Nonexistent U.K. supplier

A company in Zhangjiagang City, Jiangsu Province (“Chinese Importer”) entered into a scrap steel sales contract with a British company through the Internet. The "British company" showed the photos and videos of the scrap steel storage yard to the Chinese Importer and offered very favorable price. The payment term is 30% in advance and 70% upon the presentation of the bill of lading. After the Chinese Importer down paid more than US$170,000, the “British company” refused to ship the goods by various reasons, and even asked the Chinese Importer to down pay another 30% before the goods were shipped.

After we accepted the entrustment, after preliminary investigation, the "British company" did not exist at all. The company's registration information could not be found, and the business address provided did not have an office. The only true information provided by the  "British Company" is the bank account that received the remittance. Obviously this is a very deliberate case of international trade fraud.

Lessons and enlightenment:

1. Before the transaction, a credit investigation must be conducted on the counterparty. Now that the Internet is very developed, it is very convenient to do some preliminary due diligence through the Internet. For large transactions, foreign trade companies should entrust lawyers or other professionals to investigate counterparties to control foreign trade risks.

2. Don't be greedy for cheap; There is no free lunch. foreign trade companies must be very careful about products whose prices are significantly lower than market prices to avoid falling into the trap of fraud.