A quick guide to avoiding scams while sourcing from China
We, humans, are witnessing the peak of e-commerce in a global village where each country is a critical nod of the demand and supply chain of today’s businesses. China emerged as a key player in the demand and supply chains of most markets.
Whether you’re running a small e-commerce store or you’re a regional e-commerce giant, avoiding scams while sourcing from China must be a matter of concern for you. You can’t survive in business without importing from China because of the high margins with low investments by importing from China. But the question is how to avoid scams as there are chances to get scammed while importing from China. In this blog, we will discuss the brilliant tricks to avoid the top 3 scams while sourcing from China.
Manufacturer, Supplier, or trading Company
If you’re a leading e-commerce store somewhere in the world, you don’t want to end up dealing with a supplier or trading company. Supplier or trading companies act as the middle man. Neither are they capable to get your input for custom orders precisely nor can they offer you the best prices. But what can one do? When most trading companies and suppliers represent themselves as manufacturers on well-reputed sites like Alibaba. Follow the following tricks to avoid scams while finding a manufacturer in China.
- In the case of Alibaba, make sure that the supplier is listed as the manufacturer. But that’s not the last thing to do. keep reading to know the complete secret ingredients to avoid scams while sourcing from China.
- Look at the factory pictures, office pictures, and most importantly business license in their profile to further verify it.
- You should contact the company representative and ask them for their business card and license numbers in Chinese.
- You may go on a random video call with the supplier to check if they are the manufacturer or not.
- You can contact a company like Verifyfull to check the legitimacy of any company in China.
Replica or Fake products
Replicas are another critical issue for businesses that want to deal with brands. We may order a GUCCI handbag that costs $400 and receive a $50 replica. Many people get scammed while ordering such branded things from Alibaba or any other Chinese e-com store.
Clothes, Footwear, Electronics, and Fragrance’s clients are the main target of such scammers. Look at the following tricks to avoid scams while sourcing branded or designer products from China.
Stop! Don’t source branded products from China.
Yes, you’ve read it right. Alibaba should not be your 1st choice for sourcing branded products from China. You may visit the brand’s original websites for sourcing their specific articles, or you can ask them to provide a list of their legitimate distributors in any region.
In case you’re interested in souring branded products from Alibaba or any other e-com site from China. Then you should contact their representative to ask for a distributor license document.
To avoid scams of getting replica products, make a simple rule to check distributor documents to verify the legitimacy of suppliers before finalizing the order.
Fake suppliers are another headache to e-businesses. The fake suppliers will get disappeared after getting the payment. They will not respond to your calls, e-mails, or messages as their mission is to scam people, not to do business. It could be an extremely devastating cause for your business in terms of time and money. It also set a severe impression on Chinese manufacturers, suppliers, and the overall export industry. But you can avoid such embarrassing situations by following our small tricks instead of blaming the whole industry.
Research – Do deep market research on your supplier before finalizing the deal or making payments. Try to make payments in company accounts only. After sealing the business deal you may get a message, ‘Hey there, our company account is down because of some technical issues. can you please make payment into our boss’s personal account?’ Your answer should be no. Loud and clear, no, no we can’t make payment in personal accounts.
In international trade, it is illegal to make payments in personal accounts while importing.
In international trading making payments in personal accounts is illegal as a businessman does this to avoid taxes. And at the end, such payments are neither secure nor you can sue for a refund in case of any scam as these are not legitimate payments.
If you’re dealing with a small individual supplier who doesn’t have a company account, ask for a physical address in a reputed wholesale market. After getting the legitimate and verified physical address you can make payments in a personal account. But it is an exceptional case and can be considered only for small deals.
Reference – Ask your supplier to provide any reference. It could be any reputed ‘client company’ of your supplier or any mutually trusted company that can be a reference to trust the supplier.
Contract – Sign a comprehensive contract with your supplier that includes each tiny detail of your business deal. This contract will help you to sue and get your money back in case of any scam.
Pay extra for custom Clearance
Custom clearance is another scam you may have faced while importing from China. Some of the suppliers neither reveal custom clearance payment in their quotation nor in the agreement is the reason, we are saying custom clearance tax is a scam.
After a few days of getting the order, they will send an e-mail stating ‘your shipment has been barred here because of custom tax of value $—. Please pay this so that we can send forward your shipment asap.’ They may also send you a fake shipment tracking number that will show the same issue of customs clearance.
This is not the first order of your supplier; all the fees are known to them at the time of signing the agreement. To avoid extra payment scams in the name of customs clearance, make sure to ask for the addition of such missing information in the contract from the supplier at the time of agreement.