Trade Advisory for Indian Companies Intending to do Business in China

Trade Advisory for Indian Companies Intending to do Business in China

  • DOs

i. Indian companies should run a preliminary internet check on the credibility of the Chinese company. Many a time complaints have been registered against such fraud companies by other affected parties.
ii. Indian companies are requested to check the credibility of the Chinese company on which they are placing import orders.
iii. Indian companies should insist on the copies of the passport/national identity card (issued by the Chinese Government) of the executives of the Chinese company with whom the Indian company is interacting. This would help to track down the offender in case they go absconding.
iv. Contracts entered with Chinese companies need to have arbitration clause and proof of existence (company registration document) should be certified by Embassy of India, Beijing or Consulate Generals of India.
v. Quality / Quantity of any product to be imported from China to be physically certified by the Indian company either by visiting China or by appointing an agency.
vi. Refer your trade queries to the Embassy of India or the Consulate Generals of India instead of B2B companies.
vii. Indian companies, while doing business with companies in our jurisdiction should also look out for the companies featuring in the advisories of the Embassy of India & other Consulates in China, as these companies may have branch office in our jurisdiction. Indian companies should also be extremely cautious while doing business with companies operating from Yiwu, Zhejiang.
viii. Physical inspection of the goods to be carried out by the importing company at the point of loading in China.
ix. Release the remaining payment only after checking the quality of the consignment received in India.

  • DON’Ts

i. Indian companies are requested to desist from placing orders on Chinese companies listed on B2B sites in India and China.
ii. Never trust a Chinese B2B site which is just in English and has no Chinese version. Every website in China is inevitably in Chinese and sometimes, has an English version. A website only in English with no Chinese version is fraud.
iii. Advance payment through bank transfer is discouraged; unless the credibility of the Chinese company is proved beyond doubt.
iv. Do not release LC if not sure of the quality and quantity of the product.
v. Do not fall for offers of cheap products from the Chinese companies.

  • In view of rising instances of trade disputes between Indian and Chinese companies, following course of action is proposed to the Indian companies doing business/interested in doing business with Chinese companies:

 

i. The Indian company must run a complete credential check on the prospective Chinese partner before entering into an agreement with a Chinese company. The Embassy could provide services for preliminary credit check on the Chinese companies. There are also a number of business service companies in India and China which conduct credentials checks and provide reports on the health and reliability of the Chinese companies. The Indian company must insist on having the registration document and other agreements signed with the Chinese company attested by the Embassy of India or the Consulates General of India according to jurisdiction. This process of attestation of documents by the Embassy/Consulate involves both the local sub-council of China Council for Promotion of International Trade (CCPIT) as well as the Chinese Ministry of Foreign Affairs and thus, weeds out fake companies in most of the cases, although the Indian company should look out throughout the process of attestation, for any change in details submitted by Chinese company, as in some cases discrepancies have been noticed.

ii. The Indian company must not trust any B2B site for list of importers/exporters from China. It has been found that most of the cases of trade dispute have emerged from such B2B sites. The Indian company should refer their trade queries to the Embassy of India and the Consulate General of India in Shanghai, Guangzhou and Hong Kong for a detailed and reliable list of importers/exporters. The Embassy/Consulate provides answers to the queries within 2-5 working days. Mails to this effect can be sent to the commercial wing of Embassy/Consulate. Details can be obtained on the websites:

iii. The Indian company must not make an advance payment. If at all there is a need for advance payment, both the parties should operate through an ‘Escrow account’ or ‘Bank guarantee’ route. The Indian company must insist on guarantee before making advance payment to its Chinese partner.

iv. The Indian company must not release LC without inspecting the actual product in the consignment. A provision must be incorporated in the agreement that provides releasing LC only after the Indian company is satisfied with the quality of the product in the consignment.

 
Trade Disputes
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