By Jim Boyce

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Art work - or a sign you are getting screwed?

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Robert Joseph writes on his blog that New Zealand winery owner Graeme Avery was scammed by an outfit in China that feigned interest in his products in order to get him to purchase an expensive artwork. The gift was to be given when the head of the Chinese company visited the winery to seal the deal, a visit that never happened. The details:

“Put yourselves in the shoes of a producer with plenty of wine to sell. You receive an email or letter from a Chinese “Buying Center” interested in placing a test order worth $250,000 or more for one of its clients. There is no haggling over price, and an undertaking to wire payment for the wine before it leaves your winery. To make the deal, you are invited (at your own cost) to visit Guilin where the buyers are based. Once there, you are welcomed and entertained lavishly and taken on city tours. Next, comes a visit to an art gallery, where it is explained that you should honour local tradition by buying a gift for the head of the company that is actually purchasing your wine. You will carry the artwork home with you to hand over to the buyer when he visits your winery and signs the final contract. The art on show is fairly pricey, and you are warned off spending too much. Nothing more than $25-30,000. You make the purchase and head home with it, full of happy memories and pleasure at the thought of the Chinese money that is about to flow in your direction. But that, unfortunately is the end of the story. The buyer never actually appears at your door and efforts to contact him or the Buying Center are fruitless. You are left with your wine, an almost certainly heavily overpriced painting and credit card bills for an expensive trip to China.”

The vast potential of the China market is known to lead foreign businesspeople to take risks they might not make in other circumstances. But common sense is as applicable in this country as any other. Such as: If it sounds too good to be true, it is (“I can get you 1982 Chateau Lafite for USD50 per bottle, but don’t tell anyone else!”). Or: If your contact uses a hotmail, gmail, or other such account, then e-mailer beware (“I represent a major  Chinese buyer that wants two million dollars of your wine – contact me at takethebait@hotmail.com”). Or: If there are no or minimal negotiations, be suspicious (“We love your wine so much, we’ll pay whatever you tell us – as long as you buy this painting, that is”).

I asked Dan Harris, long-time observer of China’s legal and business scenes as well as co-author of China Law Blog about the case. He said, “The key is due diligence and to not buy big gifts.” Newcomers to the China market would do well to check his comprehensive site.

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Related posts:
Wine word: Robert Joseph on China wine tourism, blind tastings, and more

See more posts by Jim Boyce.

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