too once your order is placed.
“Thank you for your order from Electronical Parts.
Once your package ships we will send an email with a link to track your order.”
I send them five emails no reply no order
Spread this among your friends
I communicated with the potential supplier for a couple of months trying to find out if he is legitimated or a scam. He got me when I placed an order and sent the money. After sending the money he never sent me a single e-mail. I kept e-mailing him telling him that the tracking number he gave me was invalid. He never replied. I started sending e-mailing him that he is a crook, a scam and that I must get him no matter what, that I informed even the police, which I did of course!! After three months, I got a package with wrong products, with an invoice of products heading to Russia! I could not believe that could happen to me! It ruined all my business plan because my customers were waiting for goods and I ended up loosing them, but understood what happened later on and regained trust in me.
Buyers ordering from China, be careful and scare the potential suppliers the way you can and I guarantee you most will run away if they find out that you know already their game. Now I am cautious than ever before, after I was hit big time.
Thanks for telling us about this. Thousands of other buyers make the same mistake every month…
did you contact the police in china? I was jet scammed and am wondering how to go about getting them!
The police in China has other urgent issues to solve. They won’t help a foreign buyer.
If package was to be headed to client in Russia, how did you get a hold of that package? Was invoice fake?
China scam-Company name BYSKOV CO .LTD.Beware of this company .Lost 4000$ deposit with no shipment.They are good at communications but a totally fraud company to deal with .
Do not do business with Dongguan Haizhou Packaging Co. Ltd. I found this company through globalsources.com and they replied to an inquiry I made for packaging products. I did receive a proof of my design so they seemed legitimate but have since stopped returning my emails and I cannot get though by phone since I paid in full for my order. Luckily it was a small order, so the amount lost was not so bad, but watch out for them. I had a family member make a similar inquiry to them to see if they would respond and low and behold they did, but will get back to me.
Hi Renaud
I will quote comments and ask questions I had in mind:
“They did not have registered business shipping account (DHL, FedEx, etc. )”
How do you check if supplier has business shipping account?
“I have great suspicions that our partner was taken to their own factory at all. He was taken to some factory to be impressed and earn our trust.”
I read from experienced importer that to make sure it’s in fact factory and one which belongs to representative is to exchange your business card with him and factory manager and look for signs outside of factory if those will match with business cards you got.
“How do you check if supplier has business shipping account?” –> I agree this is not easy. Suppliers usually don’t want to give their account number to customers, for good reason.
“How to make sure we visit the right factory” –> Yes, good practices. And also come with someone who speaks the local language and and have that person listen to the way the salesperson and the factory people talk to each other.