When making a payment to a Chinese supplier for the first time, you probably are at least a little concerned about getting scammed. There are a number of ways that you can reduce this risk when making payments which I’ve written about here.
But I’d like to highlight one major red flag which is wiring money to a PERSONAL account. This means that the supplier’s salesperson asks you to transfer money to a personal account rather than there company’s account. In other words the company name on your invoice and the name on the bank account DO NOT MATCH.
For example, let’s say the supplier’s company name is “Shenzhen ABC technology Co. Ltd.” When it’s time to pay they send you their bank transfer information and the name of the account holder is an individual’s name such as “Li Zhenghe.”
Why is this risky?
In some cases an unscrupulous salesperson can have a payment made to his personal account and run off with the money. Cases like this are not uncommon in China especially with high employee turnover rates and lack of clear ethical standards in today’s society.
Moreover you have little recourse in getting their money back since the individual’s name was never in writing on the invoice or sales agreement. This means there’s little you can do besides try to contact them. But often they conveniently disappear and/or quit and stop responding to emails.
If the company name and bank account do not match… an unscrupulous salesperson can have a payment made to his personal account and run off with the money.
What can you do to protect yourself?
BEST PRACTICE: Make sure that the company name on the invoice matches the bank account holder’s name when transferring money. This is the least you can do to protect yourself.
If they don’t have a legitimate reason and the amount of money is not insignificant then I would think twice before wiring that money. Don’t say you haven’t been warned!