A request for help/guidance that i received from one of the readers.. Anyone out there that can help answer these questions..?? Anyone in the Trade or Legal fraternity..?? 
my company is in a little bit of a situation at present . 3 months ago we signe a contract for 2 x 40f containers of mattresses from china . we paid the 2 x deposits and the rest was balance payment upon copy b/l documents .
we paid for the first container and received it . after recieving it we noticed the quality was not good . . basically we had 2 different models but both of them was white in colour … however 1 model [ the most expensive one ] went a yellow colour .
we reported this by email to our supplier and asked them how the isse could be fixed for the future and also e wanted to know the reason why . 4 weeks later they never give me any info about this .. however we struggled to sell th goods so we took it upon ourselves to give discount .
so now the 2nd container has arrived and the balance payment has to be paid ..
i then asked the supplier why thye never got back to me and informed them we had severe problems with the colour disfiguration .. after a spell of emails they agreed to give me 50% discount on load 1 problematic mattress and if there was the same problem in load 2 they would use any further discount to act as the deposit for load 3 and 4 …. so they confirmed to me this in an email and confirmed after reciept of payment they would release the bill of lading and other documents …. so i accepted this on my companies behalf .
i then transfered the payment via my bank and there bank . on wednesday last they confirmed they received the payment and said they would ship the documents the next day .
this didnt happen and for 2 days i chased this up only until today they confirmed that they wanted the discount money paid to them as they are not happy and they will only relase the documents until after they receive th whole payment ..
basically they went back on there word and there agreement .
today my container has arrived in the port .. i contacted my forwarder and told him everything and he said he never came across anything like this before .
he asked me to send him al correspondance of there agreement of dicount and final settlement balance and also confirmation of bank transfer payment and any other relevant information . he then said he would forward this onto his agent in china and ask him how to look after this ..
basically it is my selected agent and shipping company … not the shippers !! however he did say to me that they have full control and can decide what to do … but he said hopefully our agent can look at it a bit differently and guide us as to what to do ..
so my point now is .. if they can pull a stunt like this and try not to honour there agreement .. how can i trust that the goods are actually on the container ? how can i be sure that the goods are what they say they are ??
can anyone help me on this because i am totally lost and dont know what to do next as we have orders to go and our cashflow is totally invested in this consignment . plus the fact it only 3 weeks to christmas and there is bills to pay etc ..
can anyone advise me what to do next ?
because i know they will not release any documents until ..
help !!!
Darren
Darren
Your money is gone and China is a difficult country to deal
Do not buy thru web site and even if you go to China and deal there you will end with problems.
Best is to go thru a local agent who is well versed with China and enter into a agreement in writing under local laws and pay only when you inspect goods and they are to your satisfaction
Hi Darren,
First of all I feel pity for the losses occured and pray god to come out from this loss without affecting anybody.
a) Intially when you found the goods are in bad or inferior quality should have arranged for any reputed inspection agency and got the report and the same should have been forwarded to the supplier. This report will help for further legal Investigation.
b) Normally In India we have ECGC which is governed body help in knowing the credibility of the customers and we can approach them in case if have any dispute which they will address back to their counterpart and do the needful. Sometimes they even black list the supplier so that others are affected.
c) You approach your local chamber of Commerce and give him the details of the loss incured, they might even help you.
Rgds/swamy.
Darren
First, as one who deals with the Chinese on a regular basis, I will preface this by saying any time you deal with China, you are taking substantial risk. You should have had an inspection company inspect the goods as they were loaded onto the container. Yes, it will cost you a little extra money, but let’s face it, you are buying from China because they are offering you cheap goods; cheaper than local manufacturers can supply. You need to factor these costs into the reality of your business arrangements with Chinese manufacturers.
While your story is long and complicated, it lacks certain facts and justifications.
1. You call him a “supplier”. Do you mean “manufacturer” or is this a middle man?
2. Have you ordered from this supplier/manufacturer before, or was this your first experience with him?
3. Have you ever been to the factory? Many “suppliers” parade as manufacturers but in fact are just middle men and sometimes obtain defective goods from manufacturers at discounted prices and pass them on to customers like you who are “looking for the best price”.
4. What was the amount you discounted the yellow mattresses? In other words, how much of a loss did you actually take? Amount of loss is a major factor in determining action that can be taken as a matter of “barnyard economics”.
5. You say, they agreed to a “50% discount on load 1 problematic mattress and if there was the same problem in load 2 they would use any further discount to act as the deposit for load 3 and 4” and that you accepted that. What? Are you daft, man? You will purchase shipments 3 and 4 without inspection, with payment in advance before arrival? It makes me wonder . . . they already cheated you by sending you obviously defective goods, yet, you keep paying them? What kind of business decision is that?
6. And then you say the did not honor their second agreement and say that, “ . . . they wanted the discount money paid to them as they are not happy and they will only release the documents until after they receive the whole payment.” Surely, they are kidding, and so are you if you did as they requested. Cancel shipments 3 and 4 and cut your losses while you are still ahead You can clearly see what you are dealing with here.
7. You say, “ . . . today my container has arrived in the port .. i contacted my forwarder and told him everything and he said he never came across anything like this before . . . .he asked me to send him al correspondence of there agreement of discount and final settlement balance and also confirmation of bank transfer payment and any other relevant information . he then said he would forward this onto his agent in china and ask him how to look after this .. basically it is my selected agent and shipping company … not the shippers !! however he did say to me that they have full control and can decide what to do … but he said hopefully our agent can look at it a bit differently and guide us as to what to do ..
8. Then, you say that your “. . . cashflow is totally invested in this consignment/”
Darren, Darren, Darren, what can be said? You put your eggs all in one Chinese basket and there really appears to be no way out. What are you going to do, hire lawyers and sue them in China? That’s a rhetorical question, as even if you are correct on the law as applied to the facts you reiterate, your chance of seeing any recovery money from the supplier is little to none.
Payment terms was a deposit and balance due upon presentation of the bill of lading. This is normal for goods being purchased out of China by small accompanies. Of course, the large companies can demand letters of credit, payment upon inspection at time of arrival, shipping door-to-door, DDP, etc., but I will assume four containers or so is your company’s annual max, rather than 1,000 or more yearly and that you have no negotiating power when it comes to terms of payment.
Sorry Darren, but the rest of your story deteriorates to the point that I’m a bit confused: You say, “so now the 2nd container has arrived and the balance payment has to be paid.” But you previously said you had already paid. And did you pay for containers 3 and 4 yet and taken your discount fully? You refer to a “supplier” and “agent” and a “forwarder”.
Evidently, the “supplier” sold you the goods EXW or at least FOB. This was your first mistake, but that’s another matter and requires analysis under Incoterms 2010 and is unimportant to the analysis of your business boondoggle here.
Having your forwarder look into this is in my humble opinion useless. What gives him/her the ability to deal? This is not a shipping problem, it is a pure and simple business problem. And who is your “agent” in China and what services is he/she expected to provide you both pre and post shipment?
The bottom line is:
1. Never purchase goods from China without hiring an inspection company to inspect the goods pre-loading.
2. Never purchase goods from China EXW.
3. Understand that except for multi-million dollar purchases, it is economically infeasible to settle disputes either through arbitration or through local courts in China.
4. Remember the old adage: Caveat Emptor.
5. Hire a lawyer.
Disclaimer: This analysis in no way constitutes legal advice or the establishment of a professional or fiduciary relationship, nor is it to used by any person or entity to be such. Users take action upon this analysis at their own risk and hold the writer harmless and free of any liabilities whatsoever.
You should contact a good lawyer, perhaps Shepstone and Wylie (they are expensive, but worth it). I had a similar problem but the problem was with a crooked clearing agent so the problem was more local. yours may be a bit harder. All the best, and do let us know how it goes.
I write from Bahrain in the capacity of a shipping agent. What you have naratted is not surprising to me as I hv and i am coming across many cases like your specially ex China. Atlest in your case its mattress of an inferior quality. One of our customer ordered aluminum ingots and guess what they got !!!! bricks!!!! yes paver blocks the one normally used on pavements.
I guess you suspicion on the remaining cargo is well understood. I dont know the rule sin S.Africa , but worth reporting this matter to customs and hv the cargp inspected and for waht ever its worth , please lodge a complaint with the chinese embassy , assuming you have all agreements in writing from your supplier. WE LEARN ! Always!