We are having some trouble getting a refund from a company (actually a trader). We have been dealing with them for a few years now. We paid them a deposit for some tooling and initial order but then had to cancel the order. This was not a problem and they agreed we were owed the money however they were not able to refund it because the money had been cleared and the Chinese government would make them pay 25% tax. They suggest ordering other products from them instead. In their words.........

"Because we had cleared the USD from the government, we can not return it to you. If we hadnt cleared it, we could return it to you. But now it is too late, we had cleared the money from the government. Now if you insist on the refund the money, we only can do it by commission reason. But this commission will need us to pay the income tax of 25%. As you know the government can not listen to any excuse reason."..........


This seemed a bit strange as I would have thought that this situation occurs from time to time and would be fairly simple to do a refund.

I was hoping someone could shed some light on whether this was true, or whether it was just an excuse so we would have to place an order. Also, are there any resources/ legislation I can use to argue my point with them? Thanks.

Replying to [davo]: Contact you local branch of HSBC they should be able to tell you if this is true and or direct you to a representative of HSBC in Hong Kong. Thats your first step. If you had no formal contract with them it may be that they simply wont give it back.

Ranger

I agree with Ranger. Talk to your bank to find out whether this fee is a legit or not.

I think that you will be lucky if you get all of your money back again but good luck.

Replying to [davo]:

Hi! It's NOT true.

If they really want to refund you, they can do it. But the problem is, if they are not willing to refund you, what you can do?

Replying to [davo]:
What ur supplier is saying is 100% correct
1} when money is foreign currency is rcvd in chinese bank { via tt , d/p , l/c or any other way} ,, we have to declare that this remittance came for which invoice number and bank puts a chop on custom declaration of export stating that xxx amount rcvd,,, ideally ur supplier should match custom paper with payment and get chop of payment from bank on the matching export papers,,, but practically no one considers this and they just see payment rcvd and ask bank to put chop on their any exports {which is ok as long as amounts match, which normally do},,,,, now once this chop is made then that means ur supplier can get drawback for the export made on custom paper which means he can not refund your money as a "refund"

2} now u will think since he has "used " ur payment for his other export payment he can refund the other exports payments {which also he will rcv in his bank} to return to you ,,, but here is the catch in china refunds can be made to exactly same tt route the payment are made from {which would be another buyer of your supplier} so he cant do that either

3} now only way for him to return your payment is by declaring it as "commission" ,,, which he can send to any banking account in china or overseas ,,, but commission is an income and if he has to remit it overseas he has to deduct income tax {whatever percentage may be i am not sure how much },,, this option u wont agree as he will deduct this from ur amount

4} now this is the way i suggest : ask him to return rmb payment instead of dollars { or euro as ur case may be} in cash ,,, which u can ask him to give to u when u r in person in china {or any of ur friend/contact in china} ,, this way will be no need to declare in accounts altogether and u can get ur money back

5} gettings goods from him also is good as long as price and quality is ok for you

my 2 cents
sudhia w

It is a very good experience to take note by buyers dealing business with Chinese suppliers should there be refunding issues arised.

If it is a refunding your own money, why start the bad idea to lie, it is not the western culture I am sure to accept your own money as commissions, Chinese should understand westerner's culture. I do not agree this idea too. If it is really truth as quoted by this supplier (else this supplier is tarnishing the Chinese government policy), in order to stay competitive, Chinese banking policy should be fine tuned to correct refunding issue, I am sure there will be cases in the reverse others refunding to Chinese, right ? It is always a two ways traffic policy that last long.

I am sure that my local bankers do not accept RMB at this time, maybe later after banking agreements made between 2 countries signed. How about others ? And I know that all USD  conversions are done in New York exchange, our local bankers need to have a branch office there or else local bankers ought to have an agent there, it is not done locally. This is the reason interbanking charges happened for USD transfered,the wire transfer receipent tend to get lesser amount after the deduction of interbanking charges.

the man from Hongkong said is right