At least once every 2 weeks, I get an email from the victim of a scam performed by a Chinese supplier. They ask me whether someone can help them recover the money.

Sometimes it is a scam (seller asks for a deposit before shipment, then ships nothing and stops responding to emails), and sometimes it is just a brutal retaliation (seller estimates he was poorly treated by the buyer on a previous order, and cancels a transaction after receiving some pre-payment).

Invariably, these people don’t have a contract with their supplier–not even one page in English. That tells you two things:

• These importers haven’t done their homework. Had they done some due diligence (is this supplier serious and earning money? do they have reference customers? do they already sell in my country?), they would not be in a difficult situation now.
• If you have a contract that was properly written by a lawyer familiar with the Chinese business environment, you are much less likely to get screwed by your supplier. I know, this is obvious, but some purchasers don’t give it any thought.

So, what can these importers do? Generally, not much.

The best strategy is often to contact a lawyer, who can send a demand letter and try to scare the supplier into paying. I don’t think the success rate is high, but it might work. Here are a few success factors:

• If you wired money directly on the company’s account (as opposed to a personal account, or another company’s account), it will help you.
• Same thing with the purchase order, if it was properly chopped by the supplier and returned to you.
• A clear email correspondence, where the supplier accepts the sale, is also a plus in your situation.
• A real company that owns assets (either a factory, or its own office space) is a good sign, too. They will probably not disappear overnight.

Unfortunately, the victims of scams are in the same situation as the purchasers who receive junk products after paying in full. Here is what I wrote six months ago:

From time to time, a reader who has received unacceptable products asks me how they can force a Chinese supplier to refund an order.

My response is usually “forget it, and do things right on your next order (make sure you read about best practices)”.

Now seems the good time to write about this topic, according a recent China Law Blog article:

December is fraud month because that seems to be when Chinese companies seem to decide whether they plan to continue operating as a viable business or not and oftentimes those who choose “not,” will decide at the same time to go out with all guns blazing.

A small proportion of suppliers are scammers in China. But they are out there, make no mistake about it.

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Update: see excellent suggestions here to avoid being scammed next time.