Due Diligence
October 2014

Online Fraud in China

Recently we have been hearing of increasing concern among both companies and individuals about the risks of online fraud in China.

While there are many positive aspects of conducting business online, such as convenience and the lure of low prices, it is important to protect yourself by ensuring that your business partner in China is operating legitimately.

Where Online Fraud Occurs

Examples of online fraud in China include fake websites that pretend to be legitimate and reputable businesses. These websites can look almost identical to the real websites, except for the fake contact details that consumers are directed to.

Scammers are also active on online marketplaces like Alibaba.com, and we have heard of many companies in China that have sold fake goods, or charged for goods that were not as described or never actually arrived.

We wrote more about this earlier in the year in this article.

Who is Affected

China is not only a market for big businesses, but also for small and medium-sized businesses around the world. Such has been the explosion in trade over recent years that many companies now commonly see China as their first stop for sourcing, given the almost limitless sourcing possibilities available.

Online fraud in China is a common concern though, and it creates many fears for business owners who want to succeed from their activities in the Chinese market.

No matter their background, business owners can easily get caught up in fraudulent activity, especially if they are not familiar with local Chinese laws, languages and people.

As we wrote in this article, even Alibaba’s own website admits that being scammed is the biggest problem with buying from China. Alibaba may create supplier blacklists but is this enough to keep their users safe?

Lack of Regulations

It’s fair to say that China has minimal regulations regarding internet commerce, and it is still navigating its way through new business technologies. Another concern is the lack of a credit scoring system, and legal avenues to follow once a cybercrime has actually been committed.

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Root Cause

Among some Chinese business owners there can be a prevailing attitude of wanting to make a quick buck, rather than building something over a long period of time.

There are also problems with online marketplaces that connect businesses with local suppliers in China. These often do not allow customers to comment or rate their experiences. A system like this would provide a greater level of confidence for consumers, and help to identify the businesses that are legitimately providing a high level of professional conduct and customer care.

Protect Yourself from Online Fraud in China

China Checkup provides security and clarity for businesses that are trying to successfully navigate doing business in China. We have developed a range of online services that can assist business owners who want to ensure that the companies they are doing business with are legitimate, by conducting background checks on the Chinese businesses in question.

We understand that business owners want fast, affordable and reputable information on the companies that they intend to do business with in China, so they can work assertively and confidently in a region that is so geographically and culturally foreign from their own.

Avoid fraud in China. Make sure with China Checkup’s verification services and conduct your business with success.

Further reading