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PayPal does suck. Fight the issue, you'll probably eventually prevail. If the buyer didn't buy insurance on the postage, be sure to mention that. Get eBay involved, too.
eBay sucks worse. They've changed their policy and will now automatically side with a buyer in a dispute, even if it's on a no-return item.
By the way, I won't ship worldwide. China is but one country I won't ship to.
eBay has some shipping service now that has you ship the item to them, then they ship it out of the country. Might be an option if you still want to ship to ****holes like China.
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