Yiwu, a market town in East China's Zhejiang Province known as a world trading hub for small commodities, has seen more cases of nonpayment by foreign buyers in recent months compared with previous years, the Beijing-based China Times reported Thursday, a development which local traders say is due in large part to risky local trading modes and global financial woes.
The economic crime investigation brigade of Yiwu's Public Security Bureau maintains an online local warning platform where they publish details of such cases.
The latest, posted Thursday, describes a Sudanese trader who is accused of fleeing China without paying for 10 million yuan ($1.61 million) worth of goods he purchased in Yiwu over 2011 and the first half of this year.
The brigade declined to disclose more details when contacted by the Global Times Thursday.
In late May this year, Xinhua reported that an Indian businessman refused to pay for goods he purchased from several Yiwu traders who were so angry that they illegally detained the Indian to force him to return their goods. The Indian finally returned home with the help of local police.
As a result of the event, the Indian embassy even issued a safety advisory warning businessmen from its country not to do business in Yiwu.
Wang Huiling, a lawyer, was quoted by the China Times as saying that recently more Yiwu business owners have found themselves in similar spots.
"As Chinese business people are used to settling accounts before Spring Festival, many push buyers for payment during the year-end period, making it a peak time for Yiwu traders to discover their foreign buyers are unable to pay for goods shipped months ago," Chen Jinlin, secretary general of the Yiwu Christmas Products Industry Association explained to the Global Times.
Besides the season, another factor is the great risk involved in Yiwu's traditional way of trading, which allows buyers to purchase goods on credit with a very small deposit, Ren Guoan, general manager of Yiwu Santan Arts & Crafts Co, told the Global Times.
"We warn local businesses to be on the alert for risky deals, telling them to do business with companies they know about," Chen said.
"Of course, we know it is safer to do business with familiar dealers, but as the global economy slows, it is not as easy to get export orders as in the past, so local traders tend to take risks to get clients," Ren said.
"But when business is not that good, if you don't want to sell goods on credit, someone else will be willing to," Ren added.