China Sourcing Scams: How to Spot and Avoid Them

China sourcing scams are real, common, and expensive. Importers lose money every day to fake suppliers, bait-and-switch manufacturers, and payment fraudsters. Most victims weren’t careless. They just didn’t know what to look for.

This guide covers the scams you’re most likely to encounter, how to spot them early, and how to protect yourself before you wire a single dollar.

The Most Common China Sourcing Scams

Fake Suppliers on Alibaba and Other Platforms

Not everyone on Alibaba is a real company. Some accounts are created specifically to collect deposits and disappear. They look legitimate: professional photos, polished listings, even Gold Supplier badges.

The tell-tale signs of a fake supplier:

No verifiable business registration (check gsxt.gov.cn)
Contact email is Gmail, Yahoo, or QQ instead of a company domain
Prices that are 30-50% below every other quote you received
Reluctant to do a video call or factory tour
Pushes for payment outside Alibaba Trade Assurance

If you’ve verified the supplier’s business license and done a video call, the risk drops significantly. Skip those steps and you’re gambling. Learn the full verification process in our supplier verification guide.

The Bait-and-Switch

This is the most common scam that hits experienced importers. The supplier is real. The factory exists. But what arrives in your container isn’t what you approved.

Here’s how it works: You request samples, they send beautiful ones. You place a large order. Production uses cheaper components, lower-grade materials, or thinner finishes. By the time the goods land at your warehouse, the supplier has your full payment and you have garbage.

Bait-and-switch protection requires:

A detailed product spec sheet signed by the supplier before production starts
A pre-shipment inspection by a third party (not arranged by the supplier)
Holding the final payment until after inspection passes

The 30% deposit, 70% before shipment structure was designed for this exact problem. Don’t pay 100% upfront. Ever.

Middlemen Pretending to Be Factories

Trading companies are legitimate businesses. But many of them claim to be factories when they’re not. You think you’re getting factory-direct pricing. You’re actually paying a middleman’s 15-30% markup on top of factory costs.

This isn’t always a scam. Sometimes trading companies add real value. But if you’re paying factory prices expecting factory service, you’ll be disappointed.

Signs you’re talking to a trading company, not a factory:

They list dozens of unrelated product categories (a real factory specializes)
They’re slow to answer technical questions about manufacturing
Their Alibaba profile address is a commercial office building, not an industrial zone
They can’t provide their own ISO or factory certification

Ask directly: “Are you a manufacturer or a trading company?” Watch their answer carefully. A factory will say “factory.” A trading company will say “we work directly with factories” or dodge the question.

Read our full breakdown of manufacturers vs trading companies for how to tell the difference and when each makes sense.

Payment Scams and Fake Bank Details

This one is devastating and increasingly common. You’re mid-negotiation with a real, legitimate supplier. A scammer intercepts your email thread (or hacks the supplier’s account) and sends you updated bank details. You wire $20,000 to a fraudulent account. The real supplier never receives it.

This is called a Business Email Compromise (BEC) attack and it hits importers constantly.

How to protect yourself:

Always call your supplier on a number you’ve independently verified before sending a large wire
Confirm bank details via video call, not email, before any new transfer
Be extremely suspicious if bank details change mid-negotiation
Use Alibaba Trade Assurance instead of T/T bank transfer for new suppliers

If you’re wiring money via T/T, verify the account details via phone with a contact whose number you found yourself, not one provided in the email.

IP Theft and Unauthorized Production

You share your product design with a supplier to get a quote. Six months later, you find your product on Alibaba at half your retail price. The supplier ran your design without permission.

This is a real risk for anyone bringing a custom product to market. Countermeasures include:

Register your design in China before sharing it with suppliers (China’s IP protection is territory-specific)
Use NDAs signed before sharing any proprietary specs (they’re not foolproof but create legal standing)
Split your design between multiple factories so no one supplier has the full picture
Don’t share final designs until you’ve chosen a supplier and signed a contract

China does have IP law. Enforcement is improving. But you need to take steps to protect yourself because the burden of proof is on you.

Red Flags That Should Stop You Cold

Watch for these warning signs across every interaction:

On pricing:

Quote is more than 20-25% below the next lowest quote
Price drops dramatically the moment you mention a competitor

On communication:

Replies are only by text/WhatsApp, not email or video
English is fluent but they won’t do a video call
They claim to be a factory but can’t answer manufacturing questions
They use a free email address for a supposedly large company

On payment:

They ask for Western Union, MoneyGram, or crypto
They request payment to a personal account, not a company account
Bank account country doesn’t match where they claim to be located
They push hard to complete payment before a video call or inspection

On urgency:

“This price expires today” or “another buyer is about to take all our stock”
They’re willing to skip sample approval and go straight to full production
They resist any quality inspection

What to Do If You Get Scammed

If you realize you’ve been scammed, act immediately.

Contact your bank right away. If you wired funds recently, there’s a small window where a recall may be possible. Wire recalls succeed rarely, but the faster you act, the better.
File a complaint with Alibaba if the supplier was on their platform. Alibaba’s dispute resolution can sometimes help, especially if you paid via Trade Assurance.
Report to your country’s authorities. In the US, file reports with the FBI’s Internet Crime Complaint Center (IC3) at ic3.gov and the FTC at reportfraud.ftc.gov.
Contact the Chinese embassy or local PSB. For large amounts ($10,000+), reporting to China’s Public Security Bureau through your embassy creates a paper trail that occasionally leads to action.
Consult a lawyer with China experience. For large losses, litigation in Chinese courts is possible. It’s slow and expensive but not impossible.

Recovery rates are low. Preventing the scam is always worth far more than trying to recover after.

How to Protect Yourself Going Forward

The three practices that eliminate most scam risk:

Always verify before paying. Check the business license, do a video call, run a third-party audit for orders over $5,000. See the full supplier verification guide.
Use Trade Assurance or Letters of Credit. Don’t send T/T to a supplier you’ve never worked with. Read the payment methods guide to understand which options give you protection.
Inspect before you pay the balance. A pre-shipment inspection costs $250-350 and catches bait-and-switch before the container ships. It’s the cheapest insurance you can buy.

Frequently Asked Questions

How common are scams on Alibaba? Alibaba has millions of suppliers and the vast majority are legitimate businesses. But scam accounts do exist and they’re designed to look real. Alibaba removes fraudulent accounts, but new ones appear regularly. The platform’s safeguards help, but they don’t replace your own due diligence.

Can I recover money lost to a China sourcing scam? Recovery is difficult and rare. Wire transfers that complete are very hard to reverse. Acting within hours of discovering fraud gives you the best chance. File reports with IC3, your bank, and Alibaba immediately. For losses over $50,000, a China-experienced lawyer may be worth consulting.

Is it safe to pay Chinese suppliers via PayPal? PayPal offers buyer protection, but most larger Chinese factories don’t accept it or charge a 4-5% surcharge. PayPal is safer than T/T for small transactions with new suppliers. It isn’t practical for large orders.

What is a bait-and-switch scam in China sourcing? A bait-and-switch happens when a supplier sends high-quality samples to win your order, then produces lower-quality goods for the actual bulk shipment. The best defense is a third-party pre-shipment inspection conducted after production finishes but before the goods load onto the ship.

Should I avoid all Chinese suppliers on free email domains? It’s a red flag, not an automatic disqualification. Some small legitimate suppliers do use Gmail. But a supplier claiming to be a major manufacturer using a Gmail account is suspicious. Always verify through other means before proceeding.

What’s the safest payment method for a first order from a new supplier? Alibaba Trade Assurance is the safest option for first orders from suppliers on that platform. The funds are held until you confirm receipt or a dispute is resolved. For suppliers off Alibaba, a Letter of Credit offers similar protection but requires a bank and is more complex to set up.