How to Avoid Common Sourcing Scams in China

Most companies don’t start sourcing in China expecting to face scams. Problems appear later: a supplier that disappears after a deposit, goods that never match the agreed quality, or factories that turn out to be just an office with no production capacity.

The good news is that many of these situations are predictable—and avoidable—if you apply a structured approach from the beginning.

This article focuses on practical risk control, not fear. The goal is not to avoid China or Asia, but to work smarter and protect your company when dealing with new suppliers.

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The Most Common Ways Things Go Wrong

Not every problem is a “scam”. Sometimes it’s incompetence, miscommunication or lack of structure. But from the buyer’s point of view, the result can be very similar: lost money, delays and damaged reputation.

Some of the most common risk scenarios:

• A trader pretending to be a factory, with no real control over production
• Factories that overpromise capacity and then outsource everything
• Suppliers pushing you to send deposits quickly via risky methods
• Samples of good quality, but mass production with cheaper materials
• Last-minute changes to payment terms or shipping conditions

The objective is to identify patterns of behavior that indicate risk before you commit significant money.

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Red Flags to Watch Before Sending Money

Here are signs that should trigger deeper verification or even a pause:

• Email addresses that don’t match the company domain or use only free services
• Inconsistent information between website, catalog and business documents
• Unwillingness to provide basic documentation (business license, bank info on official letterhead)
• Pressure for urgent decisions: “price will increase in 24 hours”, “book now or lose production slot”
• Refusal to allow third-party inspections or factory visits

If a supplier reacts defensively when you ask standard questions, that is a warning sign in itself.

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Verifying Suppliers: Go Beyond the Catalog

Some basic steps to reduce risk:

• Check the company registration. Ask for their business license and verify details such as company name, registration number and address.
• Use established platforms. Marketplaces like

  Alibaba

  or

  Global Sources

  offer some level of verification and history.
• Ask for references in your region. A serious supplier is usually proud to mention other clients (sometimes anonymously, sometimes by name if permitted).
• Request factory photos or video calls. Even a basic video tour can reveal a lot about how real the operation is.

A sourcing partner in China can validate these items on-site and confirm whether the factory behind the emails actually exists and produces what it claims.

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Safer Payment Approaches

Payment terms can’t eliminate all risk, but they can limit your exposure.

Some principles:

• Avoid paying 100% upfront to a new supplier.
• Use staged payments (for example: deposit + balance after pre-shipment inspection).
• When possible, use secure methods like letter of credit for higher-value deals, or at least structured bank transfers to the company’s registered account—not to personal accounts.
• If you use platform protections (like escrow or trade assurance systems), read the conditions and understand what is really covered.

Cheap payment shortcuts are rarely cheap when something goes wrong.

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Quality and Compliance Issues That Feel Like a Scam

Not all risks are financial. Sometimes the “scam” is a product that:

• Does not meet basic safety or performance requirements
• Uses substandard materials compared to the approved sample
• Lacks required lab tests or certifications for your market

From the buyer’s perspective, this can be as damaging as a direct fraud.
That’s why quality inspections and, when applicable, lab testing are essential layers of protection.

Independent organizations like

SGS

offer testing and inspection services that can be integrated into your purchasing process.

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How a Sourcing Partner Helps Reduce Risk

A sourcing partner based in China or Asia does not eliminate all risk—but can significantly reduce it:

• Pre-selecting factories that have been physically visited and audited
• Verifying documentation and consistency between what is promised and what is possible
• Coordinating inspections and reporting issues before shipment
• Helping you negotiate realistic terms instead of accepting everything the factory proposes

For companies in Latin America and North America, this external layer of expertise often becomes the difference between a healthy sourcing program and a cycle of “trial and error” that burns time and cash.

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Final Thoughts: Don’t Avoid Sourcing, Avoid Blind Sourcing

Sourcing from China and Asia can be extremely positive for your business—if you combine opportunity with discipline.

Instead of relying only on catalogs and emails:

• Verify
• Ask for evidence
• Structure your payments
• Integrate inspections and compliance into your standard process

The goal is not to distrust everyone, but to trust with a method.

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