The invitation to China to sign a lucrative sales contract is a fraud scheme that has been going on for many years and a ripoff that companies sadly enough still fall victim for.
The whole idea of the scam is to convince a foreign company to pay various administration fees and gifts in order to land a very attractive sales contract with a Chinese buyer.
At first glance, it can be difficult to assess the risk of selling to a first-time customer from China. It should be imperative to screen the credibility of the Chinese buyer by requesting a business license copy for verification, check the foreign trade rights and conduct a litigation check. (read how to conduct your own free business license verification, foreign trade right check, and litigation check). Companies that are selling commodities such as meat or crops to a Chinese company should, in particular, do a comprehensive background check of the buyer and make sure that the buyer is capable of financing the final payment in a situation where commodity prices drop during the shipment to China.
If the due diligence does not raise any flags but an invitation to China to sign the contract or a request to pay a notary fee lands in your inbox then it is very likely a scam and you should walk away immediately.
How the scam works
There are two versions of the build-up to the scam but the pattern and outcome are the same.
A Chinese company sends out unsolicited emails to mostly small and medium-size companies to inquire about product/service and the price. After having received a quotation, the Chinese company will express interesting in placing a substantial order and very often without any attempt to negotiate the price. The Chinese company will then send a purchase agreement that confirms the order size, products/services and payment terms (normally from 30% up to 50% prepayment). Everything looks great until the foreign company is invited to China to sign the purchase contract face to face with nobody else than the CEO. The Chinese company asks for a passport number, name, travel dates etc to issue a formal invitation letter as documentation for visa application.
In the second version the Chinese company contacts a foreign company and asks them to host a travel or business event for 100 to 300 people. The Chinese company asks for a quotation that covers expenses for accommodation, meal, travel and other services. The offer is accepted with no hesitations and the Chinese company replies with an agreement that must be signed in China.
How the ripoff works
The foreign company does not want to miss the fantastic deal and sends somebody to China to sign the contract. In China, the foreign company representative meets the CEO and other high-level management and is asked to pay for dinner expenses and buy a gift to the CEO who takes the final decision on the deal (often an expensive gift made of gold). The foreign company representative is also asked to pay a fee for notarization of the purchase contract and other “mandatory” administration fees to for example China Customs. The whole set-up is a fraud. After having returned home from China, the foreign company NEVER receives a prepayment or hears from the Chinese company again.
The notary public fee
Companies that rejects the invitation to China will still be met with the demand of paying a notary public fee. The expense can be a fixed fee of anything from 1000USD up to 10,000USD or a fee that is 0.3% of the contract value. Some companies will try to deduct the fee by lowering the sales price but the Chinese company will insist on the fee and suggest that the fee is split 50/50 to give the impression of flexibility and fairness. When that is said, it is important to emphasize that notarizing a purchase contract in China is complete nonsense and not required by law at all.
Who are the companies behind the scam?
Companies behind the “come to China and sign a contract scam” have a relatively short lifetime of 1 to 2 years. Companies that were active in this fraud scheme 2 to 4 years ago are now dissolved, inactive or had the business license revoked. However, new companies with exactly the same intentions are registered again and again.
Here is a list of companies that are reported active in 2017/2018.
|Company Name (EN)||Shaanxi FengQin Trade Co., Ltd|
|Company Name (CN)||陕西风沁商贸公司|
|Establishment Date||29th of March 2018|
|Legal Representative||Yang Li Jun (杨立军)|
|Address||Address No.369 North of Taihua Road Weiyang District Xian City China . Pc .710016|
|Mobile Phone||86-17039092007 86-18229097364|
|Contact person||Betsy, Betty or Helen|
|Company Name (EN)||Yunnan Zhouyun Import & Export Co., Ltd|
|Company Name (CN)||云南周韵进出口贸易有限公司|
|Establishment Date||7th of March 2017|
|Mobile Phone||86-18313890965, 86-15198853509, 86-15687892921|
|Emailsfirstname.lastname@example.org, email@example.com, firstname.lastname@example.org|
|Contact person||Zhu Yonfu, Haidong Chen, Yu Mo, Zhu Changshun|
|Company Name (EN)||Henan Changxu Import & Export Trading Co., Ltd|
|Company Name (CN)||河南长旭进出口贸易有限公司|
|Establishment Date||27th of September 2017|
|Address||22 Dongfeng Road Jinshui District Zhengzhou City China.|
|Status||Abnormal Business Operation|
|Office Phone||86-371-56051299 or 86-371-56051299|
|Website||http://www.chinahecxjck.com (not working)|
|Company Name (EN)||Xi’an Yaoke Import & Export Trading Co., Ltd|
|Company Name (CN)||西安耀科进出口贸易有限公司|
|Establishment Date||19th of August 2015|
|Address||NO.25, Dianzi ZhengJie Dong Sanxiang, Xi’an, China|
|Office Phone||0086-29-63625416, 0086-29-63625418|
|Mobile Phone||0086-18292677278, 0086-15929907719|
|Contact person||Honglin Fan Xu Chao Guang (许朝光)|
|Company Name (EN)||Shaanxi Suofu Trade Co., Ltd|
|Company Name (CN)||陕西索富贸易|
|Establishment Date||11th of November 2015|
|Legal Representative||Hu Zong Ying (胡宗营)|
|Address||ROOM 20733-7 FLOOR,2 UNIT NO.1 LONGHU MOCO INTERNATIONAL, NO.20# XINGHUO ROAD, LIANHU DISTRICT,XI’AN|
|Status||In operation, abnormal business operation|
|Contact person||Jack Wang|
|Company Name (EN)||Yunnan Gaosai Import and Export Trading Co., Ltd|
|Company Name (CN)||云南高赛进出口贸易有限公司|
|Establishment Date||11th of March 2016|
|Legal Representative||Yi Zhong (易钟)|
|Address||No.17,Jinshi Residential Quarter, Panlong District, Kunming City, China|
|Status||Business license revoked|
|Emailsemail@example.com, firstname.lastname@example.org, email@example.com|
|Contact person||Ming Yu, Liu Yifang|
|Company Name (EN)||Shaanxi Tengyu Imp & Exp. Co., Ltd.|
|Company Name (CN)||陕西腾宇进出口有限公司|
|Establishment Date||24th of February 2016|
|Legal Representative||Zheng Bao Guo (郑保国)|
|Status||Business license revoked|
|Contact person||Meng Xiang Li|
|Company Name (EN)||Xi`An Blessing Wide Trading Co., Ltd|
|Company Name (CN)||西安福阔商贸有限公司|
|Establishment Date||13th of January 2017|
|Legal Representative||An YIng Chun (安迎春)|
|Address||Jinqiao International Plaza, Building 1, Room 31009, NO.50 Keji Rd,Gaoxin District,Xi´an,Shaanxi,China|
|Status||Business license revoked|
|Contact person||Frank, Luo Ming (罗鸣) Yin Ren Ling (殷任灵)|
|Company Name (EN)||Xi`An Bei Ao Trading Co., Ltd.|
|Company Name (CN)||西安北奥商贸有限公司|
|Establishment Date||28th of July 2016|
|Legal Representative||Zhu Xiao Li 朱小莉|
|Address||Shaanxi, Xi´an Gaoxin District, Tangyan Nan Road, 3rd Block, No 1, 18th Floor|
|Contact person||Mu Huan Huan ( 穆欢欢)|
|Company Name (EN)||Shaanxi Guangda Electrical Equipment Engineering Co., Ltd.|
|Company Name (CN)||陕西广达电力设备工程有限公司|
|Establishment Date||27th of June|
|Legal Representative||Li Ping Zhang (李平章)|
|Address||No.2 Fu Rong South Road, Qu Jiang New District, Xi´an City|
|Mobile Phone||0086-15829629823, 0086-13619296713|
|Emailsfirstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com firstname.lastname@example.org, email@example.com”|
|Contact person||Mr. Zhang Liang, Mr Sun Jinfa, Liu Jia Mei ( 刘加美)|
|Company Name (EN)||Xi’an Qing Xian Lv Trading Co., Ltd (related to Nuolang, see this report)|
|Company Name (CN)||–|
|Address||NO. 216 TAI BAI SOUTH ROAD, YAN TA DISTRICT, XI’AN|
|Office Phone||0086-29-62329368, 0086-29-61857812|
|Emailsfirstname.lastname@example.org, email@example.com, firstname.lastname@example.org email@example.com, firstname.lastname@example.org, email@example.com|
|Contact person||Judy, Betty|
|Company Name (EN)||Xi’an Nuolang Trading Co., Ltd (read a comprehensive investigation)|
|Company Name (CN)||西安诺朗贸易有限公司|
|Establishment Date||22nd of January 2018|
|Legal Representative||Yang Shao Rong (杨少荣)|
|Address||No. 10 Rong Xin Road, Gao Xin District, Xi’an City|
|Office Phone||+86-2963035040,+86-2963035041,+86-2963035043, +86-2963641393|
|Emailsfirstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com|
|Contact person||Judy, Betty, Wang Hai Ping (王海平)|