Ali Baba, the Chinese Swindlers and Cheated Armenian businessmen

Quite recently the Armenian TV channels would release a surprising statement with the following content.

“All the Armenian businessmen who had loss from the activities of Chinese companies, may apply to the Republican Union of Armenian Employers.” At the beginning we thought the matter is more conceptual regarding the cheap price of Chinese products, which the Armenian businessmen cannot resist. But it turns out that the matter is more concrete and even involves criminal clans. Thus, over a down Armenian businessmen have appeared in the lair of a number of Chinese swindlers and have lost essential money. This was informed to 168-Zham by the executive director of the Republican Union of Armenian Employers (RUAE) Vahan Simonyan. He said that the Armenian businessmen wished to attain equipment at low prices from China and tried to find providers online.

They have mostly used www.alibaba.com website, which is an international forum of buyers and sellers. The problem is that the Armenian businessmen haven’t properly researched how reliable these providers were. As a result they have either fully or partially transferred the amount to these providers. Some of them haven’t received the ordered stuff at all; others have received completely different things. For example, businessmen Isahak Abrahamyan told 168-Zham that he had ordered some construction materials from China but he received “garbage.”

For the order Abrahamyan has paid $26,000 but still cannot get a refund. Another company that suffered from having business with Chinese companies is A-Jvan. When speaking to us the director of the company Artur Javakhyan told us that instead of the ordered 48 tons of paraffin he had received water. The company had a damage of $20,000. Artur Javakhyan said that after receiving the cargo they have contacted the provider and told about the problem and the latter said that the confusion happened at the factory but it is a lie because on Youtube you can see a video that a Mexican company was similarly cheated by the Chinese. They have made an order worth $183,000. Artur Javakhyan said that he had received the cargo on July 20, 2012. About a week after that he ordered expertise, which revealed that the delivered product is water.

One week after that he met with the Chinese Embassy representative in charge of economic affairs, however the Embassy did not take effective measures to solve the problem: “What he told me is that the trade volume is too big and everything is being done faster. Shipments are weighed at their customs office, and if there is extra weight, the shipper is to pay for the extra. However, if the weight is lower than the declared one, they let it go; there are even rumors that empty containers were shipped.” According to Artur Javakhyan, the Embassy representative told him that was a very easy procedure to open a company in China: “He told me that we had to be careful and if we wanted, we could apply to the police. He gave me the details of their police, however you cannot restore your loss by applying to the police only. I don’t know exactly what their laws are, but I have heard that they have strict laws. Maybe they will make a decision to execute them and close the issue. What will give it to me? Nothing.”

According to our information, Royal Armenia company is one of the Armenian companies that suffered from Chinese malfeasance. This company has ordered equipments worth of a hundred thousand dollars and made a prepayment of thirty per cent. However, so far neither the equipments have been shipped nor the prepayment was compensated.

Vahan Simonyan says that the companies tried to solve the problem with their efforts in the beginning, and even they applied to the Embassy, however they were not able to solve their problem. In a while the Union of Employers took on the role for investigating the losses and demand compensation for the Armenian businesses.

V. Simonyan says that initially they received applications from several companies, however after advertising on television they received feedback and found out that there are many companies in similar situation. So far fifteen companies have applied to the union of employers, and this number is even growing.

The union has officially applied to the Chinese Embassy in Armenia asking to investigate the fraud. The Embassy replied that they would try to find out the details of the fraudulent Chinese companies and compensate the losses. The Embassy also offered to provide advisory support to Armenian companies to escape from similar situations in making business with China. If an Armenian company finds a Chinese company and wants to place an order or make payment, the Armenian company can apply to the Chinese Embassy and ask if the Chinese company they have found is credible and reliable.

Notwithstanding the above, V. Simonyan thinks that the Armenian companies have failures too as they did not include the technical details of their products in agreements, neither the Armenian companies fully agreed upon the procedures of resolving disputes or other points related to enforcement of their agreements.

Probably the biggest mistake of the Armenian company is that they have forgotten the famous proverb saying that “the only free cheese is in the mousetrap.”

Babken Tunyan,
Ofelia Hovhannisyan