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3) Identify the scammer. Are they real company, fake company or offshore shell company in Hong Kong? Take action accordingly.
I haven’t counted one by one, but I have an impression that many fraudulent suppliers are Hong Kong offshore companies.
The scammers live and operate in one city of mainland China, but the company they use and you wire money to is registered in Hong Kong. Hong Kong sets a really low threshold to for business incorporation, you don’t need to rent office, don’t need to hire staff, don’t need to pay registered capital, all that the agent can help you with only a few hundred USD. While in mainland China, you need something like 100,000USD registered capital to set up an export company that can receive international payment, you have to rent office, hire staff and accountant, have to registered at administration of commerce and industry, customs, tax bureau, bank and other government departments, annually, you need to renew your registration with these government bodies.
In that sense, it is more difficult and costly to set up and maintain the company identity.
Hong Kong adopts a different law system than mainland China, it has its own legal system, so if the scammer is from Hong Kong, then you have to trace and fight them in Hong Kong, and vice versa.
So the benefit for the scammer to use offshore shell company in Hong Kong is that you have to report them to Hong Kong police, while they might have never been to Hong Kong. So Hong Kong police have to contact police of mainland China to seek assistance to track down the fraudulent supplier, which practically, will make the police very hard to locate and find the scammers.
So If you find that you are scammed, one thing you need to do is to identify if the supplier is a company registered in mainland China or Hong Kong. If they are a Hong Kong company, report them to Hong Kong police, if they are from mainland China, then report them to the police of the region where they registered the company.
When dealing with scam, the key issue is response time. You should prepare all the documents in a few days, report them to the police, and police then quickly locate and arrest the scammers before they run away and hide or spend out the money cheated from you.
This is gold time you should not waste. Like earthquake rescue.
If you report a Hong Kong company to police in mainland, it might waste you 1 to 2 months of time to get on the right track.
Below are 2 case studies showing how Hong Kong police and mainland China police handle fraud report.
Xiamen Police Station
Back in 2007, a UK client Tracey was cheated by a Xiamen based company called “Xiamen Zhongtong International Trade Co., Ltd. Through research, we found the company doesn’t exist, but the contact person of this “company” used telephone number and address of Xiamen city. So we decided to report the crime to Xiamen Police Station.
We helped the client to prepare all the documents required by the police station:
1) authorization letter to empower myself to represent the UK client
2) passport copy of the client and business license copy of client’s company
3) contract, B/L, quality inspection report
4) evidence documents
We translated all the documents into Chinese, then flied to Xiamen to report the fraud to the police station, that the fraudster was registered within its force area.
We were firstly directed to the Economy Crime Investigation Division, there we were told that as the client was scammed by a supplier registered on alibaba.com, it was internet crime, we should report to the Internet Fraud Division. The officer told us that the company does not exist in Xiamen, so they couldn’t take our report.
This is ridiculous, I know.
Later on we learned that, the following tricks might help to make the police take your report seriously:
1) the foreign victim come to China to report the case
2) have your embassy to give some pressure to the police station and local government
3) if there are many victims in different countries, contact other victims, to jointly report the fraud
Hong Kong Police
I have a friend that has an offshore company registered in Hong Kong, dealing electronics business. The friend is in Shenzhen, one day he allowed a friend to use the company account to accept payment for a deal as his friend don’t have a company.
The friend received the money and disappeared.
The client traced down my friend, asked for refund of money, my friend confessed the truth to him, which the client didn’t believe, the client then reported the case to Hong Kong police.
Hong Kong police instantly took action.
As Hong Kong and Mainland China adopt different legal system, so Hong Kong police can’t do anything in mainland China, but asking for assistance of local police.
The Hong Kong police came to Shenzhen, Mainland. Contacted the local police, located my friend, and arrested my friend, his business license in Hong Kong was provoked, the bank account was frozen. My friend was released after confessing everything to the police, but he lost his company in Hong Kong and the money in his bank account in Hong Kong.
So it looks you need to make a bit extra efforts to make a fraud report in mainland China than in Hong Kong.
To recap, after you make sure you are scammed by Chinese suppliers, the first thing you need to do is to research where the company is registered, is it Hong Kong or a city in mainland China.
If it is in Hong Kong, as law enforcement is better, you should be able to get police help easily and instantly. But as the fraudster does not live in Hong Kong, so practically it will be difficult to trace and arrest them, but the police will seize their bank account and provoke their business license.
If the scam company is registered in a city of mainland China, then you should report the case to local police. Use the tricks we suggest in this article to make the police take your report. If police takes your report, then you have high hope to see the scammers being located and arrested. We suggest you to empower a lawyer to represent and accompany you when you come to China to report the case.
Good luck, let us trace the scammers out, get the justice done, get your money back and make the world a better place.
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