Chinese Supplier Scams: The Red Flags Indian Importers Should Check Before Paying

1. What Goes Wrong, According to the Embassy

The most useful document on this subject is not a blog: it is the advisory for Indian SMEs doing business with Chinese companies published by the Embassy of India in Beijing (updated in 2024). It lists Chinese entities that Indian businesses reported in trade disputes between 2009 and July 2024, and describes the problems behind those complaints: goods of inferior quality, or worthless material shipped in place of the goods; suppliers who stop responding after an advance payment; fees demanded for samples that never arrive; prices raised after the contract; the original bill of lading or inspection certificate withheld; and payments diverted to unrelated bank accounts by fraudsters who hacked email accounts. It also notes that most disputes involved firms in Shandong, Hebei, Guangdong, Jiangsu and Zhejiang, the provinces Indian buyers deal with most.

This guide, from our team in Karol Bagh, Delhi, turns that advisory and China's official company registry into the red flags to check. The supplier verification guide explains how a full verification is done.

2. Red Flags About the Company

• No business licence, or one it will not send. Every Chinese company has a business licence with an 18-character unified social credit code. A seller that will not share it is not one to pay.
• The licence does not match. The company name on the licence differs from the name on the quotation, the contract or the bank account.
• The registry shows a problem: a cancelled or revoked status, an entry on the abnormal operations list, or administrative penalties (section 5).
• A very new company with very small registered capital. The embassy advisory asks for extra care with newly set-up firms registered with small capital, and warns that adverse records on the registry are not always up to date, because fraudsters close one company and register another.
• A "factory" whose licence scope is only trading. Not a fraud in itself, but you should know whether you are buying from the maker or from a middleman.
• No video call from the premises, and no visit allowed. A real factory can show you its floor; a refusal is a warning.

3. Red Flags About Payment

• "Our bank account has changed." An email announcing new bank details, often in the same thread as genuine messages, is the classic sign of business email compromise: someone has access to the supplier's mailbox, or yours. The embassy advisory names the diversion of payments by hacking email IDs as a reported problem, and advises confirming bank details through a channel other than email.
• An account in a person's name, or in a company name different from the seller's. The advisory asks Indian businesses to check that the account belongs to the company, not an individual.
• A third-party account, an offshore account or a request to pay "a partner".
• Pressure to pay everything in advance, or urgency ("price valid today only", "last container space").
• A request to pay outside the platform where you found the supplier, if the platform offers payment protection.

The rule we follow: any change of bank details is confirmed by a phone or video call to a number you already had, with someone you have dealt with, before a single rupee moves.

4. Red Flags in the Deal and the Shipment

• A price far below every other quote. The advisory warns against B2B listings with prices below the market.
• Sample fees with no sample, or repeated "customs" or "certificate" fees before a sample is sent.
• No written contract, or one with no specification, no inspection clause and no dispute clause.
• Refusal of third-party inspection before shipment.
• Holding back the original bill of lading after payment, or a new demand for money before releasing documents.
• Claims you cannot check: certificates (including BIS for India) that do not appear on the issuing body's register. Our BIS guide explains how to check an Indian registration number.

5. How to Check a Company on China's Official Registry

China's National Enterprise Credit Information Publicity System (gsxt.gov.cn), run by the State Administration for Market Regulation, is the official register. Under China's rules on enterprise information publicity, it shows each company's registration details and filings, annual reports, administrative penalties, and entries on the abnormal operations list (for example, for a missed annual report). Search by the company's Chinese name or its 18-character unified social credit code, then compare:

1. the exact Chinese name and the credit code against the licence you were sent;
2. the status (operating, or cancelled or revoked);
3. the registered address against the address you were told, and against the factory you see on a video call;
4. the legal representative against the person who signs your contract;
5. the business scope: does it include manufacture of your product?
6. the date of establishment, the registered capital, any penalties and any abnormal-operations entries.

The site is in Chinese and sometimes hard to reach from outside China. The embassy advisory also offers a route: before trading, Indian businesses can email the embassy in Beijing or the consulates in Shanghai, Guangzhou or Hong Kong to ask for a check of a Chinese company's credentials, and for larger deals it suggests a due-diligence report. Our factory verification service does these checks in Chinese and visits the premises.

6. How to Protect the Payment

1. Pay through your bank, to the account of the company named on the contract. Under the RBI's FEMA (Export and Import of Goods and Services) Regulations, 2026, in force from 1 October 2026, your bank may permit an advance payment after satisfying itself the requirement is genuine, and may ask for a standby letter of credit or a guarantee above its own threshold. Ask your bank before agreeing large advances.
2. Split the payment: a deposit, and the balance only after an inspection you arranged.
3. For high values, use a letter of credit; the embassy advisory suggests making it payable against inspection rather than on presentation of the bill of lading alone.
4. On a B2B platform, pay through the platform where it offers buyer protection: for example, Alibaba.com's Trade Assurance holds the payment and offers refunds for orders that are not shipped or arrive not as agreed, but only when you pay through Alibaba.com.
5. Put a dispute clause in the contract. An arbitration clause (for example at CIETAC, the China International Economic and Trade Arbitration Commission) gives you an award that can be enforced in India, because China is a notified country under India's New York Convention law; a Chinese court judgment, by contrast, cannot be executed directly in India.

7. If It Has Already Happened

Act the same day. Call your bank and ask it to recall the transfer; write to the receiving bank through it. Report the fraud to the cyber crime portal and the police in India. Keep every email, chat, invoice and payment record. Write to the Indian embassy or consulate in China with the documents. Do not pay further "release" or "recovery" fees to anyone who contacts you offering to recover the money. And before the next order, verify the supplier as described above.