International Trade Scams (9)
2023-03-01 21:18:38

A California importer “ cast a long line to catch a big fish”

A friend’s brother, whose company produced high-end snow boots, used to be a successful entrepreneur. He met the owner of a  California company (“California Importer”) at the Canton Fair, which distributed luxury snow boots in the United States.

Since the beginning of 2008, the company of my friend's brother (“Chinese Exporter”)  had exported snow boots to the California Importer. The California Importer firstly placed an order of 20,000 US dollars, which was fulfilled perfectly, and the two parties had no dispute and the Chinese Exporter received the payment in time. Later, The California Importer successively placed several orders, ranging from thousands to tens of thousands of dollars, which were all performed very smoothly. After going back and forth, the two sides became very familiar and the relationship was very harmonious. The owner of the California Importer was also very business-minded and very good at marketing. He gave high-end snow boots to Hollywood stars for free. After Hollywood stars wore snow boots, snow boots became popular in California and other places, and sales were in good condition. The Chinese exporter was then full of confidence in opening up the US market.

Later, the California Importer placed a large order of US$1.7 million. The California Importer down paid 30% of the purchase price, and the balance should be paid within 60 days after receipt of the goods. At that time, the Chinese Exporter were not alert. After the California Importer paid 30% of the purchase price, the Chinese Exporter actively arranged production and delivered on time. After the payment was due, the Chinese Exporter kept asking for the payment from the California Importer, but the California Importer refused to pay for various reasons. Later on, the California Importer even disappeared.

After being retained, we entrusted a California local lawyer to investigate the American company. The results of the investigation were surprising. The California Importer had no office and no property under its name. Obviously, this was a deliberate fraud case, and it was of no help to file a civil lawsuit. The Chinese exporter could do nothing but report to the police both in China and the United States. In this fraud case, the Chinese Exporter lost more than one million U.S. dollars, and the boss almost went bankrupt.

Lessons and enlightenment:

1. Be vigilant even for old customers.

2. Credit investigation is very important. Before a transaction, a credit investigation must be conducted on the counterparty. The Internet has been very developed now, and it is very convenient to do some preliminary due diligence through the Internet. For large transaction, foreign trade companies should entrust lawyers or other professionals to investigate counterparties to control foreign trade risks.

3. The safety of payment collection is very important. Maintain control of the goods or title of the goods until all payments are collected. Don't accommodate the other party unprincipledly in terms of payment terms in order to take a big order. In case the goods are completely handed over to the foreign importer before the full payment has been received, whether the payment can be made in accordance with the contract is up to the conscience of the buyer. Generally speaking, when the temptation is great enough, don't test human nature. Undoubtedly, the Chinese Exporter suffered heavy losses in this case, however they themselves were very responsible too.


We know you’re eager to get started, but it’s important to remember not to disclose confidential information until after we’ve established an official relationship. Puruo’s team of experienced attorneys is ready to provide you with the tailored and professional legal services that have been our pride for the last twenties years

Alternatively you may email us at