Warning Signs of a Business Scam

by | Nov 2, 2018 | Articles

Updated:  October 2018

U.S. Commercial Service has reported an increasing number of unsolicited buyer requests from China. If one or more of these characteristics look familiar, be suspicious and conduct due diligence on the Chinese entity.

“Red Flags” of a Potential Scam

  • The Chinese company contacted you, unsolicited, via the web
  • In recent years, these businesses are often supposedly located in Kunming, China
  • Sometimes a real, well-known company name is used, but the person claiming to represent the company does not work for the company and has no verifiable references
  • The representative uses a personal email address rather than the email address of the company that they claim to work for
  • They ask you to share “notarization fee” based on a percentage of the contract price 
    • The cost to have a government document notarized in China is less than $50 and the Commercial Service is not aware of any requirement to have business contracts notarized.
  • The representative wants to purchase an unusually large volume of goods
  • They insist that your senior executive travel to China to sign the contract

Protect Your Business

  • Ask for trade references, including the names and contact information of American companies the company has successfully partnered with in the past, and then contact those references.
  • Request a fax of the Chinese company’s current and valid business license issued by the Administration of Industry and Commerce. These should be readily available in Chinese and English.
  • The Commercial Service global network of trade professionals can offer valuable on-the-ground insights regarding potential sales opportunities.
  • You can order an International Company Profile which is a general background report on a specific foreign company.

This guidance was prepared by the U.S. Commercial Service in Chengdu, China

Other articles

HiSTEP 2023 is here!

Thanks to SBA and DBEDT, HPEC is helping coordinate the HiSTEP 2023 program by running a series of export seminars/webinars and performing one-on-one company mentoring. The first two events are scheduled for January 26 (Exporting of Agricultural Products from Hawaii) and February 2 (Export ...

New HPEC video: HiSTEP 2022’s Export University 101

HPEC has uploaded a new video to our YouTube channel of the HiSTEP 2022 "Export University 101." The four-hour webinar was originally recorded on 9 December 2021 with speakers sharing their expertise in exporting topics such as Legal, IT, E-Commerce, Logistics, Marketing, and Cultural ...

HPEC Publishes the Hawaii Export Resource Guide

HPEC is proud to present our inaugural Hawaii Export Resource Guide! The introduction to the guide is below: -------------- Welcome to the Hawaii Export Resource Guide! The intent of the guide is to support your efforts to profitably and successfully export from Hawaii to new foreign ...