Chinese company emails US company about buying a few million dollars of the US company’s product. The terms of the deal are quickly worked out and the Chinese company suggests the American company go to China to sign the contract and celebrate the consummation of the deal. Someone from the American company gets to China (usually some fairly out of the way city in China) and is treated to what appears to the American to be a really expensive meal at which the contract is signed. The American company is then told how Chinese custom requires it buy the Chinese CEO an expensive gift and pay the notarization fee. The American is then usually taken to purchase a nice piece of jade and requested to pay a couple of thousand dollars for the notarization fee. Sometimes the American just gives the Chinese company people cash to go off and buy the gift on the American company’s behalf.
It isn’t until weeks later that the American learns there is no deal and, in fact, there is no Chinese company either. The big lure of this scam is that nobody wants to fly all the way to China, have a great meal at someone else’s expense, and then be too cheap to spend less than $10,000 more to seal the deal.
This China business scam was really popular four or five years ago, but it seemed to have declined a bit since then, presumably because word had spread among American manufacturers.
It appears China has found a new set of victims.
CMM-Intelligence just did a story entitled, WARNING: Alleged Fraud Scheme by Chinese Company Targets International Media Companies, [link no longer exists] on how this scam (with a slightly new twist) is being played on foreign media companies:
CMM-I last week became aware of an alleged fraud scheme that currently appears to be prominent in Mainland China. A Chinese company that claims to be a Zhengzhou-based investment firm contacts Western media companies involved in video production via email to signal interest in co-producing a TV documentary series about the foreign party’s home country. Once the deal terms are negotiated the foreign company is invited to come to Zhengzhou, Henan Province, to sign the contract. At the signing ceremony the Chinese reveal to the foreign representatives that the latter are expected to pay a certain “notarization” fee. Moreover, the foreigners are “encouraged” to purchase presents worth several thousand Euros in order to “save face” vis-a-vis the Chinese company’s CEO.
CMM-I is aware of two German companies that have fallen victim to this alleged scam thus far. In addition, several Austrian companies seem to have been targeted. We post this message here to warn our subscribers and business partners — as well as their associates and partners — of this alleged fraud, and we will continue to contribute to putting a stop to such shady games to the best of our ability.
The easiest way to avoid this scam is by conducting due diligence on the Chinese company and its personnel before you go to China.
What are you seeing/hearing out there?