Buying from China or other Asian countries has become a common and perfectly safe way to access competitively priced products, and we have argued this point on numerous occasions on this blog, making it clear that many of the fears surrounding a product’s Asian origin are, in reality, just some of the many myths about importing from China that we should leave behind.
The vast majority of Chinese manufacturers are reputable companies with a proven track record, genuine production capacity and a willingness to build long-term business relationships. However, as in any global market, there is a minority that seeks to exploit the inexperience of first-time importers, and it is important to be able to recognise them.
A recurring pattern
Among the various types of fraud a novice importer may encounter, there is one that is particularly sophisticated: that of the supplier who, in reality, does not manufacture anything. Their method usually follows the same script. First, they create an attractive profile on B2B platforms, complete with hundreds of positive reviews and photographs of industrial facilities that do not belong to them. When the buyer requests a sample, rather than producing it, the supplier purchases it from Taobao or 1688.com—the two major Chinese wholesale platforms geared towards the domestic market—and removes the original label of another brand before dispatching it.
The buyer receives a product of acceptable quality, places their trust in the supplier and pays a percentage of the order in advance– usually around 30 per cent – to start production. From that point on, contact is lost and the money disappears along with the supplier.
This scam is not representative of the sector, but it is frequent enough to warrant a certain degree of methodical caution, particularly in initial transactions with an unknown supplier, as we explained when reviewing the 5 signs for identifying fraudulent suppliers.
Signs to watch out for before paying
Beyond intuition, there are objective behaviours that should set off alarm bells. The first is the insistence on paying outside the platform where contact was first made, thereby bypassing any buyer protection system and leaving no verifiable record of the transaction. The second is communication from generic email accounts or domains that mimic real companies by changing a single letter – a detail that is easy to overlook if not checked carefully. The third, and most decisive, is the company’s absence from the official Chinese commercial register: every legally incorporated company has a unique business licence number, and its absence from that register is the most objective indication that something is amiss.
None of these three signs on its own is a deal-breaker, but their combination should be enough to put a stop to any advance payment, particularly when the risks associated with importing from China specific to each sector are not yet fully understood.
How to check whether a Chinese company actually exists
Checking the commercial register is by far the most accessible and least subjective method of all. The Chinese government’s official system for publishing corporate credit information allows you to enter the business licence number shown on any official document from the supplier and check within seconds whether the company exists, when it began operating and what its registered capital is. If that number does not appear, or if the supplier is reluctant to provide it, giving unconvincing excuses, it is time to halt negotiations.This check does not replace a full due diligence process, but it is the first filter that any importer, whether experienced or not, can apply at no cost before proceeding.
What Alibaba and AliExpress protect (and what they don’t)
Platforms such as Alibaba, particularly through its Trade Assuranceoffer a genuine layer of protection provided the transaction remains within their payment channels – something that ghost suppliers, in particular, try to avoid at all costs.AliExpress, which is more geared towards small volumes and end consumers, can be useful for testing a product, but it is no substitute for the negotiation and verification process required for a serious B2B order. In any case, it is important to bear in mind that no platform, however sophisticated, completely eliminates risk: as we explained when discussing why technology does not eliminate import risks,the tool helps but does not replace human judgement or verification – something that should also be kept in mind when assessing how sourcing can help to manufacture products in China reliably.
The ultimate verification: audit and expert support
If the project budget allows, the most reliable way to dispel any doubts is to commission a supplier audit before committing to any payment: a physical visit to confirm whether the declared facilities, machinery and production capacity actually exist. For those taking their first steps in the import business and working to a tighter budget, the bare minimum is to check the trading licence, verify the email domain and be wary of any pressure to pay outside the platform, whilst using tools as a supplier assessment checklist before taking the first step.
At S3 Group, we have spent years supporting companies wishing to import safely from China and Asia, and the selection and verification of suppliers is one of the areas where we add the most value: we have a network of pre-audited manufacturers with a local presence to verify, on the ground, that the company you are going to work with is exactly who they claim to be. This preparatory work, which is almost always behind the scenes, is what distinguishes a smooth import process from an avoidable headache.
