How to Identify a Dishonest Middleman in China

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In the first months of 2024, trade turnover between Russia and China grew by 2.9% and amounted to more than $95 billion. Domestic companies are increasingly hiring Chinese intermediaries who are well versed in local realities. However, not all of them are bona fide. Tatyana Kulyabina, CEO of the transport and logistics company Holding Finance Broker, told us what fraudulent schemes they use and how to protect yourself.

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Content:

What fraudulent schemes do intermediaries use?
How to identify an unscrupulous broker
What's the bottom line?


What fraudulent schemes do intermediaries use?
It is important for Russian entrepreneurs to understand what prices are accepted in the Chinese segment of their market. Otherwise, they risk buying goods that are actually two or three times cheaper.

Popular types of fraudulent schemes:

Inflated prices and kickbacks. The Chinese manufacturer nigeria whatsapp phone number quotes a price much higher than the one at which the factory actually sells the product. The difference is "kicked back" to the middlemen.
Low-quality goods. In this case, they are sold at market price, but are initially of low quality. If you are working with a new intermediary for the first time, try not to order the entire batch through them. Make test purchases and see if the products match the description, in what condition they arrived to you.
Hidden additional costs. There are many variations of such deception, but the essence is the same: the contract between the Russian company and the intermediary in China does not specify all the conditions. If you were bribed by a low price for delivery, check what exactly this service includes on paper. When you have already transferred the money and the goods have arrived at the warehouse, it may turn out that storage, repackaging and defect testing are paid separately. As a result, a significant amount can accumulate.
The cost of delivery to the final destination is not specified. This is not always obvious, since sea transportation uses its own terminology. If the documents state FOB (Free On Board), it means that the intermediary must deliver the goods to the port at his own expense and load the goods onto the customer's vessel, and all other costs are paid by the buyer. With CIF (Cost, Insurance and Freight), all costs are borne by the seller. There are many such terms, but they are all reflected in the international INCOTERMS rules. Find them on the Internet and read them in advance.
You should also be wary of delays in paperwork. Perhaps the intermediary has problems. In a normal transaction, you should be provided with a sales contract, invoices for the goods, the necessary certificates and a customs declaration number.

On Topic: All Good, But Not Certain: How to Work with China in 2024