How to Safeguard Your Business from False Transactions with Chinese Companies?

You can verify the Chinese company in advance and ask it to stamp the contract with its official seal. This will largely protect you from false transactions.

One of our clients from Kenya searched Google and found a Chinese company selling motorcycle parts. It then signed a purchase agreement with this Chinese company, where they agreed on a 30% advance payment and delivery at the port of Qingdao, China, within 30 days of the payment.

The Chinese company provided a bank account in Dubai, into which the Kenyan company made payments.

By the delivery date, the Kenyan company’s freight forwarder had not received the goods delivered by the Chinese company. The Kenyan company sent many emails to the Chinese company urging delivery. However, the Chinese company never replied.

The Kenyan company wanted us to help get in touch with the Chinese company. Unfortunately, we failed.

There was only the English name of this Chinese company on the contract and no its Chinese name. The company could not be identified without finding its legal Chinese name. For more information on legal Chinese names of Chinese companies, please see our post.

We do not find any Chinese company with such name in China’s system of “Record-filing and Registration of Foreign Trade Operator”. Chinese companies engaged in international trade will generally provide their English name in such filings. For more information on English names of Chinese companies, please see our post.

We only saw a blue oval seal on the contract, with the English name of the company. However, the official seal of a Chinese company should be red, circular, and show its legal Chinese name. For more information on the official seal of Chinese companies, please see our post.

The Chinese company’s bank account was in Dubai, so we could not confirm the authenticity of this name. If the account is opened with a Chinese bank, the Chinese bank will certainly ask for its Chinese registration certificate, which will ensure that the name shown on the bank account is real.

So, we don’t know which company this so-called “Chinese company” is. It probably doesn’t exist.

When doing business with a Chinese company, you should require them to provide its legal Chinese name or stamp the contract with an official seal with that name. This will allow us to verify it and find out whether it exists.

Photo by Wengang Zhai on Unsplash