Trade advisory issued against Chinese firms

Indian embassy alarmed by issues such as supply of sand, stones, salt, bricks and even mud in lieu of chemicals, silicon carbide, aluminium ingots, plastics and polymers

Alarmed by issues such as supply of sand, stones, salt, bricks and even mud in lieu of chemicals, silicon carbide, aluminium ingots, plastics and polymers, the Indian embassy in Beijing has issued a trade advisory for dealing with Chinese companies after a gap of over three years.

There had been over 200 instances of disputes with Chinese companies in the intervening three years, officials said. China is the only country against which India has issued trade advisories.

According to the ministry of commerce, India-China trade fell two per cent to $71 billion in 2015-16. India imported $62 billion of Chinese goods last year.

Chinese companies have accused to have indulged in diversion of payments into unassociated bank accounts by third fraudulent parties after hacking into e-mail IDs of Indian companies. When it comes to imports from India, Chinese companies have in certain instances refused to make payment after taking control of consignment exported from India. At times, they have refused to take delivery of the consignment when the market value of the imported item has gone down from the value fixed in agreement.

There has also been non-release of pre-shipment inspection reports/certificates in due time after departure of shipment from the Indian port entailing demurrage on arrival at port. “The advisory is meant to enhance commercial cooperation between India and China by drawing attention to some of the risks faced by Indian companies,” said the warning issued by the Indian embassy in Beijing.

The modus operandi used by the Chinese companies includes contacting Indian companies and after several rounds of emails and phone calls, the Chinese company invites the Indian company to visit their facility in China and meet the executives of the Chinese company and senior officials of the local Government, projecting this as “an apparent exercise at confidence building”.

Once the Indian company agrees to visit China, just before the departure of their executives, it receives a request from the Chinese company to bring cash for arrangements and gifts for the senior executives and other local officials, citing “Chinese cultural values”.

The Indian company agrees to get cash and gifts and visits the facilities and meets the executives of the Chinese company. The Indian company is promised excellent cooperation by the Chinese company. After the Indian company representative returns to India, the Chinese company goes silent and stops replying to the communications of the Indian company. The Indian company ends up losing cost on transportation, accommodation and the amount.

A list of checks has been released, including running the credentials of Chinese companies past the embassy or consulates in China. “In case of large transactions, consult a business service company that can provide a report on the business transparency, financial health, reputation, reliability and credentials of the company,” said the advisory.

The US often issues advisories for conducting business in India, Pakistan, China and elsewhere.

The embassy also warned against transacting on B2B platforms. Exporters or importers of a particular commodity or service can be accessed by sending trade queries to the embassy and the consulates in Shanghai, Guangzhou and Hong Kong.

Earlier trade advisories issued by the embassy in Beijing were in December 2010, September 2011 and April 2013.

The latest one is based on complaints brought to the notice of the embassy by the commerce ministry. “It does not substitute in any way the company’s own actions or responsibility,” said the advisory.

The embassy recommended site visits for large transactions. “Take photos of the company and the factory during such visits. Check whether products are produced by the company and whether the packages belong to the target company,” said the advisory.