Import Scams and Red Flags: How Kiwis Get Burned (and How Not To)

If it's too good to be true, it usually is. That one sentence would have saved every importer we've ever heard from who lost money to a "supplier" in China. The scams that catch Kiwis aren't sophisticated — they exploit hurry, greed and the fact that you're vetting a company from 9,500 km away. Here's the pattern book, so none of it works on you.

Scam #1: the price that's too good

Genuine factories in the same region, making the same product, quote within a fairly tight band. When one "supplier" comes in 40% below everyone else, that's not a bargain — it's bait. Either the goods will never ship, or what ships will be factory rejects, or the price will mysteriously "correct" after your deposit lands.

A legitimate version of this exists too: confront an expensive supplier with cheaper rival quotes and you'll sometimes get an honest reply — one buyer we know received "we are actually a trading company" in writing. Wild price spread is always information. Investigate it before you act on it.

Scam #2: the payment switcheroo

The single most reliable scam signal is an odd payment request:

• 100% upfront payment demanded — walk away, no exceptions. Legitimate suppliers accept 30% T/T or a letter of credit.
• Payment to a personal account, or an account name that doesn't match the company you've been dealing with.
• Bank details that "change" mid-transaction by email. Email accounts get compromised; always verify new details by video call with your known contact before sending a cent.
• Requests for Western Union — cash to a stranger, zero recourse.

For small platform orders, stay inside escrow (Alibaba Trade Assurance) where a third party holds funds and mediates disputes. Scammers avoid escrow for the same reason you should love it.

Scam #3: the middleman in a factory costume

Not a theft, but a tax on everything you do: a trading company posing as a manufacturer. The tells stack up fast:

• Category breadth: a "factory" selling everything from bananas to computers is a trader.
• Name convention: trading companies typically register with their hometown in the name; manufacturers use the province. "Ningbo Better Lighting Co." → likely trader; "Zhejiang Ningbo Better Lighting Co." → likely manufacturer.
• Registered capital sanity check: 50,000 RMB registered capital with claimed turnover of US$50 million doesn't add up. Nor does huge turnover with 15 staff.
• No ISO 9001 or BSCI on the profile — middlemen won't invest in management standards.

The killer test: ask for a customised sample they don't have on hand, plus a video call showing the factory floor. Middlemen can't fake either easily. (One nuance: some genuine factories lack an export licence and legitimately work through a trading partner for the paperwork — so "trading" in the name is a flag to investigate, not an automatic disqualifier.)

Scam #4: forged certificates

Fake test reports and certificates are a real, recurring problem. Before you rely on any certificate — ISO 9001, CE-style test reports, electrical safety documentation — check that the company name and address on the document match the supplier you're actually dealing with, and have your third-party inspection company verify it. A quick verification often costs nothing and has caught forgeries repeatedly. This matters doubly in NZ: as the importer, compliance with our Electricity (Safety) Regulations and Radio Spectrum Management requirements sits on you, not the factory.

Your standing defences

• Filter hard on the platforms. On Alibaba, combine Gold Supplier, Onsite Check and Assessed Supplier filters — scammers and pure middlemen rarely pay for all three. Relax the filters stepwise only if results run thin.
• Ask for the business licence. It'll be in Chinese, and that's fine — outright refusal to send it is the signal.
• Check their laboratories. Be cautious if they only ever work with Chinese test and inspection companies nobody's heard of.
• Watch communication quality. Fragmented, slow, evasive replies at the enquiry stage only get worse mid-order. Eliminate the weakest communicators early.
• Never reveal you're a first-time importer. It marks you as a target for every trick above.
• Inspect before the balance. A ~US$300 pre-shipment inspection, with 70% of your money still unpaid, converts most "scams" back into solvable quality disputes.

No single check is bulletproof. Stacked together, they filter out nearly everyone you'd regret meeting.

Key takeaways

• Prices far below the market band are bait, not bargains — investigate every outlier.
• 100% upfront, personal accounts, changed bank details or Western Union: refuse and verify by video call.
• Vet profiles forensically: names, registered capital, standards, licences — and run the custom-sample-plus-video-call test.
• Verify certificates through your inspection company; forgeries are common and NZ liability lands on you.

Related: How to Vet a Chinese Supplier Before Sending a Cent, How to Pay Chinese Suppliers Safely: T/T, Trade Assurance, PayPal, L/C

Figure: Red flags ranked by how fast you should walk away.

How to Pay Chinese Suppliers Safely: T/T, Trade Assurance, PayPal, L/C

A supplier asks for 100% payment up front and offers a 5% discount for the favour. Take that deal and you've just handed away the only real leverage you have as an importer sitting 9,500 km from the factory. How you pay a Chinese supplier matters more than almost any clause in your contract, because once your money leaves New Zealand, getting it back is genuinely hard.

Here's how we structure payments — and which methods suit which order sizes.

The golden rule: never pay more than 30% up front

For a standard bank transfer order, the worldwide convention is a 30% deposit to start production and the 70% balance paid only after your pre-shipment inspection passes and the goods are released for shipment.

That unpaid 70% is your leverage. If the inspection finds faults, the supplier will rework the goods — not out of kindness, but because he's still waiting for most of his money. Pay everything early and a defect claim becomes a polite request he can ignore.

A supplier who insists on 100% up front is a hard red flag. He's either in financial trouble or setting up a scam. Every legitimate factory accepts 30% T/T or a letter of credit. Walk away.

The four main methods compared

Figure: Buyer risk and typical order-size sweet spot for each payment method, from telegraphic transfer through to letter of credit.

T/T (telegraphic transfer / bank wire). The workhorse. Medium risk — you have little recourse if things go wrong, which is exactly why the 30/70 split exists. Our recommendation for first-timers on orders of roughly US$1,000–20,000. Your NZ bank will charge an international transfer fee, and the supplier will usually quote in US dollars, so watch the NZD/USD rate when you time the payment.

Trade Assurance / escrow (Alibaba). A third party holds your money until you confirm the goods arrived as agreed, with neutral dispute mediation if they didn't. Very safe, and the default choice when you're buying through Alibaba anyway. For small trial orders this is the closest thing to a safety net a new Kiwi importer can get.

PayPal. Fairly safe for the buyer — good protection and easy chargebacks. That's precisely why suppliers dislike it: withdrawal hassles, fees and chargeback exposure sit on their side. Many will accept it only for samples or small lots, sometimes adding the fee to your price. Fine for small amounts; don't expect it on a container order.

Letter of credit (L/C at sight). The bank releases funds only when shipping documents prove the goods were dispatched as specified. Both sides are protected, and the supplier can even use the L/C draft to finance raw materials. The catch: it's complicated and costly to set up through your bank, so it only makes sense on orders of about US$20,000 and up. Talk to your bank's trade finance team before you promise a supplier an L/C.

Western Union deserves its own warning: it's cash to a stranger with zero guarantee. Only ever use it with people you know well — which, for a new supplier, is nobody.

A useful escrow trick for small bulk buys

Found the product on AliExpress? Message the seller, negotiate a bulk price, then have them adjust an AliExpress order to that agreed price and pay through the platform. You get wholesale-ish pricing with AliExpress escrow protection wrapped around the deal. It's a tidy way to test a product at 50–200 units without T/T exposure.

Keep the paper trail (the IRD will thank you)

From day one, keep digital copies of every invoice, payment confirmation and receipt. You'll need them for disputes, for claiming import GST back once you're GST-registered (remember: NZ GST is 15%, and registration kicks in at NZ$60,000 turnover), and for the email from four months ago that proves what was agreed. Track sample payments separately too — most suppliers will deduct sample costs from your first order, but only if you agreed it up front and actually remember to claim it.

Match the method to the moment

• Trial order under ~US$2,000 through a platform → escrow / Trade Assurance.
• First real order, US$1,000–20,000, direct with the factory → 30/70 T/T, inspection before the balance.
• US$20,000+ → letter of credit.
• Long-standing relationship → you can eventually negotiate softer terms, even balance-on-delivery, for cash-flow breathing room. Earn that; don't start there.

Key takeaways

• Never pay more than 30% before production; release the 70% balance only after a passed inspection.
• A demand for 100% upfront payment is a walk-away red flag, every time.
• Use escrow for small platform orders, 30/70 T/T for mid-size orders, L/C above ~US$20,000.
• File every invoice and payment record — for disputes, and for claiming back your 15% import GST.

Related: Pro-Forma Invoices and Purchase Orders: Paperwork That Protects You, Import Scams and Red Flags: How Kiwis Get Burned (and How Not To)