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When I first entered this industry, my business partner told me it was full of scams.
He hoped I could act as an independent third party, do things the right way, and eventually help him get out of this mess.
He has 15 years of experience and shared a lot of industry secrets with me, then let me see everything for myself.
In a completely unregulated market, if you want to survive, you’re almost forced to do things against your conscience, just like everyone else. He didn’t want to live like that.
For the first two years, I was mainly focused on shooting videos, so I didn’t really touch that side of the business.
It wasn’t until I started doing third-party inspections that I really felt how chaotic and dark this industry is.
I have a master’s degree, and I might actually be one of the most educated people in this field.
I invested a lot of money and time in my education, and it was never so I could go into fraud.
The turnover rate in this industry is extremely high.
After working in sales for about three months, most people more or less discover the company’s dishonest practices.
If they still have a moral bottom line, they feel miserable. If they can’t stand the guilt, they quit.
If they haven’t closed any deals after three months, the company will also push them out.
So people who stay long term, besides being “lucky”, usually have to keep lowering their bottom line.
Because the market is so chaotic, honest companies are shrinking their business, while the companies that are good at cheating are expanding.
They attract customers through ads on Google and Facebook. They only talk about the positive side of the excavators and never mention the hidden problems.
Let me walk you through some of the tricks they use.
1. Swapping the machine or parts before shipment
Let’s say you find a very cheap excavator in the market.
The salesperson sends you detailed photos and videos. You still don’t feel safe, so you send a third-party inspector to check it on site.
The inspector confirms that it really is a great machine.
You feel reassured and decide to pay a deposit, or even pay in full.
But when you finally receive the excavator, you realize it’s not the one you saw.
What you get is a damaged machine with constant problems.
You contact the salesperson, confused, and they simply tell you: “This is the machine you bought.”
So what can you do at that point? Return it? Sue them?
I have never heard of a foreign buyer actually winning this kind of lawsuit in China.
Sometimes even the local police will protect these companies, because they can get a lot of benefits from them.
My business partner told me that when he used to work in Songjiang, Shanghai, there was a customer who paid 100,000 RMB to a neighboring company for a used excavator.
When it was time to pick up the machine, they gave him one that couldn’t even run. He had to repair it himself.
He wanted his money back, but he couldn’t get it.
He went to the police for help, and they ended up arresting him for “causing a disturbance”.
Even when he knelt down and begged, he still couldn’t get his money back.
Yesterday, an American friend of mine told me the excavator I had inspected for him had been swapped.
And yesterday I was actually in that same market and really didn’t see his machine there.
He was very angry, but there was nothing he could do.
He had already paid a 5,000-dollar deposit and 1000 dollars in so-called “cleaning fees”.
That “cleaning fee” is unreasonable and shouldn’t even exist.
In the end, he tried to negotiate with the salesperson and use his deposit to buy some attachments instead, and give up on that excavator.
Things like this happen more often than you might think.
Sometimes they may not swap the whole machine, but they’ll swap your tracks, your bucket, or other expensive parts.
Because once the excavator is on the ship, as far as they’re concerned, it has nothing to do with them anymore.
A three-year warranty?
If they already tricked you from the beginning, do you really think they’re going to honor any warranty?
2. Removing the nameplate so you can’t trace the machine
I usually tell my clients that many excavators don’t have nameplates because of messy processes—documents get lost or mixed up, so the plates are removed.
But clever salespeople will tell customers: “We removed it to prevent other people from misusing the information.”
Now I’m going to tell you the truth:
The real reason they remove the nameplate is so you can’t track the machine.
The excavator you see in the yard is not necessarily the one you actually receive.
All of this is done to prepare for fraud.
If the price you offer is high enough, they might really ship you the exact machine you saw.
But if your offer is too low, the result is unpredictable.
Most excavators without nameplates are very old.
Maybe they were purchased for about 10,000 USD, and then sold to you for 30,000 USD after refurbishment.
Engine information, hours on the meter—everything can be changed.
You try to look it up on the manufacturer’s official website?
The information you find will match the identity on the machine exactly.
That’s easy to do, because they just copy the identity from another real excavator, which might still be working on a jobsite somewhere right now.
3. Taking deposits to gain control
I’ve said this many times: don’t rush to pay deposits online.
Even so-called third-party escrow on Alibaba can’t really protect your money.
Once you pay a deposit, they gain the upper hand in negotiations.
Paying a deposit basically ties you to them.
They’ll start pushing you to buy more things and bring up unreasonable conditions.
Because you don’t want to lose your deposit, you slowly get dragged deeper and deeper.
When their demands finally cross your bottom line and you decide to ask for your deposit back—sorry, that’s not going to happen.
So before you pay any deposit, the most important thing is not listening to the salesperson’s story.
You should go there in person, check the place, and see if the company is actually honest.
If you don’t really understand how things work in China, or you don’t have time, you can ask a friend in China to go for you.
Pay them some travel money and a small commission. Compared to losing tens of thousands of dollars, that cost is nothing.
If your friend doesn’t understand excavators, ask them to add me on WeChat.
I can teach them some basic inspection skills.
4. Turning very old models into “new” ones
You see an excavator that is incredibly cheap—so cheap that you can save half of your budget.
You might think: “Well, Chinese products are supposed to be this cheap, right?”
Here’s the harsh reality:
What you’re looking at might be a rebuilt excavator.
It was converted from a very old model into something that looks like a newer model.
When they bought it, it might have basically been scrap metal.
This kind of machine isn’t just “gray market”. It’s completely fake.
From the outside, it can be 99% identical to the real thing.
Even the operating system can look exactly the same.
In the past, to tell real from fake, we would put the machine on a scale and check its weight.
If the weight was off by a lot, we knew something was wrong.
But now, their refurbishing skills have improved so much that even the weight can be almost exactly the same.
The biggest excavator-counterfeiting base in China is in Hebei Province.
Have you heard of Hebei? It’s basically the ring of land around Beijing.
That’s also why you might have heard that excavators from “Beijing” are very cheap.
One of my colleagues once had a Greek customer who refused to accept normal prices.
In the end, my colleague had to take him to Beijing.
If you don’t care about quality or authenticity at all and only care about price, just tell me your budget.
I can definitely find you an excavator that matches it—cheaper than any quote you’ve received from others.
5. Buying off third-party inspection companies
China is a very relationship-driven society.
And when people talk about “guanxi”, or “relationships”, very often it means unwritten rules based on money.
When I do third-party inspections, almost every salesperson—either directly or indirectly—tells me that as long as I help them sell the machine, they’ll pay me.
If the customer has already paid a deposit, they’re even willing to pay me immediately to help them deceive the customer.
So how much of the inspection reports you see can you really trust?
For my own safety, the information I publish publicly is usually positive.
Because those salespeople also see that information.
But I share the real situation with my clients privately.
I also have my own blacklist.
If I find even one fraudulent company in a market, it usually means the whole market is not clean.
According to the rule of “bad money drives out good money”, in the same market, if one company is making good money by cheating, the other companies are forced to follow in order to survive.
Otherwise, they’ll be eliminated.
The only difference is who uses more sophisticated tricks.
So once I discover a fraudulent company in a market, I start to doubt the entire market.
I put my personal reputation on the line.
But if the third-party inspection you hire is a company, then anything can happen.
The employees of that company don’t personally bear the cost of damaging the company’s reputation.
They just want their cut.
Damage to the company’s name has nothing to do with them.
So they don’t even need the salesperson to hint at anything—they’ll directly tell them: “You should pay me something. That’s the rule.”
6. What kind of protection can Alibaba give you?
None.
Alibaba makes money by squeezing its paying customers.
Are you their customer? No.
Alibaba’s customers are the sellers who pay them cash.
Those sellers are the ones they protect.
Protecting the sellers is protecting Alibaba itself.
So when you and the seller have a dispute, which side do you think Alibaba is really on?
So-called third-party escrow payments mostly just make you feel safer.
They create the illusion of security.
Even though the market is very chaotic, my friends and I are still trying to do something.
Among them are business owners, salespeople, and mechanics.
They share a lot of inside information with me, which helps me know where to look and how to investigate, so I can grow quickly in this field.
There are still many customers who are willing to pay more to support honest companies.
So I believe things will eventually change, even though it’s going to be a slow process.
Thank you for watching this video.
I’m Mike Phua.
