Avoiding Scams from Chinese Suppliers in Xi'an, Tianjin, and Shijiazhuang

After two decades of sourcing from China, I've seen a troubling pattern: fraudsters concentrate in certain cities like Xi'an, Tianjin, and Shijiazhuang. Too many American buyers jump into deals without verifying suppliers, then lose deposits or get hit with fake notary fees. This article breaks down the common scams and shows you how to protect your business before it's too late.

Importing from China and exporting to China – scams

We noted growing problems with the reliability of companies located in Xi’an, Tianjin, and Shijiazhuang, and unfortunately, in the majority of the cases, the problems consisted of common fraud.

The fraud schemes and methods of operation used by swindlers suggest that they were targeting American and European companies. There are two recurring patterns of extortions. Nevertheless, the first step is always the same.

Contact with a Chinese company is established via the Internet. Usually, an American company finds a supplier on Alibaba, a popular B2B website (especially a Gold Supplier). Sometimes Chinese companies find the victim themselves and contact foreign entrepreneurs; it is particularly true for US food manufacturers and exporters.

Scenario 1. Importing goods from China

A US-based company wishing to start importing from China contacts a potential Chinese supplier. Contacting the company and the negotiation stage run smoothly. More often than not, Chinese companies send samples of goods that meet the expectations of the US client. The problems start after the Chinese company receives a deposit or the total payment – it disappears into thin air.

Conducting due diligence on the Chinese company in question is an effective way of protecting ourselves and avoiding fraud. Only by running an independent check of the company in the register can you make sure whether such an entity exists, and only after seeing a valid register entry should you decide whether to cooperate with them or not. Many companies from Xi’an are not registered, and swindlers who register their companies usually do so only to be able to scam others. Such entities are normally not registered in the most important offices, have 1-2 employees, and do not have paid-up share capital. It is also worth mentioning that usually, these are newly created companies, registered only a couple of weeks before the scam.

You need to keep in mind that you should always verify the company before transferring any money to China.

Scenario 2. A Chinese company wants to buy your goods

US export to China increases every year, especially in the food industry, where companies are successful in the Chinese market. When you participate in fairs in China or establish business contacts via the Internet, you should always remain cautious.

This scam scheme, also known as the “Chinese Big Order Scam”, is very common. Every month we conduct due diligence on dozens of Chinese companies which committed this kind of fraud.

US companies negotiate with scammers for a certain period of time, and the Chinese company agrees to all terms, including 100% advance payment. At the end of a very fast negotiation process, the Chinese partner invites the company’s representatives to come to Xi’an to sign the commercial contract. When US representatives go to China, they are asked to split fictional notarial fees of EUR 400–10.000. Of course, these fees are fictional.

Many companies confirm that the scam followed this scenario. The Chinese insist on the fees being handed over in cash, in EUR or USD, and they do not agree to go to the notary nor to cover the payment even if the American party offers a discount for the ordered goods, the amount of which significantly exceeds the amount of the notary fees.

In this case, if you do not want to go to China, the notarial fees can be transferred to the bank account of the Chinese company which promises to pay for the notary. Once such a transfer is made, there is no further contact with the company, and the contract is not concluded.

The bottom line

Don't let a cheap quote or a smooth talker cost you thousands. Every new supplier—especially those from high-risk cities—needs a thorough background check before you send a dime. At China-Check, we verify company registration, ownership, bank accounts, and even employee count, so you know exactly who you're dealing with. Get a supplier verification report before signing anything.