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Beware of brand name scam from China

by Mike Bellamy

Video Text Transcript

Hello, I’m Mike Bellamy, founder of PassageMaker Sourcing Solutions and blogger at www.ChinaSourcingInfo.org. I’ve been living in China full time now for over 12 years, and it is my pleasure to offer in this short video, some tips about how to recognize and avoid a common scam in China.

I don’t have enough fingers and toes to count how many times I have been contacted by buyers who think they can buy famous brands like Apple iPhones and iPads direct from China only to fall into a scam.

Yes, Apple products and other famous brand electronics are readily available in China. And while there are only a handful of official Apple stores, there are many authorized retailers and plenty of unauthorized retails selling legitimate products. I live in Shenzhen and recently purchased an iPad2 for my daughter’s birthday. But if your question is “Can you buy genuine Apple products online from China at a price below what you can buy them in the UK or USA?”, then I am sad to inform you that the answer is “probably not.”

Everybody knows that most of these Apple products are made in China, but what people fail to realize is that due to the tax system in China, the price of the products at wholesale and retail or higher than the pricing you would find back home if you live in North America or Europe. Also, Apple does an excellent job of controlling their sub-suppliers and carefully controls the amount of made-in-China stock that ends up in the China market. Despite what the scam artists say, the Apple-authorized factories are unable to run an extra shift to make iPads and sell them secretly on the Internet at “factory direct prices.” In fact, I have a few neighbors in Shenzhen who make a living bringing iPad’s INTO China from the USA. Not the other way around!

Warning:
If you are finding pricing from China that is below what you can find back home, be very careful. Scam artists on the Internet prey on foreign buyers who think they are getting a great deal on genuine products. It is not uncommon for these sellers to disappear with your deposit. And if they do ship goods, it is not genuine product. I met a French woman in Dubai who wanted to purchase US$100,000 worth of iPhones from Hong Kong. I told her she was crazy and at great risk. But she was so caught up in the sirens’ song of low price, that she went ahead with the purchase convinced that she would easily double her money. Thinking she was smart, in order to protect herself, she negotiated a “great” payment plan where she “only” paid 60% up front and had the safety of paying the final 40% upon provision of shipping documents. She thought that if the goods ship, the trade must be real. Imagine the tears when she opened the container load to find a load of poorly manufactured clones of next to no value. By the time she called me to try and track down the seller, they had disappeared with the money. Her so-called supplier was a guy and a computer in an instant office just trolling online for somebody dumb enough to accept his payment terms and believe they could get genuine Apple products in China at such a low price.

Why do the scam artists target small-scale foreign buyers of brand name electronics?

Most small buyers are working on tight margins and won’t do proper due diligence to verify if the supplier is legit.

Most small buyers don’t come to China or engage a third party inspection agent to check the goods before the goods ship out and before the final payment is made. Perhaps the buyers don’t realize it only costs a few hundred US dollars to have an inspection agent like Asia Quality Focus.com check the goods out.

Most small buyers of electronics have grown accustom to buying and selling online back home and falsely assume the same buyer protection is in place overseas.

Small buyers generally will not try to track down the scam artist and pay for a legal battle on a small order.

Smaller — and especially new — buyers are too trusting of sellers. If the seller says they have 500 employees, the buyers take it at face value. If the seller says their standard procedure is 80% deposit and 20% at ship date, the new buyer assumes that is the norm, when 30% deposit and 70% after third party inspection is very common.

I hope this message makes it to you before you get burnt. Stick to the verified suppliers found on GlobalSources.com and do your due diligence.

See you next time. Wishing you successful China sourcing! 


 Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center. He is also the author of "The Essential Reference Guide to China Sourcing"  and founder of PassageMaker Sourcing Solutions.

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