Why This Matters
I've seen too many overseas buyers waste time on the wrong channels after something went wrong, and end up with neither their money nor a resolution. The most important thing when something goes wrong is to correctly assess the nature of the problem. Different situations call for completely different responses.
1. First: Is This a Commercial Dispute or a Criminal Fraud?
This is the most critical step. Get this wrong and everything else is wasted effort.
Commercial Dispute (Breach of Contract)
- The supplier can perform but is delaying
- The supplier provides reasonable explanations (raw material shortages, production delays, etc.)
- Communication is still open — they haven't disappeared
In this case, police reports have limited effect. Go to mediation or arbitration.
Criminal Fraud (Contract Fraud)
- The supplier has gone completely dark — no WeChat replies, no emails, phone doesn't connect
- The supplier quickly transferred assets or deregistered the company after receiving payment
- Documents provided by the supplier have been proven false
- The supplier had no intention of performing from the beginning
In this case, filing a criminal report is the most effective tool available.
2. Evidence Preservation — Do This First, Every Time
What to Save — Right Now
Critical reminder: Chat records need to be screenshot and backed up. If you're blocked on WeChat, you lose access to everything. Screenshot everything — don't rely on the app's cache.
3. Criminal Report — Powerful, But Only in the Right Situation
The Legal Threshold
Contract fraud requires "intent to illegally possess" the other party's property, with amounts typically exceeding 20,000 RMB (approx. $2,750 USD).
Not every "paid but didn't ship" situation is fraud. If the supplier is still communicating, still has the ability to perform, or is simply behind schedule — it's likely a civil breach, not a crime. But if the supplier has gone dark, transferred assets, or provided fraudulent documents — criminal reporting is worth pursuing.
How Overseas Companies Can File in China
Documents Needed
- Written report (timeline, parties, location, what happened)
- Contract documents
- Payment records (bank statements, transfer receipts)
- Evidence of deception (fake documents, false credentials)
- Your company registration + notarized power of attorney
Contact
Police: dial the area code + 110 (e.g., Hangzhou: 0086-571-110)
Anti-fraud hotline: 96110
4. Mediation — Fast and Low-Cost
China Council for the Promotion of International Trade (CCPIT) Mediation Center
Apply online: adr.ccpit.org
Hotline: 400-8899-460 (7×24)
Website: www.ctils.com
Process: Apply → Accepted → Notification sent to respondent → Mediator helps both parties reach an agreement.
Note: Mediation is voluntary — if the other party refuses to participate, it can't be forced. But it's cheap, fast, and often effective when the other party wants to resolve things.
HKIAC / SIAC Arbitration
If your contract has an arbitration clause, go directly here. Governed by CISG (UN Convention on Contracts for the International Sale of Goods). Faster than litigation, and awards are enforceable in 166+ countries.
5. Credit Insurance and Diplomatic Channels
Sinosure (China Export & Credit Insurance Corporation)
If you've insured the transaction through Sinosure, contact them to file a claim. Sinosure can pressure the supplier or directly compensate your loss.
Chinese Embassy / Consulate Commercial Section
Contact the economic and commercial counselor's office at the Chinese embassy or consulate in your country. They can provide guidance and connect you with relevant domestic agencies. They cannot directly resolve commercial disputes, but serve as a useful support channel.
6. Action Timeline — Do This in Order
- Day 1 — Screenshot and backup all chat records, payment receipts. Evidence preservation is always the first step.
- Day 3 — Send formal demand letter (email + registered mail, keep delivery proof). Creates a paper trail for everything that follows.
- Day 7 — No response → Apply to CCPIT Mediation Center. Low cost, fast attempt.
- Day 14 — Mediation failed → Retain a domestic lawyer to prepare case materials. Simultaneously assess: is this criminal fraud?
- Day 21+ — File criminal report OR initiate arbitration (if contract has arbitration clause). Choose path based on your assessment.
7. Important Reminders
- Time is critical: The longer you wait, the higher the risk that funds are transferred, the supplier disappears, or the company is deregistered. Act immediately.
- Statute of limitations: Under China's Civil Code, general contract disputes have a 3-year statute of limitations — beyond that, you lose legal protection.
- Enforcement risk: Even if you win a judgment, collection can be difficult if the supplier has no real assets. This makes pre-transaction due diligence the most effective remedy of all.
- Don't rely on a single channel: Criminal reports, mediation, and arbitration can run in parallel. Multiple approaches are more effective than any single one.
A practical note: Due diligence helps you avoid obvious traps, but it doesn't guarantee you'll never hit one. The real reliability of a business relationship comes from ongoing communication, staying alert, and catching problems early. Something going wrong isn't the end — not knowing where to turn is.
Key Takeaways — When Things Go Wrong
Commercial dispute → mediation/arbitration. Criminal fraud → police report. The wrong channel wastes your time.
Screenshot every chat, save every payment record. Do this on Day 1 — before you do anything else.
The longer you wait, the higher the chance the money is gone and the company is deregistered. Every day counts.