Big Order Scam

A Big Order Scam is a common type of business fraud. It has been used by scammers in China ever since China opened its borders to foreign trade. Surprisingly, despite many warnings and raised awareness of these scammers, a lot of naive entrepreneurs, blinded by possible big profits, still fall for this old trick. If you don’t want to be one of them, read how Big Order Scam works, and you won’t get fooled.

What is a Big Order Scam?

Companies that outsource manufacturing goods are usually the victims of Big Order Scams. However, sometimes service companies can be victims as well.

The scam typically begins with a company receiving an email from what is claimed to be a large state-owned Chinese company. It expresses interest in purchasing a large number of goods to import to China. The value of the order can reach hundreds of thousands or even several million dollars or euros. The potential partner and business correspondence appear very professional, which helps the company to take the bait. Negotiations on their own are harmless. The danger for the company begins when the scammers invite them to China for a contract signing ceremony. At this point, most companies are blinded to any risk by the prospect of a huge payday and are more than willing to go to China.

How does Big Order Scam work?

In China, a professional and elaborate charade is prepared by scammers. First, a driver picks up the company representatives at the airport and takes them to a hotel. The costs there are significantly higher than the typical local rates (hotel owners share profits with the scammers). In the following days, the company representatives will be first asked to give money for a gift for the boss of the Chinese company („because it’s a Chinese custom”), then to pay for a notary who is to authenticate the contract (and really is just an actor). Additional costs can include „a certificate required by the government” or huge bills for celebratory banquets.

Each of these elements can cost from a few hundred up to several thousand dollars. Scammers can come up with many creative ways to extort money, and oblivious companies and entrepreneurs rarely question them. The guests are in a foreign country, don’t know the language or the culture, and still have that huge payday on their minds. Therefore it’s easy to deceive them.

After successful negotiations and a contract signing, the company representatives will return to their country satisfied. That’s when suddenly, the Chinese partner cuts off all communication. Sometimes the Chinese partner does keep appearances, at least giving an excuse why the transaction can’t take place before they stop all communication. When the company investigates what has happened, they will find that the Chinese company doesn’t exist at all. There will be no huge payday, on the contrary, they have lost significant time and money.

Why Big Order Scam works

A Big Order Scam is very deceptive because everything about it seems authentic: business premises, negotiations, contracts, and a notary. It’s worth mentioning that the scammers lure their „partner” to China using valid arguments. The most confident scammers say that they want to meet their potential partners in person to make sure that the transaction is legal.

Lack of knowledge when it comes to Chinese business culture also acts for the benefit of scammers. They can easily take advantage of the foreigner’s ignorance and refer to cultural differences. Exporters don’t want to lose such a profitable contract and therefore agree to cover all the costs, no questions asked. After all, what are several thousand dollars in comparison to several million that they will gain upon this transaction?

How to avoid Big Order Scam?

Many companies successfully export their products to China, and we shouldn’t treat every potential transaction as a fraud attempt. However, you should always take special precautions when it comes to big orders. Especially when the Chinese company is pressuring you to go to China to sign a contract in person. Contrary to what scammers want their victims to believe, Chinese law doesn’t require contract signing in such circumstances.

The prospect of a large profit resulting from a contract with a Chinese partner is obviously very tempting, but you can’t let it blind you. Before you start planning a trip to China, make sure that the company with which you establish business relations really exists. Checking the website is not enough. If the scammers are able to invite guests to the office of a company that doesn’t exist and involves an actor pretending to be a notary, then they are more than able to create a fake website with false information. To avoid a Big Order Scam, verification of the company’s legal registration and licenses is an absolutely basic necessity. In most situations, a company that places a large order with an exporter and invites them to sign a contract in China simply doesn’t exist.