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Ask Steven support team consists of experienced international trade lawyers, supply chain management specialists and Certified Public Accountants. Use their specialties and insight to add value to your business with China. Please feel free to ask a China-related business question.

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Question: 
Lost $25000 by bad supplier

Dear Steven,

Please help me urgently. I am a long term importer of gloves from China to the Middle East. Recently due to increased demand, we decided to get more suppliers from Guangdong to sell us containers of gloves.

1 supplier has sent us a bad container shipment so we canceled our 2nd container order with them. We will try to sell the 1st container somehow for cheaper price and bear the loss. But for 2nd container we had already paid 20% advance (US$ 25,000).

Now the supplier is refusing to send us the advance back or send us 2nd container with same quality as promised in sales contract.

How can we resolve the matter? Who do I report this case to? Do I go to Chinese embassy here? Is there any regulation?

Will it make a difference if I visit the supplier in China and demand my money back?

Approximately how much will it cost for me to hire a Chinese lawyer for the case? Do these cases usually win the money back?
[By kaydee   2008-6-18]
     
Answer: 

Hi Kaydee, Sorry for the bad experience. In your case, you are not only entitled to get the advance back, but also ask for compensation to your loss. Please especially note the following provisions of China contract law:


Article 111 Where the quality fails to satisfy the agreement, the breach of contract damages shall be borne in the manner as agreed upon by the parties. Where there is no agreement in the contract on the liability for breach of contract or such agreement is unclear, nor can it be determined in accordance with the provisions of Article 61of this Law, the damaged party may, in light of the nature of the subject matter and the degree of loss, reasonably choose to request the other party to bear the liabilities for the breach of contract such as repairing, substituting, reworking, returning the goods, or reducing the price or remuneration.


Article 113Where a party fails to perform its obligations under the contract or its performance fails to conform to the agreement and cause losses to the other party, the amount of compensation for losses shall be equal to the losses caused by the breach of contract, including the interests receivable after the performance of the contract, provided not exceeding the probable losses caused by the breach of contract which has been foreseen or ought to be foreseen when the party in breach concludes the contract.


Article 114 The parties may agree that if one party breaches the contract, it shall pay a certain sum of liquidated damages to the other party in light of the circumstances of the breach, and may also agree on a method for the calculation of the amount of compensation for the damages incurred as a result of the breach.
Where the amount of liquidated damages agreed upon is lower than the damages incurred, a party may petition the People's Court or an arbitration institution to make an increase; where the amount of liquidated damages agreed upon are significantly higher than the damages incurred, a party may petition the People's Court or an arbitration institution to make an appropriate reduction.
Where the parties agree upon breach of contract damages in respect to the delay in performance, the party in breach shall perform the obligations after paying the breach of contract damages.


We have helped an American company get back 10000USD from a Suzhou-based company due to quality discrepancy. However the lawsuit took almost one year.As long as you can provide solid evidence to prove that and you are willing to spend time and money to teach them a lesson, then it is an solution out.


The lawyer fee and litigation cost is about 4000-5000USD.


I don't think that you come here yourself will help much, show them you are serious to take action, hire a lawyer to send them an official lawyer's letter or pay them a visit. If they are real company, then I think they too don't want to spend a whole year fighting for an case that they largely will lose.


To make a complaint to local government body and China embassy can be used as supplementary means.


Please send the contract and a brief case introduction to support@chinawhy.net, so that our associate lawyers can have a look and suggest a solution out.

  [By Steven 2008-6-20 ]
   
Question: 
Setting up law firm in China

Hi Steven, can you tell us basically what restrictions exist as of today on foreign law firms opening in Shanghai or Beijing. Is there a specific law or rule etc.
[By WLD   2008-6-5]
     
Answer: 
So far, Foreign law firms can only set up representive offices in China, they are not authorized to set up law firm. The geographic and number restriction of representitive offices has been lifted one year after China join the WTO(In the first year after China join WTO, foreign law firms can only set up one representitive office in more than 10 cities, incluing Shanghai and Beijing).

The following links are related laws and regulation:
http://www.eduzhai.net/yingyu/615/763/yingyu_246952.html (Administration of Representative Offices of Foreign Law Firms in China Regulations)
http://www.fdi.gov.cn/pub/FDI_EN/Laws/law_en_info.jsp?docid=51436 (Provisions of the Ministry of Justice on the Execution of the Regulations on the Administration of Foreign Law Firms' Representative Offices in China)
  [By Steven 2008-6-5 ]
   
Question: 
Alibaba spam

Hello dear, i ordered product from alibaba member worth 600USD.and i have been given fake ems tracking no from the seller in china,he no longer chats with me and tells me that ny goods is with customs over a week now,the sellers name is weiqiang kong is account no is 495480020007861 and the bank is bank of china hefei branch his email is bxb168@yahoo.com. iwant u to trace him thrugh his bank.i willgive u more information, bcos china people are in nigeria and they are spoiling the image of china.
[By akanimo samuel okure   2008-5-30]
     
Answer: 
Hi Akanimo Samuel Okure, sorry for the bad experience dealing with China suppliers. Your question is the same with previous question put by Adnan Gabol, so please check my reply there.

If you read my this blog article, http://www.chinawhy.net/blog/Article.asp?id=24(Gold suppliers and TrustPass suppliers scam on Alibaba), you will find that gold suppliers on alibaba don't necessarily mean that they are real and legit companies, needless to say trustpass and free memembers.

So it is highly suggested to make proper due diligence before you enter into business relationship with any Chinese suppliers.

Chinawhy have been offering company verification service in Mainland China, please let us know if you need our help.

Regards,
  [By Steven 2008-6-2 ]
   
Question: 
scam on alibaba

hello dear
i have ordered product from alibaba memeber and they have cheated me i have send them 250$ thru western union since 8 days now and they give me 2 EMS tracking number which were wrong then they told me sorry we dont have stock after i send money and they lie to me that they shiped already twise so after that i told them to send me my money back they said sorry we will only 200$ and 50 $ for commision ( i think commsion to cheat me) so i had nothing i can do please dear sir help me i am from oman andwe have many chinese people working in my country they are spoiling name of china please do something i dont know who else to contact and i when ever i talk to them on MSN they dont reply and send me rude mgs.. now sir i will give your thier website and email address ok .. the email of salemsman is (bxb128e@hotmail.com) AND WEBSITE IS BXB168@HOTMAIL.COM
[By adnan gabol   2008-5-22]
     
Answer: 

Hi Adnan, Thanks for posting. I am really sorry for your bad experience. All the scammers has the following tricks to play with time:


1) they will go traveling for a long time after get your money, too busy to reply you or send you the product;
2) give you wrong tracking number, if there is any problem, then it is the problem with the express company;
3) some will send small quantity of the order or wrong cheap items;
4) finally they ignore your messeges when they find they can't play with time anymore;
5) they will say rude words to you and then they will block you;
6) if too many negetive comment of their companies online affect their business, they dump the website and email account, then go on to cheat the world in another name. Same old tricks.


In your case, you really can't do much for amount of USD250, it is more likely going to end like you learn a lesson at the cost of 250USD, the lessons you learned are: 1) you need to verify the potential business partners you come across online; 2) gold suppliers and trustpass memeber of alibaba don't necessairily mean they are real and trustworthy company;


Please read the following two articles before you do business with China company online again: http://www.chinawhy.net/blog/Article.asp?id=24, http://www.chinawhy.net/blog/Article.asp?id=23, Also we have written a series articles on company verification, please check it out. However you can report the case to local police and government, also you can make a complaint to alibaba to get them deleted from alibaba(if many of you complain), We can give you the contact information of the police and local government if you can send me more specific information of this scammer. Don't try to buy fake brand products from China, as I see it, that is the root of the scammers. Other than fake brand products business, I haven't heard any scam so far. I have worked in Dubai for one year, and I have a friend who now are working in Oman, so I know the situation there. I feel ashamed of what many Chinese are doing there too. But let us hope it is us not them that will make the planet a better place. Regards,

  [By Steven 2008-6-10 ]
   
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