Recently I joined the Alibaba.com forums and was surprised about how many business people have gotten scammed by fraudulent suppliers AND buyers. I read many posts and decided to add a web page dedicated to this topic. 

Scammers don't necessarily have to be suppliers. There are plenty of buyers that are fraudulent as well. Recently, we were approached by one. All I  did was run a quick search on Google of the company's name and found several entries related to them. One link lead to a discussion on the "Fraud & Security" forum on Alibaba: GuiLin  If you follow this link, you can read the details of what almost happened to me and over 40 other people questioning the legitimacy of this company. There are also details of scamming practices that are becoming popular in Asia, China in particular.

The search took 10 seconds and ended up saving me from a lot of wasted time and possibly, money. 

Who exactly are you dealing with?

Once you find a supplier/buyer your first step should be to check them out in the forum of the B2B business site you found them on. If this isn't possible, run a quick Google search on the company name and see what comes up. If they are a legitimate business, you will probably find lots of links related to them.

There are PLENTY of B2B websites that offer free listings to companies. It's only logical that a legitimate company would want to cast a wide net and post their products/services on these websites. Once they do, sooner or later a spider from a search engine will hit it and add it to searches where you will be able to find them.

The only possible set-back to this is if the company is Asian. The sites they link to may not be written in English. And, sometimes the English translation of the company's name will be spelled differently on different sites. None the less, if the company is legitimate, you will find references to it in many places.

For our company, I spent literally hundreds of hours getting it listed in as many B2B websites as possible. Aside from wanting to increase our search engine rankings, I wanted to develop an online presence that would show buyers that we are legitimate and not a fly-by-night organization.

Choosing a free listing on a B2B website rather than paying for a Premium listing isn't necessarily a bad thing.  We chose this route out of the need to economize on marketing expenses. Had I opted for Premium listings on all the websites I added our company to, it would have cost us well over $15,000 a year. We are a small company and need to keep costs down.  In addition, dealing with a company which has a Premium listing doesn't exactly mean that they are legitimate. 

Just about all a Premium listing does is allow the seller to get placed higher up on the food chain in terms of search results within the B2B website. The B2B website does a cursory "check" but what they check is what the business sends them: Business ID number, etc. so it's not necessarily something that is guaranteed to qualify the company. The websites don't go in to detail in actually qualifying any companies that register with them. So it's still up to the person doing the enquiry to apply due diligence.

Once you see that the company is indeed listed on many B2B websites, just double check the name. Make sure that it is the EXACT name of the company in question. A lot of times fraudulent companies will ride the coat-tails of legitimate companies in terms of choosing a name. 

It doesn't hurt to run another search on Google using the personal name of the individual with whom you are dealing. Make sure you use quotations: "John Doe" or "Doe, John." 

This is just written to give you a First Step in qualifying a company. If the company fails at this initial step, then walk away without wasting any further time. In addition, if their claims seem "Too good to be true" they probably are. Don't allow your "Greed Quotient" (GQ, we all have this) to influence your decision making.

 You can go here: Due Diligence and get more detailed information on how to qualify companies on your own. Again, this is another link within the Alibaba forums. 

From what I've seen, they have the most comprehensive forums of any B2B site.
Other quick tips:

DO NOT, under ANY circumstances send money via Western Union. This seems incredibly obvious but so many people send money for purchases via Western Union rather than through a bank account and then never hear from the supplier again. 

Check the images on their website. Do a "right click" and see what the file name is of a few products. Scammers are lazy. See what the file name of the image is and then do an image search on Google. The same picture may show up on another website that the scammer took it from. So you may be looking at the image of an item on Best Buy rather than an image photographed at the company's office of the actual product for sale.

If traveling to the company for a visit, book your own hotel room and tell the person whom you are in contact with that you are traveling with others. 

Don't be tricked in to buying gifts. If you are dealing with a potential buyer and they ask that you bring gifts for their CEO to facilitate the sales transaction, don't even bother to get on the plane. This is a definite scam. If they tell you it's some kind of cultural nicety for you to placate their CEO with a gift, stop there. It isn't.  

There are plenty of references as to how individuals are lured by the promise of big sales contracts in to visiting the said company in order to sign the sales contract. The company will offer to book a room and seem to be doing them a favor. The company however, ends up getting a kick-back from the hotel. Then once the person arrives, they are taken on city tours where the stores they buy from give kick-backs to the company as well. What these people end up dealing with are glorified travel agents. Sure the contracts are signed but after the person leaves, it all goes up in smoke. So the company has made money on the hotel room, money from the stores the person visits, and their "CEO" gets a gift to boot. 

If purchasing large quantities, either visit the factory in person to make a pre-shipment inspection or hire an agency to do the inspection on your behalf. This is serious. I have yet to hear of a company in Asia that will accept returned items, much less refund money. Not to say that they don't exist, there may very well be some. But I have yet to hear of any. Here's an article and discussion that's worth reading: Pre-shipment inspection is 70% of the game.

Just because the quality of your first shipment is satisfactory, that doesn't mean that the proceeding ones will be. I've read instances where the quality of the goods shipped declined over time. So again, either get in to the practice of showing up for a pre-shipment inspection or hire an agency. Here is a link to one that I read about with world-wide offices: Cotecna

In most cases it is not advisable to ship samples free of charge. The company you are dealing with should make a good faith effort to pay for samples or at least cover their cost of express shipping. Asking you to send a sample, free of charge,  over regular post is something to think twice about. It shows that the company is not in a hurry to get your products and wants to cut whatever corners it can. Is this the type of entity that would promise a long-term business relationship? Probably not. 

Their excuse may be that they have to send the sample to a company for "quality testing" and that they incur fees for this service. Unless you are dealing in health care products, food, or potentially hazardous consumer goods, I would question this justification. This is precisely the excuse that the GuiLan company, mentioned above, gave us for refusing to pay for a sample....Mind you, the product in question was a SHAWL. 

In addition, most legitimate companies will have at least ONE account with an express mail service where the shipping fees will be charged back to them rather than you. All you need to do is ask for their account number and use it when you send them the sample that they have paid you for in advance. Later, if you like, after they have placed a firm order, you can deduct the price of the sample.

In case you are wondering, we typically do not send free samples. The exceptions have been the companies that I went out of my way to contact personally. Not those who have contacted us.

Resources and links:

Here are some resources that I have come across. I am NOT endorsing them. I have simply come across these people/businesses and would possibly look in to using them.

Tips for verifying Chinese companies. This is a post by a regular forum member who provides a service that qualifies Chinese companies.  He has been generous enough to qualify a lot of companies for free. He seems reputable so if interested, please contact him directly.  His Alibaba forum name is "Business in China."

Again, take the time to visit B2B forums and ask questions. The people are incredibly helpful.

As for dealing with European companies or those in other parts of the world, your best bet is to get in contact with your country's Consulate or Embassy in the country you would like to deal with. The Commercial Officer will (should) be able to steer you in the direction of agencies such as the respective country's Chamber of Commerce which can help you qualify the company in question. 

Regarding shipping. It's best to familiarize your self with the "language" used regarding the different methods of delivery. Here is a link to another page in our website that explains the 13 Incoterm acronyms.

And finally, here's a link of resources on the Alibaba website. Use it to navigate to different forums and articles individuals have written. If you are serious with doing business overseas it behooves you to research as much as you can and learn from the experiences of others.

This site is constantly being updated. Please check back often or send me an email if you have any suggestions or tips that I can include in these info. pages.

Thanks and best of luck,

April Tosch