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Chinese traders should use third country irrevocable letters of credit (LCs) in trades with Nigeria, claims ICC publication DCPro. This recommendation appeared recently in a leading Chinese newspaper that revealed that several companies in China claim to be victims of trade frauds involving Nigerian entities amounting to millions of US dollars.
DCPro says that Shanghai’s largest circulation newspaper, the Xinmin Evening News, reports that thirteen Chinese companies have sued their Nigerian counterparts for trade fraud amounting to US$4 million in the past seven months alone.
The newspaper says its report is based on information from the Chinese embassy in Lagos, Nigeria. As a result of this information the Chinese authorities have said that fraud was more likely to happen in bilateral trades on cash on delivery terms.
Chinese officials are also warning against possible frauds involving unconfirmed credits, duplicated bank guarantees and fake official documents. Small and medium-sized enterprises are particularly vulnerable they say.
Officials now say that all business should be transacted against an irrevocable LC with banks from a third country, such as from the US or western European countries, says DCPro.
The Chinese authorities are also worried about frauds of a different kind that sometimes utilise bogus LCs.
They say Chinese internet users are falling foul of so-called 419 scams after they receive email messages that falsely promise victims massive returns. Officials say that due to language barriers, Chinese victims may treat the messages as genuine because they cannot immediately recognise them as fraudulent.