Letter of Credit Fraud

Filed Under:Fraud & Scam   |   Viewed by: 25475 Persons

Sorry, recently I have been posting too many negative posts on Chinawhy blog.
A client ordered rapeseed oil but received 9 containers of water
An Indian buyer received 2 containers of sand and mud instead of A4 paper
Hackers break into email system of buyers and sellers to steal payment
Hackers come again
Scams in the chemical industry in China
What if you are scammed, what you should do

Being in my business, everyday I can hear so many complaints, bad experiences and sad stories that some buyers are cheated, AGAIN.

Many stories are alike.

So I plan to write these stories down, share the bad experiences, bloods and tears with other buyers in the community, so they won’t fall into the trap again.

Being said that, I am not saying Chinese suppliers are full of scammers, cheaters, on the contrary, most Chinese suppliers are good and reliable, serious in doing business. Only a tiny percentage of “suppliers” are professional scammers.

The chance of being scammed is like win the lottery, you can’t say you will be or won’t be scammed, you don’t know if/when you will be scammed.

All you can do is to do due diligence properly, be prepared, be informed, and read this article carefully

The Story

Several month ago, a client from Turkey contacted us, asking our help to verify some Chinese suppliers of polypropylene granules.

For this product, I happen to have some research earlier last year, our partner in Brazil asked us to research the possibility of importing large quantity of virgin PP granules.

Our partners collected quotation from more than 10 suppliers on internet, the price is somewhere at 1100 – 1300USD per ton, except a few quotes on 2000USD per ton.

If price is over 2000USD, it won’t be competitive imported to Brazil.

So we are researching if it is possible to get virgin PP granules from China at 1100 to 1300USD per ton range.

With research, we understand the plastics raw material(like PP, PE, PVC) is monopolized by Sinopec and their subsidiary plants in different province.

The price is close to 2000USD per ton. We also contacted tens of big petrochemical plants in different province, was told that they are not able to export, all the products has to be exported by Sinopec.

We acquired customs export data for this product, found that except for Sinopec, the export volume for this products are very tiny. Even the export volume of Sinopec is less than 70 million USD.

We contacted some friends working in big trading company that deal with plastic raw material, was informed that their companies imported those products rather than exporting.

We also purchased the market index price for PP from a business intelligence agency, it confirmed that virgin PP was sold in China at 1800 to 2200USD per ton.

Based on these research, we concluded that this products, China is importing rather than exporting.

If this product can be easily sold in China for 1800USD, why those suppliers bother exporting at price of 1000USD per ton?

So we suggested our partner not to import this product from China.

We told the same to the Turkey client.

He insisted to going ahead to buy the products from a Ningbo based supplier, as they don’t ask for advance payment, the payment term is L/C at sight.

He thought L/C at sight is safe.

Until yesterday, I received an email from the client, seeking my help, here is the email:

Dear Steven

We have dealt with a Chinese company in order to buying polypropylene granules (a kind of raw material) from china.

As you see in the attachments our deal was about 60 MT of the goods with the whole price of 60,600 USD.

We had opened our LC via our bank to them and the LC was LC at sight payable against the original full set of documents as bill of lading , certificate of inspection issued by CIQ organization and certificate of origin issued and certified by legal organizations in china.

The seller prepare all document and sent to his bank, then his bank sent the documents to our bank and ask for the price.

We checked the documents and see all of them are original without any discrepancies.

So our bank send the money to the seller.

When the goods arrived to our port we saw the amount and packing and every thing is not as our contract.

And the Chinese agent of the shipping company changed his BL and told us the original BL that was sent to your bank is fake !!!!!!!!! but the sale and signature of the shipping company is on our original BL.

Now we want to lawsuit against the seller immediately, please advise us the best way to claim.

In the attachment you can find all the important document about our deal.

He was scammed. L/C fraud.

I have recommended my lawyer to him, when there is update, will post here.

Also I hope Mr. Kuldeep from India can read this story, he is trying to buy Aluminium Ingot from China, same situation like PP. He is tempted to go ahead as the payment term is 100% L/C at sight.

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1 Responses to " Letter of Credit Fraud "

  1. Vinay on  APR   24th , 2014 1:5 AM

    Dear Sir

    We purchased 5 tons of Chromium Oxide Green of USD 14150 from Tianjin Tengte Import & Export Trade Co Ltd through 100% L/C at sight dated 01/02/2014. They intentionally provided wrong material and less quantity. Now they are not replying my messages. I have all legal documents against them but since its a chinese company who will listen to our company ? Please give me a solution what should I do and take very strict against this company. I don’t think in future our company will purchase any material from china.

    Seller Address:
    Tianjin Tengte Import & Export Trade Co. Ltd.
    1-1-1705 Dibei Li, Nankai District, Tianjin, China

    Operational Office:
    Operational Address: Binhai Xinqu Tanggu, Tianjin, China
    Contact Person: Mary Wang
    Mob: 18222750863
    Tel: 0086-022-60980660
    Fax: 0086-022-60980680
    Contact Person: Clara, Cindy
    Email: clara_tengte@aliyun.com, info@chinatengte.com
    Website: http://www.tengtemetal.com/En/index.asp

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