Come to China and sign the contract scam

The invitation to China to sign a lucrative sales contract is a fraud scheme that has been going on for many years and a ripoff that companies sadly enough still fall victim for.

The whole idea of the scam is to convince a foreign company to pay administration fees and gifts in order to land a very attractive sales contract with a Chinese buyer.

At first glance, it can be difficult to assess the risk of selling to a first-time customer from China. It should be imperative to screen the credibility of the Chinese buyer by requesting a business license copy for verification, check the foreign trade rights and conduct a litigation check. (read how to conduct your own free business license verification, foreign trade right check, and litigation check). Companies that are selling commodities such as meat or crops to a Chinese company should, in particular, do a comprehensive background check of the buyer and make sure that the buyer is capable of financing the final payment in a situation where commodity prices drop during the shipment to China.

If the due diligence does not raise any flags but the invitation to China to sign the contract or a request to pay a contract notary fee lands in your inbox then it is very likely a scam and you should walk away immediately.

How the scam works

There are two versions of the build-up to the scam but pattern and outcome are the same.

Version 1

A Chinese company sends out unsolicited emails to mostly small and medium-size companies to inquire about product/service and the price. After having received a quotation, the Chinese company will express interesting in placing a substantial order and very often without any attempt to negotiate the price. The Chinese company will then send a purchase agreement that confirms the order size, products/services and payment terms (normally from 30% up to 50% prepayment). Everything looks great until the foreign company is invited to China to sign the purchase contract face to face with nobody else than the CEO. The Chinese company asks for a passport number, name, travel dates etc to issue a formal invitation letter as documentation for visa application.

Version 2

In the second version the Chinese company contacts a foreign company and asks them to host a travel or business event for 100 to 300 people. The Chinese company asks for a quotation that covers expenses for accommodation, meal, travel and other services. The offer is accepted with no hesitations and the Chinese company replies with an agreement that must be signed in China.

How the ripoff works

The foreign company does not want to miss the fantastic deal and sends somebody to China to sign the contract. In China, the foreign company representative meets the CEO and other high-level management and is asked to pay for dinner expenses and buy a gift to the CEO who takes the final decision on the deal (often an expensive gift made of gold). The foreign company representative is also asked to pay a fee for notarization of the purchase contract and other "mandatory" administration fees to for example China Customs. The set-up is a fraud. After having returned home from China, the foreign company NEVER receives a prepayment or hears from the Chinese company again.

The notary public fee

Companies that rejects the invitation to China will still be met with the demand of paying a notary public fee. The expense can be a fixed fee of anything from 1000USD up to 10,000USD or a fee that is 0.3% of the contract value. Some companies will try to deduct the fee by lowering the sales price but the Chinese company will insist on the fee and suggest that the fee is split 50/50 to give the impression of flexibility and fairness. When that is said, it is important to emphasize that notarizing a purchase contract in China is complete nonsense and not required by law at all.

Example of a fake receipt for a notary public fee. A formal receipt or Chinese "fapiao" from a notarization office would normally carry much more details such as a tax identification code and would not be handwritten.

Who are the companies behind the scam?

Companies behind the "come to China and sign a contract scam" have a relatively short lifetime of 1 to 2 years. Companies that were active in this fraud scheme 2 to 4 years ago are now dissolved, inactive or had the business license revoked. However, new companies with exactly the same intentions are registered again and again.

Here is a list of companies that are currently active in 2017/2018.

Company Name (EN)	Shaanxi FengQin Trade Co., Ltd
Company Name (CN)	陕西风沁商贸公司
Business license	91610133MA6URX8E8L
Establishment Date	29th of March 2018
Legal Representative	Yang Li Jun (杨立军)
Address	Address No.369 North of Taihua Road Weiyang District Xian City China . Pc .710016
Office Phone	86-29-68568356
Mobile Phone	86-17039092007 86-18229097364
Emails	sxfqsm@yeah.net
Contact person	Betsy, Betty or Helen
Website	http://www.sxfqsm.com

Company Name (EN)	Yunnan Zhouyun Import & Export Co., Ltd
Company Name (CN)	云南周韵进出口贸易有限公司
Business license	91530100MA6KCWYC37
Establishment Date	7th of March 2017
Legal Representative	郑国芹
Address	云南省昆明经济技术开发区云大西路39号新兴产业孵化区A幢7楼7319号"
Office Phone	86-871-63852259
Mobile Phone	86-18313890965, 86-15198853509, 86-15687892921
Emails	chinaynzy13@188.com, chenhzgs2@vip.163.com, ynkmwqw11@vip.163.com
Contact person	Zhu Yonfu, Haidong Chen, Yu Mo, Zhu Changshun
Website	N/A

Company Name (EN)	Henan Changxu Import & Export Trading Co., Ltd
Company Name (CN)	河南长旭进出口贸易有限公司
Business license	91410100MA44ETBC14
Establishment Date	27th of September 2017
Legal Representative	黄哲锋
Address	22 Dongfeng Road Jinshui District Zhengzhou City China.
Status	Abnormal Business Operation
Office Phone	86-371-56051299 or 86-371-56051299
Mobile Phone
Emails	Info@chinahncx.com
Contact person
Website	www.chinahecxjck.com (not working)

Company Name (EN)	Xi'an Yaoke Import & Export Trading Co., Ltd
Company Name (CN)	西安耀科进出口贸易有限公司
Business license	91610132351711250L
Establishment Date	19th of August 2015
Legal Representative	许朝光
Address	NO.25, Dianzi ZhengJie Dong Sanxiang, Xi'an, China
Status	Abnormal
Office Phone	0086-29-63625416, 0086-29-63625418
Mobile Phone	0086-18292677278, 0086-15929907719
Emails
Contact person	Honglin Fan  Xu Chao Guang (许朝光)
Website

Company Name (EN)	Shaanxi Suofu Trade Co., Ltd
Company Name (CN)	陕西索富贸易
Business license	91610104MA6TX56C4R
Establishment Date	11th of November 2015
Legal Representative	Hu Zong Ying (胡宗营)
Address	ROOM 20733-7 FLOOR,2 UNIT NO.1 LONGHU MOCO INTERNATIONAL, NO.20# XINGHUO ROAD, LIANHU DISTRICT,XI'AN
Status	In operation, abnormal business operation
Office Phone	86-022-60771556
Mobile Phone
Emails	sales@sfmetal.cn
Contact person	Jack Wang
Website

Company Name (EN)	Yunnan Gaosai Import and Export Trading Co., Ltd
Company Name (CN)	云南高赛进出口贸易有限公司
Business license	91530103MA6K4UBP40
Establishment Date	11th of March 2016
Legal Representative	Yi Zhong (易钟)
Address	No.17,Jinshi Residential Quarter, Panlong District, Kunming City, China
Status	Business license revoked
Office Phone	0086-0871-65127808
Mobile Phone	0086-18687527169
Emails	ynkmww4@163.com, liuyifang17@vip.163.com, liuyifang11@vip.163.com
Contact person	Ming Yu, Liu Yifang
Website	http://www.ynkmpgs.com

Company Name (EN)	Shaanxi Tengyu Imp & Exp. Co., Ltd.
Company Name (CN)	陕西腾宇进出口有限公司
Business license	91610112MA6TXKRG18
Establishment Date	24th of February 2016
Legal Representative	Zheng Bao Guo (郑保国)
Address	陕西省西安市未央区明光路龙府北郡腾龙阁19幢2单元501
Status	Business license revoked
Office Phone
Mobile Phone	0086-13571997872
Emails
Contact person	Meng Xiang Li
Website

Company Name (EN)	Xi`An Blessing Wide Trading Co., Ltd
Company Name (CN)	西安福阔商贸有限公司
Business license	91610131MA6U18MN0F
Establishment Date	13th of January 2017
Legal Representative	An YIng Chun (安迎春)
Address	Jinqiao International Plaza, Building 1, Room 31009, NO.50 Keji Rd,Gaoxin District,Xi´an,Shaanxi,China
Status	Business license revoked
Office Phone	86-29-63336915
Mobile Phone	0086-13571997872
Emails	fktradingg@163.com,cmtradingb@163.com, zgtradingf@188.com
Contact person	Frank, Luo Ming (罗鸣) Yin Ren Ling (殷任灵)
Website

Company Name (EN)	Xi`An Bei Ao Trading Co., Ltd.
Company Name (CN)	西安北奥商贸有限公司
Business license	91610131MA6TYGTR9J
Establishment Date	28th of July 2016
Legal Representative	Zhu Xiao Li 朱小莉
Address	Shaanxi, Xi´an Gaoxin District, Tangyan Nan Road, 3rd Block, No 1, 18th Floor
Status	Abnormal operation
Office Phone	-
Mobile Phone	-
Emails	-
Contact person	Mu Huan Huan ( 穆欢欢)
Website	-

Company Name (EN)	Shaanxi Guangda Electrical Equipment Engineering Co., Ltd.
Company Name (CN)	陕西广达电力设备工程有限公司
Business license	91610133MA6U61238R
Establishment Date	27th of June
Legal Representative	Li Ping Zhang (李平章)
Address	No.2 Fu Rong South Road, Qu Jiang New District, Xi´an City
Status	Active
Office Phone	0086-29-88453511
Mobile Phone	0086-15829629823, 0086-13619296713
Emails	shaanxiguangda@yeah.net, sun.jinfa@shaanxiguangda.com, sxgdelectric@vip.163.com, shaanxiguangda@126.com info@shaanxiguangda.com, sxguangda01@163.com"
Contact person	Mr. Zhang Liang, Mr Sun Jinfa, Liu Jia Mei ( 刘加美)
Website	www.shaanxiguangda.com

Company Name (EN)	Xi’an Qing Xian Lv Trading Co., Ltd (related to Nuolang, see this report)
Company Name (CN)	-
Business license	-
Establishment Date	-
Legal Representative	-
Address	NO. 216 TAI BAI SOUTH ROAD, YAN TA DISTRICT, XI’AN
Status	-
Office Phone	0086-29-62329368, 0086-29-61857812
Mobile Phone	-
Emails	officeqxl@163.com, officexaqxl@163.com, officesxqxl@163.com officecezyqxl@163.com, officexfqxl@163.com, officezjqxl@163.com
Contact person	Judy, Betty
Website	http://www.qingxuanlv.com/

Company Name (EN)	Xi'an Nuolang Trading Co., Ltd (read a comprehensive investigation)
Company Name (CN)	西安诺朗贸易有限公司
Business license	91610133MA6UQ9X955
Establishment Date	22nd of January 2018
Legal Representative	Yang Shao Rong (杨少荣)
Address	No. 10 Rong Xin Road, Gao Xin District, Xi’an City
Status	Active
Office Phone	+86-2963035040,+86-2963035041,+86-2963035043, +86-2963641393
Mobile Phone	-
Emails	officesxnl@163.com, officexanl@163.com, officennl@163.com, officenll@163.com, officexfnl@163.com, officezynl@163.com, officerynl@163.com, officejnl@163.com
Contact person	Judy, Betty, Wang Hai Ping (王海平)
Website	www.nuolangshangmao.com

Xian Nuolang Trading Co. Ltd

Earlier this year I got introduced to a German manufacturer of woodworking power tools. The reaons was that the German company was in contact with a Chinese company Xian Nuolang Trading Co. Ltd (www.nuolangshangmao.com) that wanted to place a substantial order. The German company was very surprised about the contact in the first place, since EU is their main market but they were thrilled about the opportunity to get business from the Chinese market. Judging from the website, the Chinese company appeared to a be a legit and solid import/export company. However, they wanted a second hand opinion about the Chinese buyer to make sure nothing could go wrong. After a couple of days of background investigation my recommendation was to stay away from China. Here are the reasons and the results of what came up. 

1st Red Flag Red: Confusing but amusing company introduction 

Reading the company introduction on their website told me that these guys had to get rid of their PR manager. Here is the company intro in full length with my comments: 

‘XI'AN NUOLANG TRADING CO.,LTD was established in January 2006, which has a good foreign trade base and is a professional import and export company. The registered capital of our company is 25,000,000 yuan (roughtly 3.6 million USD). Through the continuous efforts, we won the widely trust from the domestic and foreign customers and set up a well-deserved reputation as well as word-of-mouth in the industry.’ Long history of 12 years and capital strong, good reputation - so far so good. Let’s check out the next paragraph.

Our scopes and varieties of products have been expanding on the basis of the importing and exporting mechanicals. Our company mainly engaged in exporting furniture, daily necessity, construction materials, metals, food, drink, wine, condiment and products in other aspects and exported to the EU, South America ,the Middle East, Africa, Southeast Asia and other countries and regions. They mention 8 products and 5 of these products (Furniture, food, drink, wine and condiment) are nowhere to be found in the product list on the website. Not very convincing! 

Product line of Nuolang Trading

\

In 2010 , the Importing amount reached 40,000,000 dollars, which took the leading position in the same industry and had the honor to become the top ten private enterprises in Shaanxi province importing industry – Hold on this going too fast. In the previous paragraph, Nuolang Trading is mainly engaged in exporting but without warning they are one of the biggest importers in the next paragraph. And what is the industry they are referring to? 

Our company actively responded to the call of going out and established the production of motorcycle parts and whole motorcycle factory for assembling. The company has played a positive role and earned a good social benefit in stimulating local people’s standard of living and employment. - This is getting better and better. Nuolang Trading is not only busy with export/import trade but also setting up factories and the CSR awareness is fantastic. The sky is the limit

On the basis of operating the import and export business, our company will march in diversified and industrialized development. We will be adhering to the “to fine sincerity, customer first” service concept and “to cooperate with absolute sincerity, innovation, harmonious development, social returns” company purpose. - For those who are familiar with Chinese communist propaganda, knows that Nuolang Trading could get A plus in CCP rhetoric for this.

 At the same time, the company will provide our customers with high quality and inexpensive products as well as satisfactory service as their mission. To create the best benefits as our principle and to work hardly with great enthusiasm. We sincerely hope that we can work with more friends from all walks of life, and have constructive and win-win cooperation. Yeah Yeah, I finally reached the end and I am not impressed.

2nd Red Flag – Use of free email service providers 

It can be a warning sign when the contact email is from a free email service provider. 163.com is a popular free mail service in China. And what is up with 8 almost similar email addresses?

3rd Red Flag - Delayed news update and unclear business relationship 

Maybe the PR manager is very slow. Xian Nuloang Trading was at an exhibition in May 2017 as a leader company in China but the announcement on the website was made 1 year later in April 2018. 

Another curiosity are the exhibition pictures of ink products from the company Hongto (www.ht-ink.com). A quick check shows that Hongto was established in 2015 with a registered capital of CNY 1 million and the legal representative is Lü Guo Shao. The relationship between Xian Nuolang Trading and Hongto remains unclear and it is very confusing, why Nuolang Trading publishes exhibition news about Hongto. 

4th Red Flag: Highly diversified mix of products 

In general, I am always suspicious when a Chinese trading company with only 2 departments claims to have capacity, knowledge and expertise to sell and source a wide range of unrelated products (+ expertise in setting up factories) 

5th Red Flag: No ICP registration number 

Websites hosted on serves in China must acquire an Internet Content Provider (ICP) license issued by the Ministry of Information and Techology (MIIT). The website must show the ICP file number on the webpage. There is no ICP file number to be found on www.nuolangtrading.com. The example on the left side is from a Chinese webpage with an ICP registration in Shanghai. 

6th Red Flag: Inconsistency with official registration information

In order to verify that the company is legit, I need to know the Chinese company name. A few seconds on the Chinese search engine Baidu.com turned out a job advertisement page (www.jobui.com/company/15107403) where Nuolang Trading is looking for an English translator for a monthly salary of 4000 to 6000 CNY/month (580-870 USD/month). 

The job site shows that Nuolang Trading´s Chinese name is 西安诺朗贸易有限公司 and the business license number is 91610133MA6UQ9X955. 

This information was enough to look up the company in the National Enterprise Credit Information Publicity System (www.gsxt.gov.cn) where I got access to the following information: 

Business Registration number: 91610133MA6UQ9X955 

Company Name: 西安诺朗贸易有限公司 aka Xi'an Nuolang Shang Mao Co., Ltd 

Type of entity: Limited Liability Company 

Registered capital: CNY 3 million (100%) (No registration of paid-in capital) 

Legal representative: Yang Shao Rong (杨少荣) 

Supervisor: Wang Hai Ping (王海平) 

Shareholder: Yang Shao Rong (杨少荣) (100% ownership) 

Establishment Date: 22nd of January 2018 

Registration place: Xian Industry of Commerce Qujiang Branch 

Status: Active 

Registered address: Xian Qujiang New District, Cui Hua Nan Road 0 Jiahe Business Tower, Building 1, Unit 1, 3rd Floor Room 10303 

Registered business scope: Import, Export and sales of goods and technologies such as machinery, agricultural products, woodwork, construction material, interior decoration material, electromechanical equipment, hardware and electrical equipment, Daily use goods, clothing and shoes, textile products, leather products, electrical household appliances, automobile components. Exceptions are import and export of goods and technologies that are prohibited or subject to restrictions. 

On the positive list: 

• The company is a legally registered entry 

• The registered business scope is aligned with the company product list (except for the motorcycle plant history) 

• We know the Chinese company name, business registration number, name of the legal representative. All this information is enough to file a lawsuit against if necessary. 

On the negative list: 

• Very young company that was established in January 2018. The long history starting from 2006 is clearly bull shit (The German company got contacted in April 2018!) 
• The registered capital is 3 million and not 25 million but Capital has not been injected yet. 
• Registered address is not identical with operation address on website. This is not a serious violence but the authorities encourage registered address and operation address to be identical. 
• Import/export of food, drinks, wine and condiments is not mentioned in the business scope (see company introduction section) 
• The business scope does not allow activities that are related to construction or support in setting up plants for motorcycle production (see company introduction part) 

7th Red Flag – No foreign trade qualification or import/export permits 
Since the company is engaged in import and export I checked the company status with China Customs and Foreign Trade Qualification with the Ministry of Commerce. The search did not surprisingly turn out any records. Of course, trading companies without the necessary permits can import/export through a qualified import/export agent but this is not something you would expect from an industry leader with a yearly import worth 40 million USD (see company introduction part) 

8th Red Flag –Identical twin company 

While I was searching for more information on Nuolang Trading I stumbled upon the website of Xian Qing Xian Lv Trading Co., Ltd which immediately caught my attention. Take a look at the Qing Xian Lv company introduction, where did I see this before? 

The contact pages of Qing Xian Lv and Nuolang Trading are also quite similar in nature. Phone numbers and emails are different but there are still a lot of similarities: Department 1 & 2 163.com emails Email address format starts with ‘office’ followed by 3-4 letters @163.com

Just in case you want to get in contact with Nuolang Trading's Department :

+86 2963035040 

+86 2963035041 

MAIL ADDRESSSES 

officesxnl@163.com 

officexanl@163.com 

officennl@163.com 

officenll@163.com 

A check on telephone number 0086-29-61857812 shows the connection between the two companies. 

The similar product line of course 

And they went to the same exhibition – Remember how we were wondering about the exhibition dates and the relationship to Hongto. Guess what, Qing Xian Lv has the exact same news on its company website but the announcement was at least published only 1 month after the event took place in 2017. 

Who is Qing Xian Lv Trading? 
There is no link to a Chinese name and it has not been possible to confirm that the company is legally registered in China. The only reference to the company besides its website is a profile on the B2B platform www.ecer.com , where Qing Xian Lv sells a mix of different products. I guess it is not necessary to repeat the company introduction they use on ecer.com 

A search on the domain name www.qingxuanlv.com shows that the creating date was August 2017 which indicates that the company is relatively young. 

Twitter and the exhibition guy 

On the top of the Qing Xian Lv Trading website there are links to Twitter, Facebook, Google+, Youtube and Skype. Facebook leads to a dead link and there is no information on Google+ and Youtube but the Twitter link leads to a familiar face - the happy smiling exhibition guy who attended the Shanghai APPP Expo according to the news on the Qing Xian Lv website, the same Expo that Xian Nuolang Trading attended. 

On hisTwitter account (twitter.com/PrinterEco), the happy exhibition guy is promoting laser engraving and cutting machines for the company Domax(www.domaxlaser.com). 

More twin companies?: Domax and Qing Xian Lv 

Now the funny (or scary) thing is the Domax webpage looks very similar to the Qing Xian Lv Trading webpage. Here are a couple of examples that illustrate the resemblance. 

Similar frontpage format 

Similar support page format 

Similar exhibition news 

At least the exhibition name and dates are different. On the Domax website, the happy exhibition guy participated at an exhibition in Guangzhou that took place in February 2017 (although the date in the red box says May 19th 2017?). According to the news section on the Qing Xian Lv webpage, the (happy) exhibition guy was at the Shanghai APPP Expo in April 2017. 


The Domax webpage is only in English and there is no reference to a Chinese name which makes it impossible to for information from government sources. However, one thing we can say for sure is that the Domax site was created roughly 4 years before the Qing Xian Lv site. 

Looking through the exhibition pictures on the Domax webpage shows that Domax Laser is linked to the company Suna Laser (www.sunalaser.com) 

The Suna webpage is different from the previous 3 websites. The website is bilingual (English + Chinese) and there is an ICP license. 

Product line resembles the products that Dumax is selling but there is no information about the relationship with Dumax on the Suna webpage. Nor does information from government sources link the Suna management to Dumax, Qing Xian Lv or Nuolang Trading.

SUNA ICP license

Some basic fact about Suna shows that the company is legit: 
Business license number 91410184553153656U 
Registered capital CNY 100,000 (approximately 14,000 USD, extremely low amount that can hardly cover rent and staff salary for year, not to talk about investment in machinery and production equipment. The company is most likely a trading company with some connection to a manufacturing company. 
Establishment date – 2010-03-18 
Legal representative: Jing Hong Tao (敬洪涛 ), majority shareholder, 70% share, CNY 70,000 paid-in capital 2010-03-09 
Supervisor: Wan Jin Ling (万金玲), minority shareholder, 30% share, CNY 30,000 paid-in capital date 2012-12-31 
Operation address and registration address is the same 

The telephone call: 
It was now time to call up Nuolang Trading to confirm a couple of things so I called the company and told them I was the representative of the German company and would like to ask some question about the business deal. I was transferred to a Mr Ren, who confirmed that my information about business license number, address, registered capital and legal representative was correct. When I started to inquire about the connection to Qing Xian Lv, Domax and Suna and the Exhibition guy, Mr Ren denied any knowledge and the call was quickly cut off when I tried to get a comment on the same phone numbers, exhibition pictures and company introduction. The investigation stopped here and the conclusion was pretty clear. 

Final remark
Xian Nuolang’s relationship to Qing Xian Lv is unknown but it is not comforting or convincing that the trails lead to small-sized companies with no trading rights, inconsistent information and lack of proper registrations.

We later learned that Xian Nuolang belongs to the old and famous "Contract Signing Ceremony in China". A Chinese company will pretend to place a very large order and ask the foreign supplier to travel to China to sign the contract. In China, the foreign company is asked to pay for dinners, gifts to the management and expenses for notarization of documents, fees to China Customs etc.