There are innumerable reports on the internet about scams and cases of fraud when sourcing products in China. The ironic part is that most of these cases deal with American companies who are either setting up shop in China for the first time or companies simply looking to buy goods online.
Don’t worry, in this blog, we will share some experience which will be helpful for your business caree in China sourcing. If you are are a new business owners who just step into to the sourcing area , this blog can help you a lot
The following content will include
How does a fraud happen？
How to avoid fraud in China sourcing
After reading this blog, you will have a further understanding to the sanmme and fraud.
How does a fraud happen？
The usual mode of operation of a scam starts with a company who wants to source goods from China.
Scammers use job boards, wholesalers directories, Sourcing fairs and Sourcing expos to look for prospective buyers or importers.
Once contacted by an interested party, scammers usually guide them into visiting their offices.
However, there have been cases where scammers have been more patient and contact clients via phone communication before suggesting an appointment.
Once buyers arrive in China the show begins. In one scenario, scammers will take their clients to an office which is lavish and well furnished.
The employees are all dressed smartly and greet the potential client with a big smile. Counterfeit products or samples from other companies are being shown off as if it were a Sourcing expo in Guangzhou SAGC.
Alternatively, scammers will take its victims to a factory which is poor, but produces high quality goods that have been used by major corporations around the world.
At this point of time, account managers or project managers being to show off their product knowledge and provide assistance when asked for early price quotes.
Usually, prices quoted are at least 50% below international market value and the production lead times are extremely short.
It is not surprising that these tactics work well on most buyers, especially when it’s their first time sourcing product made in China.
Sourcing smartly requires experience and there is no better way to gain experience than to discuss with other companies who have done the same.
However, scammers know this too. They will approach potential buyers (via Sourcing fairs or Sourcing expos) using the same name of the company they claimed to represent.
The logo provided was non-existent or simply edited from another company’s website. Sometime scammers use personal SNS accounts like LinkedIn to pose as employee of large corporations in order to appear credible when messaging interested parties online.
How to avoid fraud in China sourcing
It is easy to spot scammers through their photos. Most counterfeit product manufacturers in China are located in Donguan city, which is considered one of the Sourcing hotspots around the world.
These factories often work day and night producing inferior products that are sold at ridiculously low prices.
The Sourcing process for potential clients usually ends after an appointment has been set up to visit a factory or office that claims to be associated with the company they contacted earlier.
Although meetings do take place, once buyers arrive at the destination it becomes clear that this has all been one big scam trying to deceive them into buying substandard goods or low quality services.
Having dealt with so many companies over the years, we have compiled 7 useful tips on how you can avoid Sourcing scams and frauds when looking for product made in China.
If you find that you or your company have fallen victim to Sourcing scammers, please contact us immediately so we can assist you with further action.
1. If it sounds too good to be true, then it probably is
This rule applies to Sourcing in China more than anywhere else in the world. It may be difficult for someone who had never Sourced before to get quotes of 50% below market price on their first attempt.
However, if buyers receive too many bids at this rate without doing any additional research on the selected supplier, there’s a high chance they are being scammed or misled by Sourcing scammers.
2. You should never pay Sourcing fees, product samples or production upfront
Most Sourcing scammers require buyers to pay for Sourcing services before reaching any agreement. Sourcing fees are usually high and buyers should negotiate to get it at a discount after checking the goods and service quality.
Another common tactic is to ask for money in form of WESTERN UNION wire transfer to secure the deal and give out quotations without negotiation (this has never happened during our SAGC Sourcing Fairs).
The kicker is that SAGC Sourcing Fair don’t require any payment from potential clients even though they will get to meet face-to-face with factory owners or managers there.
3. Beware of skype calls from suppliers you contacted online
As mentioned earlier, Sourcing scammers use SNS accounts such as LinkedIn to get in touch with clients and pose as Sourcing managers of large companies.
To prove their legitimacy, they will create skype accounts using the same name of the Sourcing managers they are trying to impersonate. SAGC Sourcing Fair organizer team has been contacted in this way a few times in order to convince us that someone from our company is requiring a service.
4. Beware of China Sourcing websites with no physical address or contact details
SAGC Sourcing Fair organizes exhibitions in Donguan city twice a year with more than 100 factory owners participating every time. If you’re looking for these suppliers online, please make sure you look for on SAGC website ONLY.
Sourcing from other websites may lead to potential clients contacting Sourcing scammers posing as SAGC Sourcing staff.
5. Beware of suppliers that try to rush the order or push for a quick decision
It is common practice in Sourcing industry, especially when dealing with reputable companies, that buyers have a set time period to inspect goods and factories before signing an agreement.
The SAGC Sourcing Fairs are a great example of how it should be done properly. However, there have been cases where SAGC Sourcing Fair participants were pushed by fake employees of our company into making a commitment on the fairgrounds itself which has proven later on to be completely worthless. Always keep this tip in mind if you’re sourcing from China.
6. Sourcing products from China is not like buying groceries
When Sourcing products in China, especially if it’s your first time dealing with SAGC Sourcing Fair participants, buyers should always go through the Sourcing Fair registration process and only SOURCE suppliers via SAGC Sourcing Fair (unless you know 100% they are legitimate).
The fair will take care of most situations and make sure that no money changes hands until after inspection is done and goods/services quality has been confirmed. Our company hereby guarantees full transparency for each and every transaction we conduct at our events.
If any information provided by us seems suspicious or dubious to you, please contact us immediately so we can clear your doubts. We have detected several cases where Sourcing scammers were masquerading as SAGC Sourcing staff in order to convince buyers from our Sourcing Fairs to commit upfront before Sourcing process has been done properly.
These tactics have never been employed by SAGC Sourcing Fair organizers and we will not tolerate them even if someone tries to pose as us online.
7. SOURCE suppliers ONLY through SAGC Sourcing events
SAGC Sourcing offers a unique service in China – sourcing products for international clients in a form of exhibitions with pre-screened suppliers attending each event in Donguan city at specified dates and times.
We do all the groundwork, pick out the best suppliers based on their past records and make sure that only reliable factories participate in our events helping SOURCE internationally recognized brands.
Sourcing from China can be done in many ways and SAGC Sourcing Sourcing Fairs is the safest way to go about it due to our professional background.
8. Never SEND any money without inspectation
SAGC Sourcing offers a FREE service for all registered participants no matter if they source anything through us or not and we will never demand that you pay any fees, especially upfront.
If someone claims otherwise, please contact us immediately so we can clear up your doubts and figure out what’s going on in order to help you avoid getting scammed.
The SAGC Sourcing team values transparency and integrity above everything else and we hope this article will serve as an eye-opener to Sourcing industry newcomers that Sourcing process can be done SAFELY and SAGC Sourcing is here to do the groundwork and make things easier for you.
Why choose Pangea Sourcing
Pangea is your No.1 choice for product sourcing in Australia. With factory partners in China, United Kingdom, Hong Kong and other markets you can be sure your products are sourced from the right place.
Now you have an idea about how to avoid scams and fraud when sourcing in China. You know what questions to ask, who is the best person on your team for this task, and where to go for more information if needed. But don’t stop here! Keep learning so that you are always ahead of scammers looking to take advantage of newbies just like yourself.
Remember that there’s no one-size-fits all solution or perfect way to do things – keep experimenting with different strategies until you find something that works well for both your company AND its Chinese suppliers.