India cautions traders about fraud in import-export from China

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Indian diplomatic missions in China have cautioned traders from India that they may end up getting sand, stones, salt, bricks, mud etc in place of items ordered and issued detailed guidelines to avoid incidents of cheating.
The Indian Embassy and the Consulates have issued trade advisories to various trade bodies and associations cautioning traders and small and medium enterprises (SMEs) planning to do business with China after receiving several complaints.
"It is to enhance the commercial cooperation between India and China by drawing attention to some of the risks faced by Indian traders/SMEs to take preventive and/or mitigating action," said the advisory.

"The information contained in this advisory is based on trade-related problems that are periodically brought to the Consulate's attention for information, facilitation and assistance," according to the advisory circulated among the members of he Indian Association of Shanghai.
However, the advisory was not put on the website of the Indian missions in China to avoid misunderstanding considering the strain in ties due to differences on issues relating to listing of Pakistan-based militants and groups as terrorists by UN and Beijing's reluctance to support India's application to join the Nuclear Suppliers Group, informed sources said.
Listing some of the complaints brought to the notice of missions, the advisory said importers should be careful about supply of sub-standard goods, inferior quality.

The items to dupe Indian importers included supply of sand, stones, salt, bricks, mud etc in place of chemicals, Silicon Carbide, Aluminium and Zinc ingots, shellac, plastics, polymers etc, it said.

Other complaints included refusal to send consignments on receipt of payment, quantity dispute,stopping of communications on receipt of advance payment, dispatch of defective machinery, diversion of payment into unassociated bank accounts by third fraudulent parties by hacking into email IDs.
Other methods included taking money for sample dispatch and then stopping all correspondences.
(Reopens FGN 19)
Non-release of Pre-Shipment Inspection
Reports/Certificates in due time after departure of shipment from the Indian port entailing demurrage on arrival at port in China, the advisory said.

Indian companies are also advised to take due precaution while engaging in business transactions, particularly when dealing with new or unfamiliar companies, it said.
It asked the Indian businessmen to follow the recommendations which included,checking of credentials of the Chinese company, including through the Embassy or the Consulates in China which may respond with basic information.
"In case of large transactions, consult a business service company which can provide a report on the business transparency, financial health, reputation, reliability and credential of the company," it said.
It also asked the businessmen to avoid transacting with any company from a B2B platform. Some B2B sites offer products at much lower rates than the market value.

The advisory said that before signing a contract, the traders should seek a copy of the business license and enquire about the company from local Industrial and Commercial Bureau.
It is advised to sign a contract of a small amount in the beginning and gradually increase the volume of business once credibility of the company has been established, it said.
For export of any product from India, the exporter must ensure that all the procedural formalities as per Chinese rules and regulations are carried out.
If any Pre-Shipment Inspection is required to be carried out by any Chinese government-authorised agency and the relevant certificate needs to be submitted for clearance of the cargo at any Chinese port that must be obtained before the vessel leaves Indian port, it said.

Otherwise the ship may be stuck at the Chinese port and the Indian exporter may accumulate demurrage, it said.
The Indian company should insist on having the registered documents and other agreements as signed with the Chinese firm attested by the Embassy of India or the relevant Consulate.