Recently one of our South America customers lost more than 30000 USD (deposit) while he is buying a used truck crane in Shanghai, China. The scammer disappeared after he received the deposit from the customer via an offshore trade company account. 

The scammer registered an offshore trade company in Hongkong or Seychelles or Cayman Islands etc, constructed an impressive website promoting second-hand heavy machinery like bulldozers, truck cranes, loaders and excavators etc. We studied the case carefully and find out some of the features for such cases in China:

1. The scammer normally uses offshore company accounts to receive the payment, so the customer is suggested to verify or audit the suppliers before any payment.Their Business License, Export License and Bank Account etc have to be verified before any payment.Some scammers registered many offshore trade companies with fake IDs, then disappeared after they receive the payment from the customers worldwide. 

2. The scammer normally has no yards to stock any second-hand machinery and they will take you to see a machine that has nothing to do with them in China. Say, they can take you to a local second-hand machinery market and say the goods there are his company’s. 

3. The scammers normally decline any on-site Supplier Inspection service from third-parties in China and they normally asked for 40% deposit.

Why should we be careful when dealing with offshore trade companies in China? 

1.It's easy to register an offshore company in China. 

You only need several hundred of USD to register a smallest offshore trade company at present. 

 It is reported that there are more than 200000 offshore trade companies in Mainland China at present. Most of the offshore companies are registered in Hongkong, BVI, Cayman Islands, MIUE, Bahamas, Seychelles, Panama, Mauritius etc.  

2.It's difficult to trace and take legal action against them when come to a trade dispute. 

 As you know, China is far away from most of the offshore registration areas, the more important thing is that their laws and regulations for the same crime might be different. It is quite for the lawyers to collect business proof and take actions against them in such cases in China. 

3.Most of the offshore trade companies pretend to be a big factory online but actually not. 

 As far as we know, at least 75% of the offshore company bosses in Mainland China are individuals and they are working alone but they normally created an impressive website and pretended to be a real big factory or a group company online in China. They will take the client to a factory that has nothing to do with them in China (partners only). It is very difficult for the foreign clients to verify their real export license and business license if they know nothing about Chinese. 

Here are the countermeasures for your reference:

Do not forget to check out their Business License and Export License before placing any orders.

Book a third-party Supplier or Factory Inspection service from local professional companies in China.

Supervise the loading process on time after signing the contract.

If you are sourcing used cranes or any other heavy machinery, please feel free to ask us any question related.