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Indian embassy in Beijing issues advisory on fake China firms

December 3, 2011

BEIJING: Alarmed by increasing incidents of Indian firms being cheated by their Chinese counterparts, the Indian embassy here has put out an advisory warning traders from entering into any financial dealings, without doing due diligence first.

"We want the Indian businessmen, specially the small traders from rural areas, should cross-check before depositing money to internet savvy Chinese exporters, who are disappearing after receiving the money," K Nagraj Naidu, consuller trade and business of the Indian business said here on Thursday.

He said complaints regarding 66 cases of cheating has been received by the embassy this year. The amount involved under these cases of trade dispute was in excess of USD 78,43,000 in 2009, USD 54,01,914 in 2010 and USD 18,82,119 in 2011 (Jan-July 15).

As the bilateral trade between the two countries crossed USD 61.7 billion, several unauthorised Chinese businessmen are trying to take advantage of the liberal business climate advertising cheap imports on the internet to attract the Indian traders, specially targeting traders from rural areas, he said.

"We have been receiving numerous complaints from Indian merchants about some Chinese traders not responding after receiving hefty advances. When we check through the Chinese authorities many of the addresses are proving to be false," Naidu said.

To counter the menace, the embassy so far had put out two advisories on its website.

The embassy has requested the Indian banks, to spread the advisory, specially among the rural branches in India.

The advisories, displayed on the website of the Indian embassy Beijing, highlighted several modus operandi adopted by the Chinese companies to dupe the Indian traders.

The site also has a do's and don'ts for doing business with China and list of Chinese companies which are locked in trade dispute with Indian firms.

In some cases, the Chinese company invites their Indian counterpart to visit the facility. Just before their departure, the Indian companies receives a request to bring cash for arrangements and gifts for the senior executives and other local officials, citing Chinese cultural values.

After the visit, the Chinese company goes silent leaving the trader in lurch.

The second type of cheating related to exporting substandard products contrary to the samples shown, while the third involved raising disputes after receiving hefty advances.

Cases also came to the notice of the embassy that Chinese parties demanded extra money after reaching 'Notarisation of the Agreement'.

In view of this, Naidu said that the Indian company must run a complete credential check on the prospective Chinese partner before entering into an agreement with a Chinese company.

According to the advisory, the embassy could provide services for preliminary credit check on the Chinese companies, adding that the Indian company must insist on having the registration document and other agreements signed with the Chinese company attested by the embassy of India or the relevant consulate.

The Indian company must not trust any B2B site for list of importers/exporters from China. It has been found that most of the cases of trade dispute have emerged from such B2B sites, Naidu said.

The Indian company should refer their trade queries to the embassy of India and the Consulate General of India in Shanghai, Guangzhou and Hong Kong for a detailed and reliable list of importers and exporters, he added.

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