China Blog by Chinaorbit.com

On my German blog I posted some information about the most popular China-related online scam. I often get emails from companies or private customers of scammers who ask for assistance after they got ripped off. Normally there is nothing you can do after transferring the money. Just do not send them anymore.

Here is a short summary of the most popular methods

• cheap branded articles or electronic articles are offered on online shops with a very professional layout. The support seems to be great, too. The contact happens via phone, skype, email. The prices of the products are often just 30% of the marked price in Europe or the US. After you did the payment, the scammer will ask for another payment, using some excuse like the goods are hold back by the customs. Or the special offer suddenly expired or their supplier needed more money. Whatever.  If you paid per Western Union, there is normally no way to get your money back. You wont find any company under the address mentioned in the imprint of the website.
• Domain registration is also very popular scam. You will get a message by an “official domain name registrar” who received a request by a company who wants to register a domain name like “your-company-name.cn” or “your-company-name.cn.com”.  Just move those mails into your spam folder. Their only goal is to sell you an overpriced domain registration with their company
• Forwarding payments or goods to China: This is also very popular. A Chinese company seeks represantatives in several countries. Your job as representative will be to accept payments by their customers and forward them to China. Of course they will never delier any goods. They just need your account to create trust because many of their customers will hesitate to transfer money directly to China. You will get paid by cheque. The cheque is a counterfeit. Or sometimes they will ask you to accept orders of goods and forward them to China. They do not pay those goods and after a few weeks you will get trouble with the supplier
• Sudden contacts to potential business partners: A Chinese company contacts a western company and invites them to negotiations about a huge contract to China. They will ask you to pay for hotel fees, food, give them expensive presents. After the “negotiations”, they will suddenly disappear.
• Sales of academic titles: You can “buy” them online or even at the side entrances of universities in China. Those titles are worthless of course, even if you do some “academic work” to get them.
• Orders per cheque: A Chinese company contacts a Western supplier and orders goods. Payments will happen with counterfeit cheques from third parties (who have no idea about any payments). Sometimes the bank clerk will credit the cheque and the goods are delivered. After a while the third party will bounce the cheque and your goods are lost.

Well, some people just can not listen. A  friend of mine (who does not care if I make some fun of him in my blog) had a good business idea, he did not want to tell me about at first. Still easy to guess: the idea was basically to import goods from China and dont sell them to customers but to wholesalers. Thats nothing new and also the goods were nothing new (some electronics, whatever).   Unfortunatly it does not always work that easy anymore (actually it never does). Of course the wholesalers he contacted had cheaper suppliers already.  Probably you can also find his products for a cheaper price on ebay. Not that it matters much now, because the second problem is, that he already ordered the goods and paid 30% in advance to a Chinese friend he knew from his last stay in China and who promised him to take care that everything in China works well (he visited the company, checked the goods…).   The Chinse friend told him he had already paid the supplier but refused to give him the address or company name.  And this Chinese “friend” appearently promised the supplier more payments and more orders in order to persuade him to deliver a quite small amount.

Now they have to figure out how they solve the problem. My guess: The “friend” still has the money. If you want to export goods, you need an export license. Unless the supplier has this export license, the “friend” needs a trading company to take care for the shipment. And until now he refuses to give any contact data but insists on the whole payment first.

If you find offers for cheap cameras on Chinese websites you should be double careful – especially, if the price is only about 1/3 of the normal market price. And – I can not repeat it often enough – a professional looking website does not mean, that the company is reliable – it just means, that it is professional – but also criminals, who want to cheat foreign buyers are more and more professional.

In this case, someone contacted a Chinese company, they had a serious looking website, their address (fake) was in the World Trade Center in Beijing and the contact via skype was fast and professional. The price of the camera was 400 Euro instead of 1200.

After the money was transferred, the company said, they had some problems with Chinese customs, the buyer should transfer another 200 Euro because of tax. Here some standard excuses to get the additional 200 Euro:

• No – sorry, it was impossible to send any proof, that the camera was held back by Chinese customs or that it had been sent.
• Tracking number? No, also not possible, it was declared invalid by the Chinese customs.
• Meeting? No problem – but they apparently even did not ask for a phone number or an exact address for a meeting point

The 400 Euro are gone of course, the company did not exist, the address in the World Trade Center was fake of course, the website has another address in the meanwhile.

I don’t think, the buyer will see his 400 Euro again

I found the website of a competitor of a potential client in Beijing. This competitor did not pay his web designer. The result was a very ugly website, “for sale” remark and a direct link to the website of my client. In Germany, I would get a nice letter by a lawyer for this kind of “payment reminder” very quickly.

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With the presentation of the new “R-Class” (Rickshaw-Class), the first car produced by Daimler exclusively for the Chinese market, the famous company wants to conquer the Chinese automobile market. The new R-Class unites western know-how with traditional Chinese automobile manufacturing.

The R-Class caused a new China euphoria in the management of the company:

“With the new r-class we will conquer the Chinese market by storm. Our designers created a real Chinese Mercedes for the people, which opens a completely new clientele in the Middle Kingdom”.
Unknown manager of the Daimler AG

But recently a reporter managed to take this picture of a first copy of the R-Class in China.

Detectives found out, that a company just around the corner produced this copy. Most of the workers of the join-venture actually spent their day shift in the joint venture and their night shift in the company of a certain Mister Wang. Breakfast and dinner are paid by the joint-venture. Like this, the counterfeiter around the corner can safe a lot of costs and can offer the copy of the R-Class with a cheaper price.

We could reach this certain Mr. Wang for a statement:
“We do not copy any product. Our car is made in China. The quality and the price are Chinese.”

The manager of the joint-venture, also a certain Mr. Wang does not intend to take any legal steps against the product counterfeiters:

“This is China. Chinese companies learn fast. The only way to beat those companies is to improve our own product. We already started working on an improved R-Class-2.

Businessmen working in China often have to make decisions, which company or service provider they should trust. They need the advice of partners (lawyers, web designers, marketing experts, accountants …) to start and operate their business in China and often (especially if they try to save money and go for the cheapest solution), it is just a matter of coincidence, if they end up with the right partner – even more so, if they have no experience in the business field of their partner or service provider.

• Meet with your partner companies in person and better visit their office.
• Always check your partner companies. Do they have references (on their websites for example)? It is worth the effort to get in contact with one of their clients. Well known companies with many references are often more expensive – but if they provide better service and especially, if they have proven experience, it is worth paying more to get a reliable company.
• Check, how long your future partner company has been doing business in China (if the company is new, check for the experience of the directors of the company – often you can find background information on websites like xing.com or linkedin.com)
• Do some research in the internet. Often you find information in online forums, especially if people are not happy with the services, they tend to complain in public forums (but of course, entries in public forums are not really reliable).
• Listen to recommendations! Ask your friends and business partners for advice and their experience.

Recently, I found an excellent website, which screens and recommends experienced managers in China.

http://www.chinasolved.com.

They pay attention to quality instead of quantity. I know two of the recommended managers in person, so the site seems to be a very useful resource. I hope, they will continue developing it.

It seems, that at least in Beijing, it is not so easy anymore to extend your F-Visa. Until now, it was never a problem to extend it for another 6 month, now a few people I know had problems even getting a 3 month extension.

Probably, teh guidelines changed, because the Chinese government wants more control because of the Olympic Games next year or maybe more control over foreigner coming to China with an F-Visa and working here without a proper working permission.

Having your office in a new office building is somehow nice and there are a lot of new office buildings in Beijing. But if you are one of the first companies there, some things might not work in a perfect way, but a professional property management should take care of everything.

But still, as foreign company, you should think twice, before you rent an office in a building, when you are the first foreign company to register there. The owner or property manager of the building probably never heard about the papers you need to register your WFOE and they are quite annoyed and sometimes not really willing to cooperate to provide you with the necessary documents.

Especially for small and middle sized enterprises, it is better to move into a building with other foreign companies anyway (e.g. SOHO in Beijing). Not only because of the western toilets in office buildings aiming on foreign companies but also because of opportunities to get in contact with other foreign companis for later cooperations.

www.dotproject.net

is a nice open source software and a cheap solution to manage projects online, especially, if two teams or companies from different countries work together.

dotproject.net offers features like handling different projects, tasks, a calender, forums where you can discuss projects, email-notification if a team member gets a new task and much more.

Hong Kong

http://www.legislation.gov.hk/eng/index.htm
Bi-lingual Laws Information System (BLIS), maintained by the Ministry of Justice of Hong Kong (with searchable Database)

China

http://www.bfai.de/fdb-SE,MKT20050705112545,Google.html

Information on income tax for foreigners in China(German language)

http://english.mofcom.gov.cn/static/column/topic/lawsdata/chineselaw.html/1

Ministry of Commerce of the People’s Republic of China: useful information about corporate and business law
http://www.law-star.com/html/lawsearch.htm

Law database in Chinese language, published by China Legal Information Center

http://www.fdi.gov.cn/pub/FDI_EN/Laws/GeneralLawsandRegulations/BasicLaws/P020060620319004069971.pdf

Company Law of the Peope`s Republic of China

http://www.steuerschroeder.de/doppelbesteuerungsabkommen.html

double taxation treaties between Germany and other countries, including China.

http://english.tax861.gov.cn/zgszky/zgszky.htm

Overview over the Chinese taxation system

Beijing

http://english.tax861.gov.cn/

Website of the Beijing Local Taxation Bureaus

http://www.bjsat.gov.cn/en/index.jsp

Website of the Beijing Municipal Office State Administration of Taxation, P.R. China