How to Start a Joint Venture in China: Lessons in Sourcing and Due Diligence
Amanda Davis, a budding entrepreneur with big aspirations, decided to expand her interior design company by opening a high-end retail store featuring custom wall panels. To source these unique products, she turned to Alibaba, confident in the platform’s ability to connect her with reliable overseas suppliers.
A Promising Start
After browsing for days, Amanda came across Guangzhou Design Panels Co., Ltd., a supplier with excellent reviews, competitive pricing, and a wide range of stylish wall panel designs. Their representative, “Leo,” was professional and responsive, answering all her questions and even offering customization options to fit her store’s aesthetic.
To prove their quality, Leo sent samples that arrived quickly. The panels were sleek, durable, and exactly what Amanda envisioned for her store. Impressed by their craftsmanship and reassured by Leo’s communication, she placed an order for 800 panels to meet her store’s launch deadline.
The Red Flags
As negotiations continued, Amanda noticed some warning signs:
Request to Communicate Off-Platform: Leo asked to switch to WeChat, claiming it was more efficient for sharing updates.
Incomplete Business Documentation: When Amanda requested company registration documents, Leo sent blurry, incomplete scans.
Offshore Payment Terms: Leo required a 50% deposit of $40,000, wired to a Hong Kong offshore account, citing “tax optimization for international clients.”
Despite her reservations, Amanda proceeded with the payment, trusting the sample quality and Leo’s professionalism.
Silence After Payment
Initially, Leo provided vague updates, blaming production delays on “supply chain disruptions” and “factory maintenance.” Gradually, his responses became infrequent, and eventually, he stopped replying altogether. Six months later, Amanda had no wall panels, no refund, and no way to contact the supplier.
Desperate and frustrated, Amanda reached out to IntelliChain, a global leader in supply chain investigation and fraud prevention.
IntelliChain’s Investigation
IntelliChain assigned Michael Lin, a senior investigator, to look into Amanda’s case. Michael’s findings revealed a well-orchestrated scam:
Empty Office Address: The supplier’s listed address led to an empty building with no operational activity.
Mismatched Registration Records: The business registration documents Leo provided were forged and tied to a dissolved company.
Stock Photos: The factory and product images shared by Leo were sourced from free stock photo libraries.
Offshore Payment Fraud: The Hong Kong account was linked to a network of shell companies designed to siphon funds from international clients.
How IntelliChain Could Have Prevented the Scam
Michael explained how IntelliChain’s services could have safeguarded Amanda’s business:
Factory Verification: IntelliChain would have conducted an on-site inspection, confirming the lack of operational facilities.
Document Authentication: Their team would have verified the supplier’s registration with official Chinese authorities, flagging inconsistencies.
Secure Payment Guidance: IntelliChain’s escrow service would have ensured Amanda’s funds were released only after verified production milestones.
Real-Time Tracking: IntelliChain’s advanced monitoring tools would have detected irregularities early, allowing Amanda to take preventive measures.
Lessons Learned
For Amanda, the experience was an eye-opening lesson in the importance of due diligence when sourcing internationally. “I trusted the samples and communication,” she said, “but I didn’t dig deep enough to verify their legitimacy.”
Determined to move forward smarter, Amanda partnered with IntelliChain for her next project. With their help, she found a reputable supplier, sourced high-quality panels, and successfully launched her store.
A Message to Other Businesses
Amanda’s story highlights the risks of international sourcing and the need for professional support to navigate complex global supply chains.
IntelliChain’s Services Include:
Factory Verification
Document Authentication
Escrow Payment Solutions
Real-Time Order Tracking
Fraud Prevention Consulting
Contact IntelliChain Today
Phone: +1 307-310-5502
Email: connect@intellichainco.com
Address: 306 N Main St. Sheridan, WY 82801
Let IntelliChain be your trusted partner in China, ensuring that every step of your sourcing process is secure and seamless. With our local expertise, we guarantee that your products meet the highest standards of quality, compliance, and safety. By partnering with us, you can focus on scaling your business, knowing that every detail—from factory vetting to logistics—is handled with precision.
Let IntelliChain be your eyes and ears in China, empowering you to bring the best products to market with confidence.
