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HindustanTimes Sun,31 Aug 2014

Indian Embassy in China issues advisory for SMEs to protect it from fraud

Rajeev Bhaskar, Hindustan Times  Jalandhar, April 24, 2013
First Published: 19:08 IST(24/4/2013) | Last Updated: 19:09 IST(24/4/2013)

Expressing concerns over the growing incidents of frauds by Chinese companies with Indian Small & Medium enterprises (SMEs) in import transactions, Indian Embassy in China has issued an advisory for Indian business community to protect them from such frauds.

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"In the recent years maximum cases of trade disputes have originated from the province of Hebei and the Tianjin towns of China and the amount involved under these cases of trade dispute was US$ 29, 35,016 last year", Advisory (copy of which is with HT) issued by Second Secretary of Embassy of India in Beijing, Abhishek Shukla stated adding that so far 86 complaints of the trade disputes have been lodged with the embassy.

"It has been found that even after issuing multiple advisories, there are still a number of Indian SMEs not adhering to the DOs and DON'Ts as mentioned in the 'Trade  Advisory' and placing orders with unverified Chinese companies listed on B-2-B sites like Alibaba, tradeb2b.net, etc., sending advance payments to the bank accounts of  unverified Chinese companies and not conducting physical inspection of the goods at the point of loading”, Advisory pointed out.

Advisory also include names of 86 Chinese companies in different 12 cities of China to create awareness among India companies.

When contacted by HT, Deputy Director of Engineering Export Promotion Council (EEPC), Opinder Singh confirmed the receipt of advisory and revealed that same has been circulated to the SME units of Punjab and city particularly as several industrial units import their material from China.

“Recently several complaints of fraud by Chinese companies are reported to EEPE office and apart from engineering goods, some chemical and sports goods traders came out with such complaints with their Chinese exporters”, Singh said.


Pointing out one of the recent incident of fraud made by the Chinese company, Singh said that Lidhiana based Nexo Industries Limited has imported 25000 kgs of M24 Nuts from a company and made full payment to Chinese companies but actual weight of the container has been found just 7220 kgs only, that too including the eight of the container.

“Even a Amritsar based company has complained that a Chinese company has sent the consignment of drugs filled with water instead of industrial oil, for which lakhs of rupees were paid in advance”, he revealed.

The Indian company must run a complete credential check on the prospective Chinese partner before entering into an agreement with a Chinese company, advisory issued by the Indian Embassy stated adding that the Embassy could provide services for preliminary credit check on the Chinese companies.

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, Indian Embassy suggested adding that the Indian company must not make an advance payment and if at all there is a need for advance payment, both the parties should operate through an Escrow account' or 'Bank guarantee' route.

Release the balance payment only after checking the quality of the consignment received in India, Indian embassy advised while suggesting that SMEs should check the e-mail id of the dealing foreign company, whether China-based or third country-based, every time a correspondence is made.

The Indian embassy also released list of Chinese companies involved in the fraud for creating awareness among the SMEs.

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