Cheating foreigners is much easier than cheating Chinese.
Our countries embassies have limited power in these scenarios, and Chinese police tend to overlook scams against foreign buyers as long as the scams don’t lead to serious crimes. A factory owner planning a scam will likely target individuals with the least risk of repercussions. In this scenario, foreigners are that category.
Offering you a heavily discounted rate but asking an increased deposit.
Be careful of a factory offering you a heavily discounted rate on their products. It’s not a good sign to make a deal, generally, you are required to pay an increased deposit.
A common deposit amount among Chinese factories around is 30 percent of the total order price, if a factory asks you a deposit up to 50 percent, it might be a scam. In this case, the factory would shut down and walk away as soon as they have collected your deposit.
Shipping non-conforming products after full payment.
The factory offers you a discount in exchange for full payment before shipment. After you make the payment, the factory ships defective products or even scrap material instead of qualified products.
In this case, you need to hire a professional third-party inspection to verify the goods before payment and ensure they meet your standards is one way to protect yourself from this.
Factory owner sells you their entire business.
You may be the victim to this scenario if you’re one of the factory’s largest foreign customers. If the factory owner offers to sell you their business, and they tell you that the deal close very quickly and in exchange offers an unrealistically low price, there might be a setup. Once the deal closes, typically via wire transfer, the owner disappears.
You typically will meet a very unpleasant situation when you visit the facility to assess conditions, including the following possibilities:
1. The factory wasn’t actually owned in the first place, instead, they rented it.
2. The previous owner stripped the building of all materials and machinery
3. The landlord and workers demand back payment on rent and salaries that the ex-owner owed them.
Remember: if you get a deal that is obviously too good to be true, then trust your intuition, it might be a trap! Honest deals do exist, but be cautious when navigating an overtly tempting offer.