China Business

Faked in China: Even the Universities Are Not Immune

China scam fraud

Danwei ran a story, University Diploma Scandal in Jinan [link no longer exists], on a fake Chinese university. This story is directly relevant for those doing business in China. Let me explain.

The story is from the Jinan Times. Jinan is the capital of Shandong Province. I have been there a couple of times and it is no backwater. The story is about how 68 students came to realize “on the eve of their graduation” that the school they had been attending for the last four years was a complete fake. These 68 students had test scores too low to get into the Shandong Institute of Light Industry, but they received letters offering them the opportunity to enroll as full-time students in a “pilot program” at RMB 8,000 per year in tuition. The students enrolled, paid their tuition, and attended for four years, only at the last minute to discover that their school in fact had no official connection with the Shandong Institute whatsoever:

As one student told the Jinan Times, “Until now, our teachers all claimed to be from the Shandong Institute. We only just found out they’re not affiliated with the university at all. So now they’re avoiding us, and not answering their phones.”

The fake school was officially set up as a training school on the grounds of the Shandong Institute. It was in charge of its own admission, finances, teaching and administration. Yet the letterheads were fake, and copied from the university itself.

What does this have to do with doing business in China? Everything.

Everything, because if you do not conduct sufficient due diligence there is a good chance you will find yourself at the wrong end of something like the following:

1.  Fake China Law Firms. We have on more than one occasion heard of companies that thought they were paying money to a Chinese law firm for something like registering a trademark in China or drafting a manufacturing agreement. Instead, they paid money to somebody that had set up a temporary website with the sole intention of bilking the unwary. I feel compelled to add that I have never heard of a real Chinese lawyer doing this.

2.  Fake China Factories. Fake China Seals. Our China lawyers have seen these more times than I can count. The foreign company pays for product from the Chinese factory but the Chinese factory either does not exist, or the person or company to whom the payment is made is not the Chinese factory from whom the buyer thought it was buying the product. I mention the seal because that is oftentimes a good way to figure out who is real and who isn’t. The result is the same in the end. The foreign company pays a lot of money for absolutely nothing and the odds of it ever recovering anything are not good.

For more on China scams and on how to avoid them, check out the following:

Here’s the real point of this post and of those I cite to above: 68 Chinese college students were duped into paying tuition to an essentially non-existent entity for four years. That alone ought to tell you how careful you need to be to avoid having something similar happen to you in China. Nobody doing business in China or with China is completely immune.

Verify, verify, verify.

Does anyone disagree?

5 responses to “Faked in China: Even the Universities Are Not Immune”

  1. Wow. China NEVER ceases to amaze. A shame the Danwei story does not go into detail about how the students “figured it out” after four years.
    Had to laugh at your finish, though, Dan: “Does anyone disagree?”
    Hard to imagine any of the readers of THIS blog disagreeing!

  2. Financial breakdown/follow the money:
    Revenue: 8k/yr = (32k all in)64 = RMB2.048m. This results in a “budget” of US$328k
    Expenses (USD): rent ($1k/month)48=$48,000, salary $700/month[8 employees]= $5,600)48=$269k, startup expenses $3k, bribes $10k. Total expenses: $330,000.
    I don’t know what university has only 8 employees, they’ve got to be pretty sorry making USD$700/month, too. Meaning the “employees” likely weren’t the scam founders. Unless my calculations are way off, the bribe recipient/university employee gained the most, and is therefore most likely to be the guilty party.

    • Actually, $USD700 per month sounds about right for a university professor (with a PhD) in China today. Excluding tier-one schools, Chinese universities are fast becoming ghettos. Staff turnover is high, moral is pathetically low and teaching quality in free-fall. Kind of what you’d expect given the salaries.

  3. After four years? They did not realized they were “enrolled” in a fake school, after four freaking years? Well, they do not only have fake LV bags, it turns out they have a fake school as well. 

    • The brilliance of the scheme was to locate the fake school on the campus of the (supposedly associated) real school.  One of things I’ve come to appreciate, living in China for a while, is on the one hand the sheer variety of scam schemes, and on the other hand, how they are all basically variations on a few themes.  Theme 1: collect a large amount of money upfront for something, and don’t give the something.  Theme 2: associate yourself with something with a good name or reputation and sponge off the reputation.  Theme 3: substitute something plausible for the genuine article, then make yourself scarce before the swap is discovered.  Theme 4: write an eminently fair-sounding contract, then ignore your obligations under it but collect your benefits under it; if something comes up, call your special friend in high places to make it go away.  The school thing here is #2 + #3.  A lot of what Dan writes about is #1.  Dan doesn’t talk so much about #4, but I’ve seen that one a lot.  I think you could write down a list of about a half-dozen of these and it would cover the essence of all the scams, but the variety of details is still amazing.

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