Businesses Seek Redress After Chinese Plastics Trading Platform Exposes Prepayment Risks

What began as a seemingly reliable sourcing platform for China’s plastics industry has unraveled into one of the sector’s largest financial crises, leaving hundreds of companies scrambling to recover funds, according to business owners who spoke to The Epoch Times.

In recent days, business owners from across China have gathered outside offices linked to the platform, Jinsubao, demanding answers after payments allegedly stopped and deliveries failed. Many say they are no longer seeking profits, only the return of their original funds.

On April 17, hundreds of buyers from across the country gathered in Tianjin, China, where the company operates. On April 20, dozens more gathered in Shanghai.

Lu Junjie, who runs a nonwoven fabric factory in Beijing, traveled to Tianjin to join the protest. His factory, with nearly 50 employees, has been conducting business mostly with Jinsubao for nearly three years, and he described a subdued scene to The Epoch Times.

“There was no shouting or chaos,” he said. “Everyone just wants to know where the money went and when it will be repaid.”

Police and local officials were present, he said. Chinese authorities have not publicly commented, but participants were told preliminary results could take up to two months. Few are optimistic.

“The amount involved is too large. I don’t think it can be fully resolved,” Lu said. “Most companies just want their principal back. We’re not even asking for profit.”

According to its website, Jinsubao positioned itself as a big-data-driven platform connecting more than 10,000 manufacturers with logistics networks.

The platform attracted customers with below-market prices. The model came with a critical condition: full upfront payment, with delivery delayed by a month or more.

“At first it seemed like a good deal,” Lu said. “We would purchase two to three million yuan [approx. US$290,000–440,000] worth of goods every month. That was normal.”

Over time, as companies increased order volumes, large sums of capital accumulated on the platform. That structure—low prices combined with full prepayment and delayed delivery—left buyers exposed when shipments stopped, according to the business owners.

Around the Lunar New Year in February, many businesses placed large orders to stock inventory. As delivery dates approached, shipments failed to materialize.

“When the delivery date came, nothing was shipped,” Lu said. “Then, the sales staff told customers to come to the office. When we got there, we saw many others waiting. That’s when we realized deliveries had stopped entirely.”

Some customers said the platform issued written promises to deliver goods in batches, but none were fulfilled.

“It was just a way to buy time,” Chen Meijuan, who runs a small trading company in Zhejiang with seven employees, told The Epoch Times. “For a small factory like ours, this is like a disaster. It’s basically a year of work gone.”

The cause of the problems remains unclear, but many affected businesses point to the same explanation: failed futures trading.

The Epoch Times reached out to Jinsubao for comment but did not receive a response by publication time.

According to Lu, the platform used prepaid funds to speculate in commodities markets. Profits would have been used to purchase raw materials and fulfill orders. If trades went wrong, the company would be unable to buy goods at rising market prices.

“There are claims they lost money in futures, and at the same time, raw material prices went up,” Chen said. “They were losing on both sides.”

Chen is connected to around 500 other protesting business owners via online chat groups, and has estimated that “the total amount may exceed 2 billion yuan [$293 million].”

Ripple Effects Across Supply Chain

Lu estimates that in northern China alone, about 1 billion yuan [US$147 million] is tied up with the platform, involving roughly 70,000 tons of undelivered goods and around 150 companies.

“These funds aren’t just ours—they include deposits from our own customers,” Lu said. “If we can’t recover them, our own cash flow will break.”

The fallout is spreading beyond the alleged victims. His factory is now running at reduced capacity.

“[We’re] not making money, but we still have to keep machines running,” he said, noting that shutting down entirely could cause even greater losses due to high restart costs.

Meanwhile, raw material prices have surged, further squeezing margins.

Chen said her company has effectively halted production. Already struggling with declining export orders amid U.S.–China trade tensions, the additional losses could push some businesses into bankruptcy.

Tax complications have added to the pressure. Since many transactions were conducted through official accounts with tax included, companies now face accounting discrepancies: payments were made, but no goods or invoices were received.

As hopes of recovering shipments fade, many affected businesses have shifted their focus.

“If the money is gone, the platform must be held responsible,” Chen said.

Jinsubao’s case is not an isolated one in China.

In recent years, high-profile failures in real estate and trust products have left investors and businesses exposed. Earlier waves of peer-to-peer lending platform collapses have wiped out savings for millions.

Against that backdrop, Chen’s words capture a growing sense of frustration.

“There’s nowhere to turn,” she said. “No one is answering.”

Li Jing and Gu Xiaohua contributed to this report.