How to Avoid the “Fake Company Scam” in China

By | May 9, 2016
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China’s economy is still growing rapidly, making it one of the best countries in the world to invest and do business in. The problem is, oversight and business culture have not evolved to the standards of the west, creating an environment where scammers and fraud can pop in from time to time.  At CNBizCheck, we don’t want to scare you away from doing business from China, we just want to help businesses take a well-rounded and safe approach to doing business in China. Today, we will talk about some common scam predicaments and share what you should look out for to avoid encountering such situations yourself.Scam

The “Fake Company Scam”
“Hello! We feel the need to warn you and your company that there are people trying to steal your trademark and register it in China! For $30,000 we can help you prevent this from ever happening, but only if we act quickly. Please respond as soon as possible to ensure the protection of your intellectual property!”

Governments around the world are aware of Chinese entities pretending to be legitimate legal or due diligence firms, trademark, copyright, domain registration or patent agents, and freight forwarders. There are many different types of scammers who can be creative and use a plethora of different identities, disguising themselves and cheating foreign businesses.

This type of scam has many variations, and is not limited to this one hypothetical example. The scam can be both simple and very complicated, complicated to a degree enough where it could even involve non-Chinese individuals ore entities acting as employees of a fake Chinese company. No matter the tactics, ultimately the scammers’ end-game is extracting money from your company without providing anything in return.

How do I avoid such a scam?

Always conduct thorough due diligence on your potential Chinese partners. The most well-rounded and user-friendly way to do due diligence is through the use of CNBizCheck’s business reporting services. Our reports are used internationally and are generated according to official government data from official government databases. These reports are reliable, quick, and best used to cross-check data any company sends you. If there are any discrepancies, you will be able to hold the business accountable and demand an explanation before any business is conducted. In this way, you can be safe in knowing your entity is protected from harmful scammers. It’s ok to trust, but we always need to verify; that is CNBizCheck’s motto.

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