The EU SME Centre has received a few enquiries from EU SMEs which were asked, by a Chinese business partner (buyer), to pay notary or other administrative fees before or after signing a business contract. The fees would not be paid directly to the notary, but to the local Chinese company which would in turn ‘arrange’ or ‘take care of everything necessary’, sometimes ‘showing good will and accept to share the fees together’.
According to Chinese law and regulations, there is no mandatory provision to notarise ordinary sales and purchase contracts. This requirement exists only for some contracts of special importance, as for example real estate transfers. An excuse commonly used by such “partners” is to pay a fee that is required for applying to foreign currency exchange in the local bank: in practice, such fees do not exist.
In one specific case received, one EU SME received an unsolicited request from a Chinese company for the purchase of some products. The contract signed indicated that ‘notary fees’ and ‘foreign currency exchange fees’ would need to be shared by both parties to validate the contract. The EU SME paid the fees to the Chinese company, which then disappeared without proceeding with the purchase of the EU SME’s goods as agreed.
Therefore, when asked to pay any kind of notary fees or other administrative fees, European SMEs should immediately be suspicious!
The EU SME Centre receives, on a weekly basis, emails from EU SMEs that have been scammed when purchasing goods from China. In the majority of cases, such scams could have been avoided with the above steps. The EU SME Centre can assist in conducting free-of-charge, informal background checks on potential partners. For major transactions and complex deals, it is always recommended to seek professional legal advice from law firms established in mainland China.
