Fraud warning to entrepreneurs: Beware of business inquiries from Limited Company from China!

Beware of business enquiries from Limited Company (LTD) from China

Some time ago it all started very comfortably with a cheese request from China – an import company wanted to import our Alps cheese. Since we know from the media how important milkCheese milk is the milk intended for the production of cheese, also with the concomitant use of buttermilk products, cream products, sweet whey, sour whey and whey cream (whey cream) » More info products imports are for China, we gave the company YK IMPORT&EXPORT CO., LTD from Shaanxi Province China a quick answer – that we are interested.

A subsequent call to the Chinese company showed us that there was someone there who could be reached. The pleasant lady on the phone told us that her boss doesn’t speak English very well and that we should please send everything via email.

1. Overview of the main business development with China LTD

2. It gets funny – invitation to sign a contract in China?

Dear Stephan,

Thanks for your letter. In China, we need sign a contract to complete our business. After we signed the contract, we will apply for the exchange currency in SAFE to change the RMB to Euro. China is the country which execute foreign exchange management system, each payment to abroad have to be approved by the Foreign Exchange in SAFE. Only after approved by them, could our bank pay for you.  The procedures is very strict and complicated. The SAFE need our contract to apply for the exchange currency, besides, our bank also need the contract to transfer the payment to you.
Attachment is the contract our lawyer drafted, please check it. If you have any other different opinions about it, you can modify directly on it. Then write it back to us.
Hoping we can reach an agreement and start to sign the contract as early as possible. Your fast reply will be appreciated.

Best wishes,
Honglin
—
Honglin Fan
Vice General Manager

YK IMPORT&EXPORT CO., LTD
NO.25, Dianzi ZhengJie Dong Sanxiang, Xi’an,
Shaanxi Province,   China
Mobile: 0086 182 9267 7278
Tel: 0086 29 636 254 16 / 636 254 18
Tax:0086 29 636 254 19

3. Normally the buyer visits the supplier – questions in the business network

After consultation with other entrepreneurs, we learned that there seems to be a scam from the very low priced China Ltd. companies, which are professionally acting, attracting suppliers to China to collect horrendous contract set-up fees and nothing but high costs happens.

Good question: What do you want to reject under pressure in an almost lawless area for us?

We decided to set a trap:

We first accepted and received the invitation and by email details on where to go – Xi’an XianYang Airport in China.

4. Confrontation with the information of the entrepreneurs

We wrote an email with 3 options how we could proceed – with the request for comments:

Dear Honglin

I am writing you because we received important news from our lawyer after his discussion with the Austrian foreign trade agency.

Their feedback was: “In China in the last years Austrian companies had several cases of faked contracts with China Ltd. companies. Chinese Ltd. companies are cheap to create in China. For the entrepreneurs everything looked good and trustful and the Austrian companies received invitations for final contract signing. In China then they had to go to a notary and had to pay (were charged which a percentage of the contract value) for obviously official china contract costs (which were not necessary according to the law). And after this nothing happened – no contract was implemented. This happened many times and the damages to these companies were high.”

For reputable cooperation the foreign trade agency recommend us:

1. Because of the simplicity of the delivery for the first order (only goods is packed) – complete the first order and travel afterwards to China for long term agreements. Signing in China is not required by law and confirmed irrevocable L/C makes everything safe for both parties. Additional legalization in AustriaSince 2004, ARGE Heumilch Österreich has been bringing together around 8,000 hay-milk farmers and more than 60 dairies. » More info for China is possible in Vienna.
2. If you go to China before the first contact and delivery ask for a deposit which cover the full travel cost (approx. 6.000€) and deduct it afterwards from the contract value. Normally this is a often used option and no problem.
3. Invite your client to Austria to sign the contract – if necessary – in Austria.

Because of the fact that we are in a traditional farmers business (we try to prevent any losses for our farmers), we are not so big and not specialists in international business – how shall we proceed?

We prefer to proceed according to the first point of the  recommendation list.
Now I need your help – hope to hear soon from you.
Best regards from Austria

5. The answer from China and last “sign of life” from Mr. Honglin

We received a final reply to our email – further attempts to contact them were unsuccessful.

Dear Stephan,

Thanks for your letter.
I forwarded your letter to our CEO.
We discussed our cooperation today and decide to find a suitable time to visit you instead.
Please wait our visit information.

Best Regards,
Honglin

—
Honglin Fan
Vice General Manager

Searches for scammers (= fraud, scam) on the Internet

Obviously, numerous companies have already fallen for this China fraud scam. OnlineThe purchase of food and cheese via the Internet. A big and very interesting topic in this area will probably be the easy and quick access to specialties such as - for examle - cheese. » More info research has yielded the following results:

• http://www.chinaseite.de/china-wirtschaft/geschaeftsbeziehungen-china/fallstricke-im-china-geschaeft/mehr-online-betrugsmaschen-in-china.html
• http://chinesescamers.blogspot.co.at/p/chinese-scam-companies.html
• http://www.fraudslist.com/2014/04/28/big-order-scam-xi-an-sg-impexp-tading-co-ltd/
• http://chieurs.blogspot.com/2016/04/info-yktradingvip163com.html

And the fraud machine also works in the private sector, of course – Tourism in China!