International Due Diligence Keeps Companies Safe from China Fraud

Some criminals in China have been giving the country a bad name, and scamming Western businessmen and companies and investors. Since the internet has become a major tool for trading and business relationships for Chinese investment are often built or initiated online, some illegal companies and fraudsters have found ways to cheat investors and importers by taking their money and disappearing. The Chinese economy is still outperforming most countries, and with dismal opportunities elsewhere, investors and businesses are eager to get into the China market, and many are forgetting to do their homework. As a result, scam cases are rising.

Fake companies and false representatives are now the biggest threat facing China investors. Companies and investors in the U.S. by stock on companies that don’t exist, sign business contracts with companies that don’t exist, and so on. Victims pay for items and cargo which is never shipped, and imports are paid for with no delivery. The list goes on. How do companies and business people fall for such scams? The answer is simple. The criminals conducting these scams and fraud are good at what they do, and they use very convincing support documentation and claims. They’re familiar with the industry and use professional looking websites, email addresses and local Chinese phone numbers. The crooks are excellent sales people.

International private investigators have seen a significant rise in the demand for due diligence investigations from companies in the U.S., the U.K. and Australia interested to do business with local Chinese companies. The risk is becoming more widely known, and more CEO’s and investors are taking the risk head on, and minimizing their potential losses with a professional international due diligence service. A due diligence services conducted by a reputable international private investigation company can verify the contact, the business, operations, start date and registration, reputation, legal filing and more. In short, due diligence can save you a lot of money.

Investigators say that most of these so called businesses take advantage of the fact that being online they do not really register themselves as entities and may not even be legally established in their country. Often scammers will claim to be based outside of China to avoid the reputation and perception of risk among Asian nations. In fact, the criminals could be Chinese nationals or even from Malaysia, operating from anywhere in the world using the internet and proxy servers.

Fraudsters are really experts of deception and know how to appear legal. They can get forged legal documents, open temporary bank accounts, get your money and go. Foreign companies interested in investing money in China should check their contacts and the history of the companies they represent. As always, ask for and check the references. Have a professional investigation firm verify their claims and screen the case for fraud, which will also include verifying any documentation and identifications provided. Don’t go it alone, get the help of a professional before closing a deal with a company based in Beijing, Shanghai and even Taiwan.

International due diligence in China can save you a lot of trouble, time and money. Professional investigation firms like Wymoo® International the FBI and Interpol have seen big companies fall for these scams, losing millions of dollars and in some cases even face bankruptcy. Basically, no one is immune from these scams and it’s important to know that the risks are a serious threat to business and investment in China. Wymoo and law enforcement also agree that many crimes go unreported, as companies don’t want their shareholders to know that they’ve fallen for such a scam, and executives are also concerned about personal and company reputations.

Doing business in China is still a good idea if one takes the necessary precautions. When looking for opportunity abroad, do your homework, check references, and get due diligence.

Best of luck,

A Hathaway
© 2011 A Hathaway