The Chinese work is not shams and has not disappeared. I think...

The Chinese work is not shams and has not disappeared. I think there is more work than what the company has got onto its books. Here the company is dealing with a fraud issue which seems to involve the selling of finished product on the black market (of course using the company’s name). The way it seems to be conducted was to always balance the books (by replacing finished product with same quantity of raw materials). This fraud seems to be sophisticated and only the people on the ground will notice or a forensic accountant who looks at much more information than just the balanced books. The fraud in this case is stealing the labour and factory efforts. Unless the accountant tries to reconcile factory output in addition to book balancing, this type of fraud can’t be detected easily.