India has warned small and medium enterprises (SMEs) against doing business with dozens of Chinese companies including those listed on online sites after Indian businessmen were found to have been duped of several crores of rupees in the last few years.
The Indian Embassy in Beijing
received 86 complaints of trade disputes from Indian companies in 2012. Most of the disputes originated from the province of Hebei and the municipality of Tianjin.
The disputes, according to rare advisory issued by the Indian Embassy on Wednesday, were divided into 10 categories ranging from denial of payments for goods, supplying fake goods and Chinese companies disappearing after receiving advance payments.
Diplomatic sources said the Chinese companies change their “modus operandi” to catch Indian businessmen unaware.
One way Chinese companies duped Indian SMEs was: “The Indian company, wishing to import machines from China, finds a Chinese company from online sources. After the deal is finalised between the two parties, the Indian company makes the full payment and receives the machines. The machine is installed…but fails to operate.
The Chinese company promises to send engineers to India and train the Indian company…However, it requests the Indian company to bear the cost towards air tickets and accommodations. The Indian company makes the payment for air tickets and accommodation. The Chinese company goes cold after this. The Indian company ends losing the entire money.”
Investigations revealed instances of hacking where intended payments never reached Indian exporters.
“Some instances of hacking of mail boxes have also been noticed whereby a foreign importer is purportedly sent an email with bank details by an Indian exporter. The foreign company transfers the amount to the bank account as per the email. However, the money does not reach the original bank account of the Indian exporter. Further investigations reveal that the Indian company’s mailbox was hacked to send an email to a foreign company to transfer the amount to another bank in China,” the advisory said.
The Embassy listed a number of precautionary steps for Indian SMEs to take before getting down to business in China. The list includes a detailed preliminary online check, insisting on passport or identity card copies of representatives of Chinese companies, physical inspection of goods before consignments are loaded in China and releasing payment only after the quality of goods is checked.
Further, the advisory recommended that Indian companies do not place orders with Chinese companies listed on B2B sites, not to trust sites which only have English and no Chinese version and not to make advance payments unless the credibility of the Chinese company is beyond doubt.
Diplomatic sources added that a positive sign was that dispute cases were coming down. But it was important that Indian SMEs continue to be before striking deals in China.
BOX WITH STORY
Amount involved in trade disputes:
2012 -- USD 2935016
2011 – USD 4831273
2010 – USD 5401914
2009 – USD 7843000