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How to avoid commercial frauds in cross-border trade?

How to avoid commercial frauds in cross-border trade?

Monday 28, 03 2022
Businesses are facing several risks when conducting cross-border transactions, especially through e-commerce.

Companies should be more cautious

As an arbitrator of the Vietnam International Arbitration Center (VIAC), Mr. Ngo Khac Le has accompanied many businesses on trips to "claim justice" after being frauded when doing business with foreign partners. There are many times of success, but there are also times of failure because of the loopholes and carelessness of businesses.

For example, there was a Vietnamese enterprise engaging in cross-border trade transactions only through a mobile phone. Although the money had been transferred for a long time, this business did not receive the goods while still maintaining contact.

Thinking they had been cheated, this business sought help from Mr. Le and suggested that he go abroad to find the scammer. After going abroad for a few days, they could still contact with their partner via mobile phone. The local police could also communicate with them through that phone number.

It is worth mentioning that the local police said they were unable to determine whether or not the phone number belonged to the mobile network in their home country.

At this point, the enterprise looked back on the phone number in the contract and found that this phone number was missing a number. The addresses on the contract were all fake.

“Going to the north of that country, residents say there is no such company. Going to the southern branch, it turned out to be just a bookstore, with no boat service at all” Mr. Le shared.

To avoid risks when conducting cross-border commercial transactions via e-commerce, Mr. Le advised to investigate partners carefully and clearly determine the method of storing information.

commercial transactions

Many companies just use Zalo or Viber to contact their trade partners. When there is a dispute, it is hard to resolve as enterprises cannot save copies used by the parties. There are electronic copies that can be automatically deleted when the subject changes.

Mr. Le emphasized that businesses must keep information and documents so that when there are disputes, everything can be checked easily.

Potential risks faced by impoters and exporters

Mr. Nguyen Trong Tinh, Director of Sales and Distribution Channels of Corporate Banking, Vietnam Maritime Commercial Joint Stock Bank (MSB) also pointed out 5 common risks that he has drawn in the process of working with Vietnamese importers and exporters.

The first is trade risk. Specifically, foreign importers are slow to make payment or even do not make payment.

To limit it, businesses need to carefully verify information of their partners (KYC), only choose a trusted company, with a history of on-time payments. Enterprises should divide the payment into several installments (deposit, partial transfer, full transfer upon receipt of goods, a combination of different payment methods such as 30% by TT, 70% by L/C).


The second risk is the risk of exchange rate fluctuations. The third is moral hazard. For example, the importer does not receive the goods and refuses to pay; the carrier disappears, or damages the goods; the document forwarder colludes with the buyer to replace the set of documents to pick up the goods.

Fourth is the legal risk. When an enterprise has limited knowledge that can only form a contract with unfavorable interests, it is necessary to set up a specialized department or use an consulting company specialized in international law.

Finally, there is operational risk. There are cases where the level of the parties is still weak, causing errors in the preparation of contracts and documents, leading to the possibility of delay or non-payment.

Avoiding commercial frauds – How?

To avoid unnecessary damage during transactions with foreign partners, import-export businesses need to be absolutely cautious. However, that is still not enough. Businesses need to have comprehensive information about their partners including financial background and payment history, which cannot be found on the Internet. In addition, the information provided by the partner itself may be dishonest and subjective.

import-export businesses

Therefore, businesses need to rely on a third party. This third party is often called a credit ratings agency, specializing in providing business information and credit checking services, helping businesses truly understand their partners.

Credit ratings service has been very popular in the world, but it is still unfamiliar to Vietnamese exporters. That is why in the past time, many Vietnamese businesses have been deceived by their foreign partners.

In Vietnam, VietnamCredit is a leading enterprise in the field of providing business information and business credit ratings. We can offer customers with information about businesses in Vietnam as well as around the world. With just a very small amount of cost, the value of the information we provide has great meaning for the development of businesses by helping them avoid a lot of risks.

Source: theleader


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