About a year ago, in Ancient China Business Scam With A New Hollywood Twist, we wrote of how we were hearing about film and media companies getting hit with an old-fashioned scam from China.  Things then went quiet for a while, but in the last month, we have received two emails from two US film companies seeking “our thoughts” regarding contemplated “deals” and then, this morning someone left a comment on another such “deal.”  In other words, this scam seems to be back in full force right now.

What is so interesting about this scam is its constancy and its simplicity.  The comment we received today on our initial post reinforces both notions:

We’re a small video company in the UK, and we were almost hit by exactly this scam until we came across the handful of articles on the net that called it out. I know this is a pretty old news story, but I thought we should point out this scam is still alive and well!

It fits exactly the format as described. The company wanted to co-produce a set of 20 tourist/language learning videos for £15,000/piece, which was sent to us in a very specific e-mail with requirements, etc, that we would be lucky to ever get out of one of our real clients.

Apart from the English and weird formatting, there wasn’t anything to immediately tip it off as a scam. We have legitimate Asian contacts who struggle with the same! They weren’t asking for money up front, and they said they would instead be happy to pay us up front for a large percentage of the work prior to shooting commencing. When we asked about the specifics of the brief they had sent, they effectively said we had free rein to produce on topics of our choosing.

We’re a tiny micro business so £300,000 was the deal of the year. We spent a few man hours putting together proposals and sent it off. They replied promptly saying they would put it through the board of directors, and within a couple of days they sent this back:

“Because it is our fiirst cooperation,we would like to invite you to come to
Xi’an China ,so we can discuss the details face to face and sign the contract
formally. After we signing the contract,we can declare foreign exchange
formalities. According to the contract,we will pay 40% deposit ,TT,the balance will be paied per month.”

Things started to get suspicious. There had been no discussion of a contract, nor the terms of payment — merely the budget and the work proposal. We brushed it off and pushed on because… well, £300,000.

We got in touch with one of our contacts in China, who acted as a ‘representative’ of our company to communicate with the scammers’ office, to try to work out if it was legit. He called the numbers provided and checked out whether or not the company existed, and — to our surprise — it seems that, on face value, everything seemed to be in order. They reiterated their intent with our contact who then forwarded it onto us.

We mailed a job confirmation sheet, and they returned it, signed and stamped, so the next step was going to be to go over and sign the contract. We asked them if they could pay 1% up front to cover travel expenses. Of course, they refused ironically citing that they needed to make sure of our businesses legitimacy by meeting us in person first! They then mentioned the involvement of notarization fees, again sticking to the exact same numbers and formula we’re reading on all these articles in regards to the scam.

So – thanks once again to the Internet – despite us being a few man-hours down in terms of documentation and communication, we saved ourselves a costly business trip to potentially lose money, a kidney, or both.

The above fits exactly what we described in our previous post:

I last week became aware of an alleged fraud scheme that currently appears to be prominent in Mainland China. A Chinese company that claims to be a Zhengzhou-based investment firm contacts Western media companies involved in video production via email to signal interest in co-producing a TV documentary series about the foreign party’s home country. Once the deal terms are negotiated the foreign company is invited to come to Zhengzhou, Henan Province, to sign the contract. At the signing ceremony the Chinese reveal to the foreign representatives that the latter are expected to pay a certain “notarization” fee. Moreover, the foreigners are “encouraged” to purchase presents worth several thousand Euros in order to “save face” vis-a-vis the Chinese company’s CEO.

Bottom Line:  Once again, the advice is simple.  If it smells bad, it almost certainly is bad.  Do your due diligence like it matters, cause it does.

Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.