British companies continue to be contacted by individuals from China posing as representatives of companies placing large orders for products from UK-based factories. Manufacturers are being enticed to China to sign supply contracts, in the course of which they may be faced with demands for cash. Any ‘contracts’ signed turn out to be merely part of an elaborate ruse.
There is a loophole in Chinese regulations that means Chinese companies do not have to demonstrate that their registered capital exists in the first three months they exist. Unscrupulous individuals are using this loophole to claim that they are multi-million pound buyers and disappearing after three months.
The China-Britain Business Council, in common with other organisations including the UK regional offices of UK Trade & Investment and British diplomatic posts in China, has received numbers of reports of this type of fraud and there has been a recent upsurge in the volume of complaints. UK companies are not the only ones being targeted: there have been reports of other European companies experiencing the same situation.
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