How to Safeguard Your Business from China Bulk-Buying Scams

China today is like the world’s production factory. Its gigantic industries supply nearly all the popular products. Businesses the world over do their product sourcing from China primarily because they are cheaper, readily available, and can be supplied in bulk. 

This fact makes China the home of bulk buying scams. The common ways to be scammed are:

1. Advance fee – the supplier asks for advance payment before delivery of goods. Once you pay, the goods are never shipped and the supplier cannot be reached.
   
   
2. Inferior goods - the supplier presents samples of good quality products for viewing and verification, then finally ships poor quality goods in the actual order.

How Can You Verify a Chinese Supplier?

There are a few easy checks you can do:

Look for reviews

Check references, and ask questions that will help you detect a legit company over a bogus scammer. Some clever scammers have succeeded by manufacturing reviews. You will find mostly good things about them on Trustpilot, SiteJabber, Google. You need to go past general site reviews for this.

Research the supplier

Search the supplier’s business name on known B2B directories. These will give you a better picture of potential supplier:

• Alibaba - select 'Verified Suppliers' when using alibaba.com
• Global Sources - provides a curated list of trusted service providers in import and export, factory audits, credit check, product quality checks.
• Hong Kong Trade Councils - provides contact to quality suppliers.

Go for established companies

If you are new to bulk buying from China, a safety tip is to prefer older companies to new ones. That way getting their business history and track record is easier for you. Scammers will usually have companies that run for 12-18 months. The reason being they get busted from time to time and have to change their names, contacts, or location to hide from the law.

Do a background check

Use China Check-Up company verification to evaluate the true status of suppliers. They will do a thorough fact check for you on your potential supplier. China Check-up has foreign buyers in mind and caters directly to their business needs relating to China. 

Request the supplier for their licensed business numbers

The Chinese government gives a unique number for all legally registered businesses. You could visit the local Bureau of Commerce and verify that the number given is on record for the business that gave it to you. A supplier has nothing to lose by sharing this number. It is safeguarded by law. 

Any supplier who is unwilling to give it may not be registered and could be operating as a scammer. 

Ask for a reference to a previous customer

A business with a good track record of bulk sales should be proud to mention its clients. Requesting to know a supplier’s clients should not be an issue.

Be careful with potential suppliers who are unwilling to mention any of their buyers. They may be hiding bad reviews. 

Request samples of the product

Bulk buying does justify giving samples to potential buyers for them to assess if the quality is up to standard. Suppliers who do not want to provide you with samples may simply be hiding poor quality.  

Unless you are sure about the reliability of a supplier, do not order in bulk before checking the quality of the product. 

Insist on Cash on Delivery

When dealing with new suppliers, insist to pay after you have received your bulk purchase from China. This way you can tell the confidence that the supplier has in the product and their ability to deliver as agreed. 

The advance-fee scam works specifically because payment is made before receipt of goods. 

You could suggest using an escrow service to show the supplier that you have the money ready. 

Also, please insist on wiring money to the supplier bank account because bank transfers are traceable. 

Conduct factory visits

You could do this in person or get an independent/third-party agent to do the visit at your cost. Your goal here is to see the operation scale and check that the quality of products is to your desired standard. 

Refusal of a factory visit may be a red flag. The factory may be totally inexistent! Or you may learn that the contact posing as a factory is actually a middleman! It is easier to deal with the actual seller, and it will save you money!

Call them on Landline

Scammers in China are known to mostly use mobile numbers. Why? China allows the purchase and activation of numerous mobile numbers that are unregistered. This way, once the scammers have pulled one over on you, they simply discard the number and can’t be traced.  

Telephone numbers are registered with the authorities. Plus, they have codes that are geo-tagged. That means telephone numbers correspond to known and marked areas on the map.

The China international calling code is +86. Then the next two digits that follow are geo-tagged in a region and locality in China. 

China will continue to be the production powerhouse of the world because of its cheap labour, an abundance of raw materials and vast industries that can manufacture almost anything.  As a buyer, you need to be smarter about how you verify Chinese sellers to safeguard yourself and your business from bulk buying scams.

Always do your due diligence with every new potential seller. Sharpen your scam-sensing instincts here!