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 firstname.lastname@example.org) 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.
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.
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!