Several foreign companies have been the victim of fraud in China according to the Dutch embassy website. What happened is that these companies receive a proposal for a large order from a Chinese company that they have never done business with before. They are then asked to come to China to sign the contract for this order. Once in China they need to pay for dinners, presents and some ‘administrative fees’. But after that the Chinese partner suddenly disappears, or after the business person is back home he is not able to contact the Chinese party anymore.
I am not surprised about this, although it certainly is the exception rather than the rule. So many foreign companies seem to think that doing business in China is just like doing business at home. But although some aspects are the same, this is not a country where you will sign a contract during a first trip, and certainly not if you get to know a company over the internet.
I heard several similar stories over the past years, and I always wonder why these foreign companies do not prepare themselves a bit more in order to make sure that they are not being fooled. It is not so very difficult to check out your business partner in China, and some advice before or during negotiations can save you tons of money and frustration. My company China Bay (www.china-bay.com, email: firstname.lastname@example.org) can help with this, or you can ask your embassy in China to provide you with names of consultancy or law firms that provide this kind of services. Don’t be afraid to do business in China, just be well prepared!