The "Big Order" Scam in China
By Sun Jin(Marlow), Chinese attorney at Law, Republishing this article please indicate author and source of this article. July 21, 2015
This sort of scam once was very active years ago in some Chinese cities like Guilin, Zhengzhou, and now it comes back again, and this time it’s in a Chinese city called Xi’an.
A former client of this lawyer from South Africa contacted me again days ago, said a Xi’an company placed an order to them, purchasing honey of South Africa from them, with total sum USD390,640. Of course this is not a real order, and the client sent samples to this Xi’an Company, unsurprisingly, the Xi’an Company said the honey product is good, and very good, and they did not even bargain the price, and signed one purchase agreement with the South African company. And after this, no performance of the agreement at all, of course, but the contact person of the Xi’an company started to request the client to pay all sorts of small sum of monies, like notary fee, small sum of money to buy gift, and foreign exchange swap fee, and so on, and finally the client paid about 4000USD to the contact person of this Xi’an company, and then they disappeared.
So this is the “big order” scam in China. A company received what appeared to be a lucrative offer from a potential customer from China. The offer concerned a large order of the company's products. Once the basic terms of sales/purchase had been closed, the company was to send a representative to China to finalize the details and sign the contract. Once in China, the representative will always be pressured into incurring expenses for "notarization" or other fees, funding extravagant signing dinners or purchasing gifts to facilitate signing, and so on, the scammer will use all whatever methods to let the representative to pay small sums of money to them. After signing, the representative returns home to learn that the "customer" and the lucrative offer were nonexistent, and the scammer may just disappeared. While this iteration of the scam relies on the travel requirement (and several companies have indicated that the "customer" rapidly lost interest after learning that no representative would be sent), the lack of a travel requirement does not mean that an offer is not a scam.
According to PRC Crime Law, this sort of scam could be a crime, if the total sum scammed is more than USD1000. The problem is, generally the scammed sum could be USD1000-USD4000, and the cost of legal actions is always high, just like before Putian Scammers. And even you will file a case in local police, and nobody can surely promise that the scammer will always be thrown into jail.
So the way to avoid being the victim of such scam, is to prevent it in advance. In fact in all China, there are millions and even tens of millions of companies, but most of them are small ones, and cannot afford a big order like half million USD. And profit is always the number one target of merchants, including Chinese merchants. If somebody came to you to place a big order without bargaining, or without effective bargaining, and then accept your quotation, or request you to fly to China to sign the agreement with them, you need to become alert. It’s not a must to fly to China to sign one agreement face to face at all.
Or if you want to hire a lawyer to help you, we can help you to do some basic investigation on the company, and see whether it’s a big company. Chinese companies always have some registered capital, if a company with registered capital of USD10,000, generally they cannot afford an order of half million USD.
There is a Chinese saying or proverb, NO CAKE WILL FALL DOWN FROM SKY AND UPON YOUR HEAD, it means do not believe some easy money will just come to you without hard work, if believe it that this really happens, be careful, you may just fall into one TRAP.